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One Day Conference and Mini Exhibition on Strategic Electronics Defence & Aerospace HAL Convention Centre, Bengaluru 2 nd August, 2013
Harnessing the National Electronics & Defense Policies for Enhanced Value Addition in Strategic Electronics
STRATEGIC ELECTRONICS SUMMIT 2013 Post Show Report 2 nd August, 2013, HAL Convention Centre, Bengaluru
The 4 th Strategic Electronics Summit 2013 (SES 2013) Defence & Aerospace, was organised by ELCINA in Bengaluru on 2 nd August, 2013 at HAL Convention Centre. The idea of SES was mooted by the ELCINA Executive Committee in 2009. It recognized the potential of this sector and the Indian industrys special skills in the high technology low volume production.
ELCINA identified the following key factors, which inspired us to focus on strategic electronics - Rapid and supportive changes in Government thinking regarding Defence Production as well as Procurement Policies. Encouraging indigenous production and value addition, as well as participation by SMEs Large and growing budgets for the Defence & Homeland Security Greater importance of defence avionics, as well as, an expanding aviation industry Increasing threat in dependence on imports, for national security equipment High potential for employment and revenue generation Capability and keenness of the Indian industry to participate in manufacturing
SES 2010, 2011 & 2012 Successfully Brought Industry, Defence Establishment & Government Together !
Earlier editions of Strategic Electronic Summits demonstrated great interest and opportunity that the industry saw in the Strategic Electronics sector and participated wholeheartedly. Deliberations and discussions were intense and passionate between all stakeholders. There were over 120 participating companies and 200 delegates at the SES in 2012.
With Honble Shri MM Pallam Raju, Minister of State for Defence as the Chief Guest in 2010, Air Marshal Jagdish Chandra, DG System, Air Hq. in 2011 & Honble Shri Pallam Raju the Chief Guest once again in 2012 and top officials from Defence and Department of IT as Guests of Honour, the earlier three editions of the Summit proved to be an excellent forum for sharing of views with top policy makers. Subsequent to SES 2010 and 2011, ELCINA presented the Defence Ministry with its recommendations and we believe that some of the key issues have been addressed in the new Defence Production Policy 2011, which was released in January 2011, specially in favour of SMEs.
Snapshot of Previous SES Events
1 st Strategic Electronics Summit 2010 - Date 2 nd July, 2010 - Venue Indian Institute of Science, Bengaluru - Number of Participating companies - 62 - Number of Exhibitors - 32 - Number of buyers - 9
2 nd Strategic Electronics Summit 2011 - Date 29 th June, 2011 - Venue HAL convention Center, Bengaluru - Number of Participating companies - 85 - Number of Exhibitors - 21 - Number of buyers 11
3 rd Strategic Electronics Summit 2012 - Date 26 th 27 th July, 2012 - Venue HAL Convention Center, Bengaluru - Number of Participating companies - 135 - Number of Exhibitors - 33 - Number of buyers - 11
A Summary of SES 2013
OBJECTIVES OF THE EVENT
Bring all stakeholders on one platform to enable better communication and understanding of requirements of the defence establishment. Facilitate in creating indigenous capability to manufacture defence equipment and meet these requirements. Create awareness about opportunities in the Strategic Electronics sector. Involve the Small and Medium Enterprises to meet the requirements of Defence Forces. Bridging the gap between R&D, Government organizations and businesses. Explain and highlight the new Defence Production and Offset Policies. Encouraging and enabling investments for developing strategic strengths. PROGRAM DETAILS A High Level Conference on key issues and business opportunities in Strategic Electronics Conference Theme: Harnessing the National Electronics & Defense Policies for Enhanced Value Addition in Strategic Electronics
