Seminar Agenda

Pre-Event Engagement: November 26, 2015

Talk: 19:00 To 20:00
How Can SMEs Grow Their Business Within The Defence Sector
A global perspective on actions governments and industries can take to create a positive environment for SMEs to add capacity
Dinner: 20:00 Onwards

Second Day: November 27, 2015

Panel 1:  10:00 To 11:00
Defence Procurement Policy as an Enabler For MSMEs

The panel will analyse the Defence Procurement Policy to identify drivers and enablers for SMEs; especially issues related to ease of working, demand visibility, product development etc. Issues discussed will cover the below sub-themes:
  • Likely policy changes in DPP 2015
  • Key shifts over DPP 2013
  • Implications of the new policy on ‘Make in India’
  • The road forward: Opportunities emanating for SMEs

Detailed View
Sector policies and regulatory requirements are often quoted as a barrier restricting entry of private players in the Indian Aerospace and Defence (A&D) industry. While many progressive steps have been announced in recent years including liberalisation of industrial licenses, increase in Foreign Direct Investment (FDI) limits and preference for Indian participation in defence procurement programs, market insiders have continued to highlight policy gaps to be addressed for greater and faster indigenisation of the Indian industry. Industry discussions advocating improvements in areas such as offset regulations, FDI restrictions and simplification of procedures have gained momentum in recent times, with many changes being suggested to the latest amendment to the DPP (Defence Procurement Procedure), due to be released by the Indian government.

While a policy push will surely accelerate growth, industry players need to consider policies and procedures as an input into the ecosystem and focus on identifying ways to succeed in the market despite policy restrictions. The Indian government has set ambitious targets of increasing the contribution of manufacturing output to 25% of GDP by 2025, from 16% at present. The A&D sector is poised at an interesting juncture in India and could well be the sector driving this growth ambition. An industry with an inherent need for indigenisation, defence is expected to witness significant capital spending in the coming years.With this as the backdrop, the panel discussion is aimed at understanding not only policy shifts that are creating new opportunities for industry participants, especially SMEs,but also at highlighting the best way forward for Indian companies. 
Keynote Session: 11:30 To 12:15
Energising India’s Defence Industrial Base
Panel 2: 12:15 To 13:30
Indian Defence Acquisition System: Can It Help New Age Entrepreneurs Commercialise Their Products/Innovations?

Indian SMEs struggle to convert their ideas into commercially viable products. With a vibrant defence production system, the SMEs can have immense opportunities to be part of a global supply chain that encourages innovation. The discussion will cover the below aspects:
  • Product commercialisation challenges in India
  • Fostering innovation for self-reliance: Support being provided to private sector
  • Understanding the process: Transforming ideas to products

Detailed View
Innovation has been the driver of change across the world. As per a recent study conducted by PwC, a path driven by R&D and innovation capital will be essential for India to become a USD 10 trillion economy over the next two decades. As of 2014, India’s spend on R&D (0.8% of GDP) significantly lagged global counterparts such as China (1.9%), South Korea (3.8%) and the US (2.7%), thus impacting our global competitiveness. India would gradually need to increase its R&D spend to 2.4% of GDP by 2035 to achieve and sustain close to double-digit economic growth, and thus will have to build ecosystems that nurture research and technological advancements.

The situation is similar in the Aerospace and Defence (A&D) sector. According to the Centre for Strategic and International Studies (CSIS), R&D spend in the sector averaged around 3% of sales in the US and 6% of sales in Europe, while it stood at only 2% for the rest of the world. An innovation-driven path could enable non-linear growth for the Indian A&D sector, turning the tide from being a leading importer of defence products to becoming a hub for regional exports. This panel discussion is therefore aimed at understanding product development and commercialisation challenges prevalent in the Indian defence sector,and at highlighting steps being taken to support private participants in achieving self-reliance through innovation. It will help attendees in tracing down the path to be followed to convert ideas into prototypes and thereafter into commercially viable products, and help uncover opportunities for SMEs to contribute in this developmental journey.
Lunch: 13:30 To 14:30
Panel3: 14:30 – 16:00
Make In India: Is Government Committed To Participation Of Private Sector In Defence Production?

