India’s aerospace and defence industry is expected to consume electronics worth $70-72 billion in the next decade, as the country rapidly modernises its military by embracing new technologies.
About $58 billion of the electronics opportunity comes from large systems that have electronic components built in as a solution, according to a report from Munich-based consultancy Roland Berger, in partnership with two bodies here, the National Association of Software & Services Companies (Nasscom) and India Electronics and Semiconductor Association (IESA).
Despite India’s information technology sector being globally recognised, the defence and aerospace industry has not been able to leverage this strength. India is now the largest importer of defence equipment and seventh largest defence market globally. While these are market predictions for the next 10-12 years there could be more ahead. In June, the government announced it would allow up to 100 per cent foreign direct investment in manufacturing for the military, through the government approval route.
The opportunity in electronics in aerospace and defence straddles both standalone systems and sub-systems for other systems. This is not only a huge business opportunity or industry but also a window to significantly scale up the technological capabilities in the electronics industry. “A huge defence portfolio is emerging — avionics, high power lasers, radars, computing and communication networks, nano devices, stents, high power electromagnetics, data, nitrogen systems, etc. Miniaturisation and micro miniaturisation of systems is taking place, with nano technology coming in a big way, both in terms of sensors and other systems, “ said V K Saraswat, NITI Aayog member and former head of India’s defence research agency, DRDO. IESA and Nasscom have also prepared and given policy recommendations to the ministry of defence, on using the capabilities of the electronics industry. In terms of annual revenue, the latter industry is $32.7 billion and demand is rising at a compounded annual rate of 25 per cent. Supply for electronics goods is rising by 16 per cent a year.
Around 65 per cent of the demand is met through import. The global electronic industry market is $1.8 trillion, of which India consumes $125 billion. The industry’s contribution to this country’s gross domestic product is 1.7 per cent. The consumer market has an annual turnover of Rs 50,000 crore and there is going to be a huge gap between supply and demand.
“We are aware of the vital role that defence has played in evolving newer and powerful technologies. All these technologies have had tremendous impact on society. It is not as if all defence needs are only related to greater destructive capability. For example, the internet itself,” said R Chandrasekhar, president of Nasscom.
Adding: ‘Electronics is in the heart of every manufactured product and in the heart of it is also the embedded software and design. These are three areas which happen to be areas of strength in India. It is a shame that we have not leveraged that for self-reliance and defence.”
Source:http://www.business-standard.com/