A mini exhibition to showcase opportunities for buyers and sellers Booths of 4, 6 & 9 sqm and multiples; Release of Research Study on Test & Certification Facilities for Defence Related Components & Products. Pre-arranged Business to Business Meetings at Buyer Seller Meet Reserved Buyer-Seller Meeting Area for pre-arranged meetings Industry Networking Session Opportunity for informal meetings and networking
BUYER-SELLER MEET Pre-arranged one-to-one meetings in a reserved area between potential suppliers and large buyers
Conference on Harnessing the National Electronics & Defense Policies for Enhanced Value Addition in Strategic Electronics CONFERENCE PROGRAMME 9:00 9:30 am Arrival & Registration 9:30 11:00 am Welcome Address - T Vasu, President ELCINA & Director, Tandon Group Special Industry Address Dr. Vivek Lall, President & CEO, Reliance Ind. Ltd. Address by Guest of Honour- Dr. KD Nayak, CC R&D and M&M (DRDO) Address by Guest of Honour- Dr. Ajay Kumar, IAS, Jt. Secretary, Dept. of Electronics & IT, Govt. of India Address by Guest of Honour- Shri MN Vidyashankar, IAS, Principal Secretary, Commerce & Industries, Karnataka Address by Chief Guest Shri K.H. Muniyappa*, Honble Minister of State, Ministry of Micro, Small and Medium Enterprises Release of Research Study on Test & Certification Facilities for Defence Related Products 11:0011:30 am Tea Break; Inauguration & Visit of VIP Guests to Mini Exhibition 11:30 1:00 pm
11:30 -11:50
11:50 -12:00
12:0012:15
12:15-12:30
12:30-12:45
12:451:00 Session I -Users perspective for Future Requirements, Technology & Vision of Defense Forces Lt. Gen AKS Chandele, PVSM, AVSM (Retd)-Future Technology Requirements & Vision for Defence Forces Dr. Vivek Lall, President & CEO, Reliance Industries Ltd. - Perspective on Global Partnerships to bring Key Technologies to India Manjunatha Hebbar, Sr. VP & Head of Strategic Solutions, Infotech Enterprises Ltd. High Growth Products & Technologies for Manufacturing in Strategic Electronics David Keynan, Managing Partner, FIICC - Defense Offset, Israeli Experience, Practical Aspects Sanjay Handu, Director, Defence & Aerospace, TE Connectivity Effective Localisation Will Transform Indias Defence Capability for Growth Questions & Answers 1300 1400 HRS Networking Lunch 14:00 15:30 HRS
14:00-14:30
14:30-14:45
14:45- 15:30 Session II Emerging Policy Scenario and Challenges Offset, Defense Procurement and Production Policies Col. Dipendra Rawat, Director A (Artillery) Essential Characteristics of DPP 2013 and how it will Assist Indigenization K. S. Desikan, CFO, Centum Electronics Policy & Procedural Challenges faced by Pvt Cos. In Business with Defence Sector Panel Discussion How to build a Vibrant Indian Defence Industry Coordinator- Col. KV Kuber (Retd) Participants- (including speakers in this session) o Robert John, CEO, Amphenol Interconnect & Past President, ELCINA o Brig. S C Sharma, President, Axis Aerospace Recent Changes in DPP and their relevance to Indian Industry" o Pankaj Gulati, Exec. VP, Continental Device India Ltd. Vote of Thanks Subhash Goyal, Vice President, ELCINA
15:30 18:00 Hrs Buyer Seller Meet 1100 Hrs - 1800 Hrs Mini Exhibition LIST OF PARTICIPATING COMPANIES EXHIBITORS/*SPONSORS
Accord Software Amphenol Interconnect Applied Realtech AutoTEC Systems Bharat Electronics Ltd. C-DoT Centum Electronics Convergent Technologies Dexceldesigns Digital Circuits Electrosolve EMI Solutions Freescale Semiconductor FTD Automation Hical Technologies Honeywell Automation Merlinhawk Aerospace National Instruments Nuline Technologies Numerix Technologies iNETest Technologies Infopower Technologies Intron ITI Ltd. Kaynes Technologies Rohde-Schwarz India SLN Technologies Sree Vishnu Magnetics TUV Rheinland India Uniautomation India Unisem Electronics V-Design Technologies
