India’s aerospace and defence (A&D) story has a few headline themes that have overwhelmingly grabbed mindshare of the industry and government alike over the last few years.
The first of these has been the intention and effort by the government to leverage the private sector to meet India’s aerospace and defence needs. I have deliberately made the distinction between intention and effort—a substantial gap between the two needs to be bridged.
The second headline theme has often been around the excellent utilization of the government-to-government (G2G) route for sales by original equipment makers (OEMs) to India. A corollary to this is the fact that the business-to-government sales route for foreign OEMs has been a challenging one.
The third highly visible theme has been around the delivery efficiency of our defence public sector undertakings (DPSUs). On this, there has been progressively deepening focus by the government on improving efficiencies and bringing accountability at the Defence Research and Development Organization (DRDO) and DPSUs in recent years.
With all the noise generated by the above, three other serious issues have been relegated to the background. These have not got the kind of attention they deserve and this article tries to bring the spotlight on to them. The first of these issues is the intense need for refocussing energies on building understanding around basic sciences in materials.
The A&D business is built around cutting-edge exotic and technology-intensive materials. The A&D world is often the first large-scale adaptor industry for new materials. For example, the use of composites in A&D started way back in the 1970s (much before other industries) and today’s modern civilian and military aircraft have upwards of 50% of their structure in advanced composites. Additionally, in terms of product value, a substantial part of the product value resides in materials.
India’s largest A&D challenge is to master material sciences. It is worth noting that even access to some of these materials is a matter of national policy for other countries. There are enough examples of countries investing in mines in other countries to guarantee supply of these rare/exotic materials. As a country, we will need to define a policy that has the twin objectives of ensuring unfettered access to these critical materials and developing significant local expertise in being able to develop, work and deploy advanced materials (both for alloys, composites and nano technologies).
The second of the under-reported issues is the need to build extremely deep competencies on electronics. Modern war-fighting machines have a disproportionately high content of electronics, often outstripping other aspects like protection and delivery. Electronics poses a unique challenge whereby the technology cycle is often much shorter than procurement cycles of the government. Often, generations of technology around electronics can change by the time procurement of platforms is effected. Fortunately, there is now visibility and understanding of this in the government and some work is starting to happen on this.
The last of the under-reported issues and perhaps the one with the biggest ramifications is the exceedingly large talent gap that will need to be bridged. It would be fair to say that a large part of the private A&D industry in India has grown by poaching scarce talent from the DPSUs. This is not sustainable in the long run. As a country, India will need to find a way to expand the talent pool through larger industry-academia-government partnerships so as to avoid the risk of cannibalisation of DPSUs towards private sector growth.
These less visible but critical issues will help drive long- term viability and competitiveness of the Indian A&D industry.
Rahul Gangal is a partner for Roland Berger, a global strategy consulting firm.