Aerospace & Defence sector

India scenario
Overview (1/2)
3rd India is expected to become 3rd largest Aerospace Industry by 2020

USD 2.6
Estimated value of India’s MRO segment by 2021, growing at 10%
billion

India’s rank in military expenditure (USD 63.9 billion) in 2017, accounting for 3.7% of
5th
the total global military expenditure

India’s share in the total global arms imports, making it the largest arms importing
12%
country in the world between 2013 and 2017

2
Source: Stockholm International Peace Research Institute (SIPRI) Fact Sheet, CII – Defence sector
Overview (2/2)

Capital expenditure allocation is expected to Domestic defence manufacturing is largely

be 50% of estimated total budget outlay of dominated by defence PSUs and ordnance
USD 620 billion by 2022 from the current factories, accounting for ~90% of indigenous
33.70% (2018-19) allocation defence manufacturing output

Union Budget statistics for defence sector India's current defence equipment
700 procurement
620
600

500
USD billion

400 Indigenous
310 sources; 40%
300

200
Foreign
100 sources; 60%
45.46
15.32
0
2018-19 2022 (Est.)

Capital Expenditure Budget Outlay

3
Source: Press Information Bureau, Government of India
Government of India initiatives

Two Defence Industrial Production Corridors planned.

(Uttar Pradesh – 1, Tamil Nadu - 1)

Introduction of significant policy reforms such as Defence

Production Policy 2018 (DProP 2018), Defence Procurement
Procedure (DPP 2016), Liberalization of FDI Policy, etc.

Thrust on indigenous manufacturing and creating a robust

defence industrial base under ‘Make in India’ initiative
Intergovernmental agreements in which intergovernmental
purchases often include a significant role for DPSUs that
are licensed to produce the contracted equipment through
transfer of design, technology and sub-systems from OEMs
‘Strategic Partnership Model’ for enhancing the role of
private sector across various military platforms on a long-
term basis
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Source: Government of India, Ministry of Defence
Policy / Regulation Overview
Procurement • Defence Procurement Procedure (DPP) 2016 accords priority to ‘Buy (Indian – IDDM (Indian Designed,
Developed and Manufactured)), ‘Buy (Indian)’ and ‘Buy & Make (Indian)’ categories over Buy (Global)
Policy category of capital procurement

• 100% FDI permitted if foreign defence firms are willing to provide full technology transfer
• Foreign investment up to 49% is permitted under the automatic route
FDI Policy
• Foreign investment beyond 49% is permitted through government approval route, in cases resulting in
access to modern technology or for other reasons to be recorded

• Mandatory offset requirements of a minimum of 30% for procurement of defence equipment in excess of
INR 2000 crore (USD 307.69 million) from foreign company have been envisaged under “buy” & “buy and
make” categories
Offset Policy • Foreign vendors can finalize Indian Offset Partners (IOPs) and offset product details one year prior to the
intended offset discharge
• ‘Services’ as an avenue for discharging offsets re-introduced

• Defence sector is subject to industrial licensing under Industries (Development & Regulation) Act 1951
and Arms Act, 1959
Industrial • Industrial Licenses granted by Licensing Committee in Department of Industrial Policy and Promotion
Licensing • Validity period of industrial licenses increased from 3 years to 15 years with a provision to grant
extension for a period of 3 years

5
Source: Government of India, Ministry of Defence
Tamil Nadu scenario
Overview
Aerospace component manufacturing Suppliers to various defence PSUs are
120+ 700+
companies in Tamil Nadu operating in Tamil Nadu

Engineering colleges conducting Aerospace engineers graduating every

70+ 5000+
Aerospace courses year

Technicians and engineers from Tamil Nadu are employed in large number in aerospace companies
across the globe
• Government of Tamil Nadu is formulating an exclusive Aerospace & Defence policy
Aerospace &
• Policy Objectives:
Defence • Achieve 30% share of the defence sector in India
Policy • Create high-end employment opportunities for around 1 lakh persons in Tamil Nadu

7
Source: Government of Tamil Nadu
Manufacturing in Tamil Nadu
Year-wise output of manufacture of
machinery and equipment n.e.c. in Tamil
Nadu (USD million)