DELEGATES / *SPONSORS 505 Army Base Workshop Advanced Electronic Systems Advanced Sierra Electrotech Aeronautical Engineers Categorisation Board Agilent Technologies Air Force Liaison Cell ALISDA, DGAQA, Ministry of Defence Analog Devices Applied Materials Ashok Leyland Atotech India Ltd. Avni Energy Axis Aerospace Bergen Associates Bharat Dynamics Ltd. Bharat Heavy Electricals Ltd Bosch Automotive Electronics Brady India CAIR Caliber Interconnect CDIL Champion Electronics CII Guardian Intl Continental Device India Ltd. CQA(L) Data Physics Datasol Pvt. Ltd. DGQA Dixon Technologies DRDO EADS ECIL EFY Group Electrosolve Elektron Technology Elico LTD EME olane Bangalore FCI OEN Connectors Federation of Indo-Israeli Chambers of Commerce GMR Infra HCL Technologies Henkel IBM India Imec India Pvt. IMRB INTERNATIONAL Infotech Enterprises Ltd. Ingersoll Rand Intelux India Iwave Systems Jabil KDDL Limited Keltron Component Kramski Stamping & Molding Larsen & Toubro Ltd. Latitude Edutech LRDE MAG 1 Mandate Chips MEL Systems & Services Miracle Electronics Devices NSIC O/E/N India Ltd. Oxys Technologies Pentair Prismatic Engineering Rambus Chip Technologies Rangsons Defence Solutions Reliance Industries Ltd. RMC Electronics Ltd. Sasi Group of Institution SGS Tekniks Manufacturing SIATI Sikka Interplant System Spectron SPEL Semiconductor Stanesh Semiconductor Sulakshna Circuits Tandon Group Tata Power SED TE Connectivity Teknic Electromeconics Titan Time Products Toradex Systems Trishala Electrolytics TTL Technologies Vruddhi Consultancy Services Weiss Technik India Pvt. Ltd. Zentron Labs Zeonics Systech
STATUS OF INDUSTRY AND OPPORTUNITIES
The Strategic Electronics sector presents an unprecedented opportunity as well as challenge for our country. This is equally so for the domestic industry which needs to play a much greater role in this sector. The strategic electronics segment encompasses Communication systems, Radars & Sonars, Network Centric systems, Electronic Warfare systems, Weapon systems, Satellite based Communication, Navigation and Surveillance systems, Navigational aids, underwater electronic systems, infra-red based detection and ranging system, disaster management system, internal security systems .. the list is long. All modern weapon systems, military, aerospace, naval or for internal security depend heavily on electronics. The production of strategic electronics in India has been growing steadily from Rs 5700 crores in 2007-08 to Rs.9000 crores during 2010-11. As per projected growth rates, electronics production in Defence Sector in India is likely to reach Rs.12,000 crores during 2012-13 and exceed Rs 13,800 Crores during 2013-14 recording a growth of over 15%. This growth is fuelled by the expanding budgetary allocation for Defence Sector which jumped from Rs. 164,415 crores in 2011-2012 to Rs. 193,407 crores in 2012-13 and further allocation has been increased by 5% to Rs 2,03,672 crore for 2013-14 with provision for further funding depending on actual requirements. Of this, Capital expenditure, which mostly caters for modernisation requirements, accounted for Rs 79,579 crores in 2012-13 and was increased by 9% to Rs 86,741 Crores in 2013-14. The Defence Procurement Procedure 2011 for capital equipment has come into effect from January 2011 and incorporates simplifying the purchase mechanism. The scope of the offset policy guidelines have been expanded to include civil aerospace, internal security and training within the ambit of eligible products and services for discharging offset obligations offering an immense growth opportunity for domestic electronics manufacturers serving Defence segment. For the first time in India, a Defence Production Policy was announced and became effective from 1 January, 2011. The objectives of the Policy are to achieve substantive self-reliance in the design, development and production of entire range of Defence equipments and encourage SMEs to play an active role in this endeavor. SES brings this opportunity to domestic players and endeavors to bring about partnerships with global players who are vital for meeting the strategic needs of the country. Offset Policy - a new beginning for domestic players India's defence offset policy is being seen as a key driver for growth and modernization of the defence industry base. Modified in 2009 & 2013, it is expected to provide manufacturing and business opportunities of Rs.40,000 crores over the next five years and has opened doors for private players, mainly domestic players.