The private sector in U.S has a lion’s share of its defence production. A similar approach will be highly beneficial for the Indian private sector, especially in the backdrop of the ‘Make in India’ thrust. The discussion will cover the below aspects:
  • 'Strategic partnership’ model to  enable ‘Make in India’ targets
  • Scope for private participation: Are local opportunities enough for new players to enter
  • Government support to increasing private participation in defence

Detailed View
India has consistently maintained its position among top 10 defence spenders worldwide.However, buoyed by a renewed interest from the government to promote indigenous manufacturing, the sector now stands at taking a significant leap. Market analysts are predicting the country to emerge as the third-largest defence spender globally by 2020. Accordingly, immense opportunities are being created for participants to grow within the Indian market. As per PwC Strategy& estimates, defence capital spend is expected to grow between 6% to 10% annually over the next five years, with opportunities worth USD 90-100 billion expected to materialise over this period. While Defence Public Sector Units (DPSUs) dominate the Indian market at present, capacity constraints and need for growth capital will pave way for greater private participation across the industry value chain.

The Indian Aerospace and Defence (A&D)sector marks a high value but also a risk-heavy proposition for entrants. Issues such as limited long term visibility, significant need for capital investments, rising competition from domestic and global players and a web of complex policies and procedures reflect the other side associated with opportunity announcements worth billions of dollars. Therefore, it is essential for market players, both existing and new, to understand the feasibility of realising these opportunities, the steps being taken to action market announcements and the scope for capacity addition by private players. The session will aim at demystifying these aspects for the attendees, helping them in making a fair assessment of realisable market opportunities and the feasibility of building a profitable business in the sector. 
Panel 4: 16:00 – 17:00
Funding Your Dream: Unconventional Ways To Financing In Defence Production

Finance is a major hurdle to a budding SME. This is further accentuated in defence production due to the very nature of the market. The panel will discuss various modes of financing, including a few disruptive ones. It will also discuss methods for SMEs to  generate enough Free Cash Flow to fund its own growth. The subthemes would be:
  • Financing challenges faced by defence companies especially SMEs
  • Financing support provided to SMEs by the government
  • New financing models being developed by private sector (e.g. cluster approach).

Detailed View
Small and Medium-sized Enterprises (SMEs) will be vital to accelerate and sustain manufacturing growth in India in the coming years. As receptors of technology from global players looking to meet their offset obligations, the segment could well be the harbingers of change in the Indian Aerospace and Defence (A&D) industry. Many of these companies could even grow beyond Indian borders by aligning themselves to the global supply chain of defence majors and build a stronger business profile for themselves. However, much needs to be done to enable the segment to move up the value chain and contribute as per its potential to the national economy.

Today, while SMEs employ 40% of the country’s overall workforce, they contribute only 17% to the nation’s GDP. Much of this results from an unfavourable business climate, as evident from our low standing worldwide in the Ease of Doing Business (142 among 189 nations) and theEase of Staring a New Business Index (158). Consequently, a vast majority of SMEs remain unregistered, leading to issues such as shortage of skilled workers and restricted access to working capital. Lack of finance furtherleads to limited technology adoption, thus resulting in lower productivity. Financing represents an even greater challenge in A&D; a sector marked with uncertain demand amidst the need for specialised equipment and skill development and stringentcertification requirements. This session aims at highlightingchallenges that impact the cost of capital for private players and reduce the segment’s competitiveness over public sector units orimports. It will also discuss implications of policy changes such as provision for Exchange Rate Variationin local currency contracts and the emergence of new alternative modes of finance such asdevelopmental funds, venture capital and SME clusters among others.

Valedictory: 17:00 To 17:30
High Tea and Dispersal:17:30 To 18:00