7349 6977
6208 5977

2012-13 2013-14 2014-15 2015-16

Year-wise output of manufacture of

fabricated metal products in Tamil Nadu
(USD million)

4992
3844
3356 3339

2012-13 2013-14 2014-15 2015-16

8
Source: ASI 2015-16
Manufacturing in Tamil Nadu
State-wise output of manufacture of
machinery & equipment n.e.c. in 2015-16
(USD million)

13305

7470 6977

3137 2544
Maharashtra Gujarat Tamil Nadu Karnataka Haryana

State-wise output of manufacture of

fabricated metal products in 2015-16
(USD million)

8121

3480 3339
2524 2463
Maharashtra Gujarat Tamil Nadu Uttar Pradesh Haryana

Source: ASI 2015-16 9

Prominent players

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Infrastructure Support
Aerospace Park at Sriperumbudur
Aerospace Park at Sriperumbudur Advanced Computing and Design Engineering
Centre (ACDEC) (Part of Aerospace Park)
• Aerospace Park is being set up by TIDCO in 250 • Proposed ACDEC is being set up in an area of 1
acres in 1st phase million sq. ft. at an estimated cost of INR 330 cr
(USD 507 million)
• It will house atleast 50 aerospace or defence • First phase with built up space of 5 lakh sq. ft is
companies forming a strong base for supporting being developed at an estimated cost of INR 180
large OEMs cr (USD 277 million)
• Will offer cutting edge technology and state-of-
• Expandable up to 500 acres in the next phase the-art infrastructure to support incubation and
innovation

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Source: Government of Tamil Nadu, TN Policy Note 2018 - 19
Support Infrastructure
Salem Aeropark Garuda Aerospace
• Garuda Aerospace focuses on the Design,
• Aerospace Engineers is an eminent aerospace Building and Customization of Unmanned
parts manufacturing unit offering Design, Aerial Vehicles (UAVs) or Drones for various
Development, Precision Manufacturing, applications
Assembly, Certification, Supply and Integration • Caters to diverse needs such as Agricultural
of Systems Survey, Mapping, Reconnaissance and
• Manufactures about 5000 parts Surveillance

Maintenance, Repair and Overhaul (MRO) facility

• Taneja Aerospace & Aviation Limited (TAAL) and Air Works India (Engg) have entered into an
Aviation Infrastructure - Airfield & MRO facility agreement for establishment of commercial Aircraft
Maintenance and Operating Aviation Infrastructure at TAAL's private airfield (Licensed) at Hosur

• An Aircraft MRO complex is being planned to be established in Chennai which will emerge as the
preferred MRO destination

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Growth enablers
India’s first Defence Corridor
• Will provide an impetus to Aerospace and Defence sector
in the state
• Sub-sectors such as engineering / heavy engineering will
benefit from this development

Tambaram Air Force

DEFEXPO 2018
Station
• Started during the British • Thiruvidanthai, Chennai
regime period, the Air Force hosted DEFEXPO 2018 in
station is primarily involved April 2018
in training of pilots • 150+ global players and 520+
Indian defence companies
• Apart from training, participated
helicopters from the Indian • A number of tanks, aircrafts
Navy are also operated from and other military equipment
this airfield were displayed

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Specific opportunities
Investment opportunities
The cumulative investment opportunities in India are expected to be between USD 160-
250 billion with an opportunity of around USD 75 billion as part of the 30% offset
obligation for domestic companies

Greenfield airport development through PPP

mode

MRO facilities development, Skill development

in aerospace sector through PPP mode

Integrated Aerospace Parks development

through PPP mode

Up-gradation of existing airports

Manufacturing of aircraft parts and assembly

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Government Policy Support
 Category Investment Range (INR crores) (Area wise)

A Districts B Districts C Districts

(Chennai, Tiruvallur, (Other than A & C) (Southern
Kancheepuram) districts)
Mega Projects Above 500 – 1500 and creating Above 350 – 1000 and Above 200 – 500 and
an employment of 300 in 3 years creating an employment of creating an employment
200 in 4 years of 100 in 4 years