Following are the highlights of the amendments to the DPP-2011 which have been brought into effect from 1 st June 2013: 1. Prioritisation of Various Categories for Capital Acquisitions under Defence Procurement Procedure Preference for indigenous procurement in the Defence Production Policy 2011 has now been made a part of DPP through an amendment that provides for a preferred order of categorization, with global cases being a choice of last resort. 2. Release of Public Version of Long Term Integrated Perspective Plan (LTIPP) The DAC has approved the release of a public version of its 15-year perspective document (LTIPP), outlining the Technology Perspective and Capability Roadmap (TPCR) against LTIPP 2012-2027. s and directing its R&D and technology investments. 3. Maintenance ToT (MToT) no longer through Nomination
MToT has been hitherto reserved largely for OFB and DPSUs through the nomination process. The DPP does away with nomination by Department of Defence Production and facilitates selection of MToT partners by Indian bidders. 4. Advance Consultations for Make Procedure The DAC has approved an amendment mandating consultations to begin sufficiently in advance of actual procurement by Service Head Quarters (SHQs), so that capital acquisition plans can be translated into national defence R&D and production plans. 5. Simplification of Buy & Make (Indian) Procedure The DAC has approved an amendment further simplifying this complex category. 6. Clear Definition of Indigenous Content To enhance indigenization, indigenous content has now been defined in an unambiguous manner, providing requisite clarity and a common understanding. 7. Ensuring faster progress in Make and Buy & Make (Indian) cases The Ministry has a limited number of acquisition cases under Make and Buy & Make (Indian) categories, with an estimated value of Rs. 1,20,000 crore. Instructions have been issued for speedier conclusion of these cases. 8. Defence Items List The Defence Items List has been finalised by the Ministry and sent to DIPP for notification, which will bring required clarity in the licensing process. 9. Licensing for Dual Use Items The Ministry has categorically clarified to DIPP that dual-use items will not require licensing, thereby bringing added clarity to the licensing process. 10. Consultations on Security Guidelines for Indian Defence Industry It is expected that a complete security framework with guidelines for Indian private industries participating in defence cases will be in place in the near future. 11. Resolution of Tax-related Issues Resolution of deemed exports status for certain defence projects and rationalisation of tax and duty structures impinging on the Indian defence industry has been taken up by the MoD with the Ministry of Finance. 12. Funds for MSMEs in the Defence Sector The Defence Production Policy 2011 requires the setting-up of a fund to provide necessary resources for development of defence equipment. In order to ensure regular supply of funds to MSMEs involved in manufacturing of defence products, SIDBI has decided to earmark an amount of Rs. 500 crore for providing loans, and further, a fund of Rs. 50 crore for equity support out of India Opportunities Fund managed by its subsidiary, namely, SIDBI Venture Capital Ltd. 13. Efficiency and Transparency in Defence Procurement A stipulation to freeze the SQRs before the Acceptance of Necessity (AoN) stage has been accorded, and the validity of AoN has also been reduced from two years to one year. 14. Enhanced Delegation of Financial Powers The financial powers of Service Chiefs/ DG Coast Guard have been enhanced from Rs. 50 crore to Rs. 150 crore for capital acquisition cases. 15. Powers to DAC Approval for all deviations from the Defence Procurement Procedure will henceforth be sought from the Defence Acquisition Council instead of the Defence Minister.
The Offset opportunity is expected to bring in large volumes of business the size of this opportunity is estimated at USD 10-15 Billion over the next 4-7 years. The current global defence expenditure was over US$ 1.465 Trillion with US being the largest with 40% share while Indias share was 2.1% (~US$30 Bn+). India is currently among the top 10 spenders worldwide with its defence expenditure growth at about 9.3%. Indias defence Expenditure was distributed as follows - 46% on the army, 30% on air force, 19% on navy & balance 6% others. A larger share of capital expenditure went to the Air Force at 40%, the Army got 28%, Navy 25% and 7% to others.
SUMMARY OF PROCEEDINGS
The 4 th edition of Strategic Electronic Summit was inaugurated by Shri M N Vidyashankar, IAS, Principal Secretary, Commerce & Industry, Govt of Karnataka on 2 nd August, 2013 at HAL Convention Centre, Bangalore.
