India Manufacturing Talk

News and Views on Manufacturing in India

Opportunities for Manufacturing Still Abound

The global recession has all but wiped out the exuberance of the manufacturing industries.  Nothing new to report here.  News all over the web and print medias focus endlessly on the agony being faced by the common man these days but the fact is that the manufacturing industries have been reeling long before.   Spiraling interest rates, the strong/weak dollar rates and the oil price crisis all started a slow down process that was effectively finished off by the global economic meltdown.

Companies all over seem to be floating a figure anywhere between 30% – 50%  reduction in order intakes and corresponding metrics.   The industries worst hit by the recession are the automobile industries and their ancillaries.  This has resulted in a snowball effect that directly affected all verticals that act as suppliers to the industry – iron & steel, transport, raw materials,  etc.   Most plants were effectively closed for months of November and December with some activity reviving in January.


IAF Tender for 126 Fighters – The Offset Clause & Ramifications for India Mfg

In news all over the media today, India floated its largest tender for its much awaited Multi Combat Role Aircraft (MRCA) fighter. Requests for Proposals (RFP) were issued to six suppliers for 126 fighter aircraft in a project that is likely to be worth $10 bilion (Rs 42,000 crores) . The six suppliers / fighter aircraft shortlisted were the Boeing F/A-18E/F Super Hornet, the Dassault Rafale, the Eurofighter Typhoon, the Lockheed Martin F-16, RSK MiG-35 and the Saab Gripen.

The 211 page long RFP details the IAF requirements of technology transfer, licenced manufacturing and life time support arrangements. The RFP is the culmination of a process that began in 2001 when the IAF sent out its Request for Information (RFI) for 126 jets. The RFP mentions that 18 fighters will be bought ready to fly while the remaining 108 will be manufactured under technology transfer in India. India holds an option of purchasing another 64 fighters under the same terms and conditions. The first batch of 18 is to be supplied and incorporated to the IAF by 2012. The remaining 108 are to be manufactured in partnership with IAF Tender for 126 Fighters  as part of a 50-per cent offset deal linked to the purchase.


L&T: Aerospace & Defence Plans

In the wake of the new opportunities in the aerospace and defence sectors, engineering behemoth L&T has announced plans to setup two manufacturing plants at Talegaon, Maharashtra and Coimbatore, Tamil Nadu. L&T as mentioned in my previous post is likely to be approved as a Raksha Udyog Ratna which gives them access to bids for defence projects.

L&T has established MOUs with aerospace majors Boeing and EADS at the Aero India show at Bangalore in February 2007 in which both Boeing and EADS are to source components for both domestic and international markets. The Economic Times reported that L&T has already acquired land in Coimbatore for precision parts (aerospace) while the Talegaon plant will specifically support weapon systems.


India’s Offset Policies to boost Industry

There has been a lot of talk in the news of the amount of investments India’s offset policies in defence and aviation will bring to local industry. The Times of India had an article reporting that the Central Government’s Offset Policy is to bring $10 billion worth of offshore deals to the country. This is based on the recent commitments by the government to purchase both commercial and defence products – aircraft, services, spares and equipments – worth $40 billion. The offset components of these deals range from 30% to 50%.

If you’re asking what the heck is an “offset policy” let me explain using the CII Defence Division site for reference:


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