Super Mega A Above 1500 – 3000 and creating Above 1000 – 2000 and Above 500 – 1500 and
an employment of 400 in 5 years creating an employment of creating an employment
300 in 5 years of 250 in 5 years

Super Mega B Above 3000 – 5000 and creating Above 2000 – 4000 and Above 1500 – 3000 and
an employment of 600 in 6 years creating an employment of creating an employment
400 in 6 years of 350 in 6 years

Ultra Mega Above 5000 and creating an Above 4000 and creating an Above 3000 and creating
employment of 700 in 7 years employment of 600 in 7 years an employment of 500 in
7 years

“Southern Districts” means the Districts of Theni, Dindigul, Madurai, Sivagangai,

Ramanathapuram, Virudhunagar, Tirunelveli, Thoothukudi and Kanniyakumari
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Standard Incentives
Capital Subsidy
• Subsidy ranging from INR 30 Lakhs to INR 2.25 crores
• 50% additional subsidy for industries set up in SIPCOT Industrial Parks (other than Southern
districts)
• For investments made in B & C category districts, an additional 10% & 25% subsidy for industries
located outside the SIPCOT Industrial Parks

Stamp duty concession

• 50% to industries located in SIPCOT parks in A & B districts and 100% in the case of
Southern Districts
Environmental Promotion Infrastructure Subsidy
• Subsidy of INR 30 lakhs or 25% of Capital cost whichever is less
• Apart from the above, Industries adopting Zero Effluent or Waste Water Discharge, Clean
Development Mechanism and Emissions Trading Mechanism will be given a higher amount of
subsidy

Electricity tax exemption

• Period of exemption depends upon the quantum of investment and the employment criteria
prescribed

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Incentives for Industrial Promotion in
Southern Districts

• Higher fiscal benefits

• SIPCOT will allot lands at 50% of the cost in its existing and new industrial parks
• SIPCOT will acquire & allot Land for new ventures in case SIPCOT Industrial parks
are not available
• 50% exemption from Stamp Duty for land privately purchased by investors; and
100% exemption in case of units in SIPCOT Industrial Parks
• 25% additional back ended capital subsidy; linked to investment and employment in
the case of industries located outside SIPCOT Industrial Parks

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Investment Promotion Facilitators - Key
Contacts
TN Industrial Guidance and Export Promotion Bureau
19-A, Rukmani Lakshmipathy Road,
Egmore, Chennai-600 008
Phone: 91-44-2855 3118
Website: www.investingintamilnadu.com

Tamil Nadu Industrial Development Corporation Limited (TIDCO) State Industries Promotion Corporation of Tamil Nadu (SIPCOT)
19-A, Rukmini Lakshmipathy Road, 19-A, Rukmini Lakshmipathy Road, Egmore, Chennai-600 008
Egmore, Chennai-600 008 Phone: 91-44-2855 4787
Phone: 91-44-2855 4421 E-mail: [email protected]
E-mail: [email protected] Website: www.sipcot.com
Website: www.tidco.com

Tamil Nadu Industrial Investment Corporation Limited (TIIC) Tamil Nadu Urban Infrastructure Financial Services Ltd.
New no: 692, Anna Salai, Nandanam, 19, T P Scheme Road,
Chennai-600 035 Raja Muthaiapuram, Ramakrishna Nagar.
Phone: 91-44-2433 1203 R A Puram Chennai – 600 028
Fax: 91-44-2434 7209 Phone: 91-44-24643103
E-mail: [email protected] E-mail: [email protected]
Website: www.tiic.org Website: www.tnuifsl.com

Electronics Corporation of Tamil Nadu Limited (ELCOT) Tamil Nadu Small Industries Development Corporation
692, M.H.U. Complex, II Floor, Anna Salai, (TANSIDCO)
Nandanam, Chennai-600 035 Thiru Vi Ka Industrial Estate,
Phone: 91-44-6551 2330 Chennai - 600 032
E-mail: [email protected] Phone: 91-44-2250 1461, 2250 1422, 2250 0185, E-mail:
Website: www.elcot.in [email protected]
Website: www.sidco.tn.nic.in
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Thank you