Shri MN Vidyashankar, Addl Chief Secretary, Commerce & Industries, Govt of Karnataka, in his inaugural address said that Govt should encourage entrepreneurship and promote & facilitate start-up companies. He shared information about various schemes for promoting R&D and Innovation which were being operated by his State Government. Innovation he said, is key to success that will create demand not only in the country but also enable development of goods and services for the global market. Mr Vidyashankar advised industry delegates not to fear failure as for innovation it was often necessary to fail ! He emphasized that investment in Electronics hardware manufacturing is the need of hour and collective efforts from both, Govt and Industry would be needed to achieve the desired goal.
Dr. Ajay Kumar, IAS, Jt. Secretary, Dept. of Electronics & IT, Govt. of India, who was the Guest of Honour, encouraged the industry by sharing details of the tremendous opportunity in the defense electronics segment, though it posed challenges at the time of entry into the sector due to stringent quality and financial requirements. Dr Kumar shared details of DeitYs top level delegation visit to Israel and the opportunities that the country offered to Indian entrepreneurs. He informed the delegates about the new center of excellence in IIT Mumbai for developing new technologies for communications and security purposes. Dr Kumar, highlighted key elements of M-SIPS and EMC policies as well as new Clusters being developed in the country with a special mention of a Brownfield Cluster coming up in Electronics City, Bangalore. Dr Kumar also apprised the gathering about the plan for setting up an incubator for ESDM Sector in Bangalore and encouraged the delegates present to establish a Greenfield Cluster in or around Bangalore.
Dr. K.D.Nayak, Chief Controller (R&D M&M), DRDO, also was Guest of Honour. In his speech Dr Nayak highlighted the importance of SMEs in the overall growth of the Strategic Electronics sector. In his presentation he emphasized the special place of Karnataka and Bangalore with respect to the defence industry and the numerous R&D and Test/Certification organisations established here over the last many decades. He welcomed participation of private sector in the defense segment and gave details of the various models under which DRDO assists industry to take up defence projects and specially mentioned the GOCO Model (Government Owned Commercially Operated) under which a number of projects had been promoted by DRDO. Dr Nayak informed that DRDO provides full support from design to build stage to industry and opined that it should be mandatory to have 50% indigenous content in products manufactured for defence sector. He repeatedly emphasized the need for enhanced private participation in defence production and R&D and invited stakeholders to seek support from DRDO and also invest in this growing sector.
Mr. T Vasu, President ELCINA & Director, Tandon Group delivered the welcome address and stressed the need for revitalizing the Strategic Electronics Industry in India. He
stressed on the need for creating conditions where the government, Defence Forces, DRDO, PSUs and Private Sector form a partnership approach, towards building a great industry in the country. Mr Vasu drew attention of the participants to the National Electronics Policy and the great opportunity which this initiative had opened up for ESDM stakeholders in India. There was now a supportive eco-system for companies interested in electronics manufacturing in India and we should seize this opportunity.
Lt. Gen AKS Chandele, PVSM, AVSM (Retd) gave a detailed presentation on the Future Technology Requirements & Vision for Defence Forces. Backed with his vast experience and involvement in the development of the Long term Technology development plan, he shared the key technologies which are going to be required by defence forces in the coming decades and the key role of electronics in these weapon and communication systems.
Dr. Vivek Lall, President & CEO, Reliance Industries Ltd. provided a perspective on Global Partnerships to bring Key Technologies to India. He gave his views representing the role of large corporates in building capacity for strategic electronics industry. He made a special recommendation to develop Standards for Defence Production and Products and providing support and scholarships for developing skills for this key sector.
The Conference featured other key experts from industry and the Defence establishment who shared their vision and views for the benefit of the participants. Manjunatha Hebbar, Sr. VP & Head of Strategic Solutions, Infotech Enterprises Ltd. shared the experience of his company on High Growth Products & Technologies for Manufacturing in Strategic Electronics David Keynan, Managing Partner, FIICC made a presentation on Defense Offsets with respect to the experience of Israeli companies and how they had successfully utilized this policy for sourcing locally from India.
