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Make in India if you want to sell in India The Statesman 24 Jan 2023
There were reports that India is currently in talks with Airbus and Boeing to set up assembly lines for their aircraft manufacturing in the country. India is likely to be the third largest aviation market in the next decade, increasing its demands for new passenger aircraft to over 2000. This gives the government the power to dictate to global aircraft manufacturers. Acceptance by one of the two major aircraft manufacturers will result in the other rushing in. An assembly plant would necessitate establishing a complete set of MSME’s, induction of latest technology apart from increased employment opportunities.
Embraer, a Brazilian aerospace giant, is contemplating establishing a manufacturing facility in India for its aircraft, currently under development. Jackson Schneider, President and CEO of Embraer Defence and Security stated, ‘In India, we are at the beginning of the process (of negotiations) with the authorities. We are absolutely open to integrating into the aircraft, Indian solutions, not only for India but also for other countries.’ Tata-Boeing Aerospace Limited (TBAL), in Hyderabad, is the sole source supplier for Apache fuselages and has produced aero-structures for Boeing 737 and 777 aircraft. It recently handed over the first fuselage for the six AH-64 Apache attack helicopters ordered by the Indian Army.
India is offering a USD 10 billion incentive plan for semiconductor manufacturing in the country. India is one of the largest markets for semiconductors and rolling out 5G will only enhance requirements. There are inputs that Qualcomm, the world’s leading chip consumer, mentioned that it is ready to assure chip purchases from India in case companies establish manufacturing plants in the country.
Other industries are not far behind. India is also the world’s third largest automobile market, having overtaken Japan last year. Automobile manufacturing will need to increase to meet market demands. India refused to give tax breaks to Tesla for its electric cars unless it establishes manufacturing in the country.
India Cellular and Electronics Association Chairman, Pankaj Mohindroo, stated, ‘India is currently one of the fastest growing mobile phone manufacturers in the world and has emerged as the second largest manufacturer of mobile handsets globally.’ China being the leader. As the market grows, demands would increase, necessitating higher production levels.
India wooed three of Apple’s contract manufacturers into the country during COVID. However, due to nonavailability of critical spare parts, it permitted Chinese companies, currently vendors to Apple, to continue supply in India, displaying flexibility.
India’s growing population will make it the most populated country this year, overtaking China. Rising income across all sectors will make India the most lucrative market for consumer products. Exploiting its growing market, India is insisting that companies establish manufacturing facilities within if they seek a share of its market.
India also possesses the third largest armed forces and till recently was a major importer of defence hardware. Its imports are presently reducing at a rapid pace. A report by the Stockholm International Peace Research Institute in March 2022 stated that India’s arms imports dropped by 33 % between 2011-15 and 2016-20. All this because of its changed policy of Atmanirbhar Bharat.
Under this policy India has successfully adopted the ‘Buy Global and Make in India’ model in defence manufacturing. Companies are being encouraged to establish manufacturing in India if they seek to supply to the Indian armed forces. The latest example is the establishment of C 295 transport aircraft manufacturing plant in Vadodara, Gujrat in Nov last year.
The aircraft, apart from being inducted into the Indian air force will also be exported. The plant would also be the hub for maintenance, repair and overhaul. The Indian partner in the project, Tata Advanced Systems Limited is part of the Tata group, which already has tie ups with Lockheed Martin which specializes in aerospace, arms, defence and information security.
A report in the Janes in Nov last year mentioned, ‘Lockheed Martin is leveraging its manufacturing ecosystem in India to support its proposal to supply the Indian Air Force (IAF) with F-21 fighter jets as part of India’s Multi-Role Fighter Aircraft (MRFA) acquisition project.’ The air force had already announced that it is seeking 114 fighter jets of which 96 would be manufactured in India and the balance imported.
Participating companies in the MRFA project are compelled to announce manufacturing in India if they seek to participate. SAAB, whose Gripen E fighter is in the fray, had announced closure of its deal with Adani to manufacture the aircraft in India. It simultaneously announced that it would partner another company where it would hold 74% stake, in case selected. No company wishes to lose the Indian defence market.
PM Modi had stated while inaugurating the C 295 plant, ‘In the past eight years companies from more than 160 countries have invested in India. We aim to scale our defence manufacturing beyond USD 25 billion by 2025. Our defence exports will also exceed USD 5 billion.’ India, banning import of defence equipment by regularly releasing fresh lists of only domestic procurement, has also acted as an incentive for global manufacturers to establish plants in India. The government announced that 68% of defence procurements would be from in-house manufacturing.
Addressing the Ambassador’s Round Table Conference on the forthcoming Aero India 2023, Defence Minister Rajnath Singh stated, ‘A robust defence manufacturing ecosystem has been created which has led to the emergence of India as a defence exporter in recent years. Defence exports have grown eight times in the past five years and now India is exporting to over 75 countries.’ Russia’s Rosoboron export has commenced manufacturing its AK-203 assault rifle in Amethi. By 2024, Sweden’s Saab Defence will set up a facility in India to produce its Carl-Gustaf M4 multi-role weapon system. The message is evident, you seek the Indian market, manufacture in India.
We may term it blackmail or whatever else. The fact is that India is pushing global manufacturers to produce for the domestic market. For defence, this will ensure production is not hampered by any global crisis an example being the Russo-Ukraine war. More importantly, technology would be transferred building its technological base, apart from enhancing employment avenues.