Sanjay Handu, Director, Defence & Aerospace, TE Connectivity made a presentation on how Effective Localisation Will Transform Indias Defence Capability for Growth. Mr Handu who has vast experience in global sourcing, emphasized on a few strategies for success in Strategic Electronics. He advised that corporates should build products & invest in developing relevant technologies for the sector. Also he said that while buying cheap was a necessity, we should not do so at the cost of neglecting technology. Stakeholders in the industry needed to collaborate for defraying cots, reduce timelines by shortening the development cycle and indigenize technologies.
The 2 nd session on Emerging Policy Scenario and Challenges Offset, Defense Procurement and Production Policies was Coordinated by Col KV Kuber (Retd) with Keynote address by Col. Dipendra Rawat, Director A (Artillery) on Essential Characteristics of DPP 2013 and how it will Assist Indigenization. Col Rawat gave a details of the changes brought about by the new DPP 2013 and how it was expected to change the way procurement was done by Defence Ministry. A list of the key changes under this policy is given above.
Col KV Kuber (Retd) Advisor NSIC, who was heading the DOFA organization in its formative years, made a strong pitch for much greater Government support to local manufacturers for defence projects. He recommended immediate and drastic changes in policies where in the industry had to face financial losses and risk caused due to delays in awarding projects and pitfalls arising in the R&D Stage. Col Kuber made various recommendations such as Government must pay for withdrawal of RPFs under the NCNC Policy. He also recommended that there should be special preference for purchasing from MSMEs and payment to Indian companies should be through LCs so that they do not face financial hardships.
K. S. Desikan, CFO, Centum Electronics made a detailed presentation on Policy & Procedural Challenges faced by Private Companies In Business with Defence Sector. Being one of the key domestic companies in this sector in India, Mr Desikan shared their experiences and challenges faced by manufacturers in being successful vendors to the defence sector. He highlighted the need for a change in approach and policies as the current dispensation made it very difficult for new entrants and even for the existing private players to expand and become of large/global scale.
The Conference concluded with a Panel Discussion on How to build a Vibrant Indian Defence Industry in which Col Rawat, Col Kuber, participated along with Mr Robert John, CEO, Amphenol Interconnect & Past President, ELCINA, Brig. S C Sharma, President, Axis Aerospace and Mr Pankaj Gulati, Exec. Vice President, Continental Device India Ltd. Brig SC Sharma made a strong pitch for support to domestic companies and specially the SMEs whom he said were reluctant to enter Defence production due to high NCNC trial cost. The cost is not in the trial but in development and production of the equipment to Army specifications and making it ready for trials. He further added that though the National policy is to encourage MSMEs, this is not reflected in the Defence Procurements. In turnkey products there are no NCNC trials. Brig Sharma suggested if such provisions can be provided in Buy cases where product is ready off the shelf and that Indian Industry should be able to develop items of Defence needs in collaboration with the users rather than in the current system of multi tenders as if the equipment already exists on the shelf.
The event concluded with a Vote of Thanks by ELCINA Vice President Mr Subhash Goyal. The industry leaders made a strong recommendation that ELCINA should take up these issues directly with the Defence establishment and officials who are involved in the purchase process. It was recommended that recommendations from the Summit would be made to the Defence Ministry at an early date so that highlighted challenges were addressed urgently.
SNAPSHOTS OF THE EVENT After the inaugural session of the Summit, the Honble Principal Secretary along with Secretary, DietY & CC (R&D), inaugurated the Mini-Exhibition, held at the same venue. In the mini exhibition, more than 30 Industrial Units from Private & Public sector show cased the technologies developed indigenously in the Strategic Electronic Sector. The Honble Principal Secretary, accompanied by distinguished guests, went around the exhibition.
During the inaugural session, a research Study on Test & Certification Facilities for Defence Related Components & Products prepared byELCINA was released by the Honble Principal Secretary.
C-dot Meeting with prospective Supplier Tata Power Sourcing Team
After the 2 nd Session, Buyer-Seller meet was conducted.