Make in India - Progressive Punjab

Invest in the BEST:
Aerospace &
Defence
PUNJAB
Rank 1
in
“Ease of Setting up a Business”
by World Bank
“Remarkably, Punjab is the only State in which the single window system
allows application for all of the licenses studied in this assessment, ……”
Extract from the Assessment of State implementation of Business reforms report | September 2015
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Table of Contents

Make in India

Progressive Punjab

Advantage Punjab

Investment Opportunities
Make in India

Indian Aerospace & Defence

Drivers of growth
Indian Aerospace & Defence
India has the 9th highest expenditure in the world on Defence
Sector highlights
 Indian aerospace industry has grown at about 10% in the
past 5 years, higher than the global average of about 4%
Indicators
 Indian civil aviation market is set to become the world’s 3rd
largest by 2020
 YOY rise of about 13% in commercial passenger traffic from
June 2014 to June 2015
 India has the 3rd largest armed forces in the world
June 2015
Growth rate
(w.r.t June 2014)
Total air passenger
traffic
17.5 Mn
13%
Aircraft movement
141,620
8%
Total freight
222,990
tonnes
5.4%
 ₹ 25,000 Cr. (USD 4 Bn) to be invested by Government of
India by 2020-21
India’s Defence Budget (In USD Bn)
64
CAGR 10.3%
11
2002
40
18
2007
2013
2020(P)
India's Defence Budget
4
Drivers of India’s growth story
Higher demand
 Growing middle class ready to travel by air as well as
growth in business and leisure travel
 India expected to be amongst 10 largest international
freight markets (₹ 22.2 Lac.) (USD 34,000) by 2018
 Greater focus on infrastructure development. AAI driving
modernization of airports, Air and Navigation Systems.
 Growth in aviation leading to greater demand for MRO
service. MRO market size: about ₹ 4,600 Cr. (USD 700
Mn) in 2014
Enabling ecosystem
Skilled manpower
 Second largest pool of scientists and engineers in the world
Policy initiatives
 Defence production policy 2011 that encourages
indigenous manufacture of defence equipment
 100% FDI under automatic route for setting up Greenfield
airport projects, manufacturing and R&D activities
 FDI limit in Defence increased to 49%. Where state-of-art
technology is involved, upto 100%
 Removal of cap on annual production capacity for
defence related equipment
 Defence offset policy mandates offset requirements of a
minimum of 30% for procurement of defence equipment in
excess of ₹ 300 Cr. (USD 45.6 Mn)
 ₹ 100 Cr. (USD 15.2 Mn) Technology Development Fund
created by GOI to support companies for development of
Defence systems
 Validity period of industrial licenses for Defence sector
increased to 15 years, further extendible by 3 years
 Over 380 universities, 11,200 colleges and 1,500 research institutions
 5.8 Mn graduates added to the talent pool during FY15
Advanced manufacturing capabilities
 Design and engineering capabilities to manufacture high precision CNC machines, defence and aviation equipment
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Progressive Punjab

Untapped and growing market for Aerospace & Defence

Robust existing ecosystem

Strong MSME base for engineering
Untapped and growing market for Aerospace & Defence
PAS S E N G E R M O V E M E N T
( AM R I T S AR )
Sector highlights
International Pax

Annual growth in passenger traffic is 10%

New international airport at Chandigarh/Mohali
set to further increase the passenger movement
in the State

438,825
307,481
77,947
2005-06
Chandigarh International Airport
Passengers
Airport
FY 20142015
FY 20132014
724,340
CAGR 9.8%
409,166
Domestic Airports in Ludhiana, Bathinda and
Pathankot for enhanced connectivity
Domestic Pax
133,773
2008-09
PAS S E N G E R M O V E M E N T
( C H AN D I G AR H )
Domestic Pax
Growth
%
1,050,397
CAGR 29.7%
Domestic
Amritsar
750,000
International
Amritsar
335,000
Domestic
Chandigarh 1,206,000
724,000
2013-14
3.5
307,000
8.7
1,050,000
15
364,167
131,501
2005-06
2008-09
2013-14
7
Robust existing ecosystem
Base Repair Depot
established by Indian Air
Force in 1962
• Base Repair Depots (BRD)
in Chandigarh for repair and
maintenance of aircrafts and
equipment
• Functions: Overhaul of
aero-engines/aircraft specific
items including various types
of fabric for covering wings,
fuselage, control surfaces,
panels and interiors
Air force stations in
Punjab
• 6 Airforce stations –
Chandigarh, Amritsar,
Bathinda, Pathankot,
Halwara and Adampur
• Halwara Airforce station one of the first air bases built
in India after Independence
• Adampur Airforce station
is one of the largest airforce
bases of India
• Indian Airforce to open its 2nd
Bhisiana Airforce station
near Bathinda, which will
house indigenous Airborne
Early Warning and Control
Systems (AEW&CS)
Strong R&D support for
advanced
manufacturing
• Central tool room, Ludhiana
has been setup in 1980,
under bilateral agreement
between India and Germany
• Courses are certified and
accepted by the industry in
India and abroad
• Services: CNC
programming, Rapid
prototyping (RP), 3D
computer-aided design
(CAD) and 3D digitizing
systems
8
Strong MSME base for engineering
 1.6 Lac. MSMEs in Punjab
 Tremendous growth in exports
seen across segments of light
engineering including auto parts,
electrical
switchgears
and
accessories
and
engineering
goods (YoY growth: 36.4%)
 Electrical
switchgear
and
accessories segment has grown by
52% in the last 5 years
 Engineering exports contributes
15% of the overall manufacturing
exports from Punjab
Advanced manufacturing capabilities
 Progressive Competencies
- Quality engineering
- Prototyping
- Process optimization
 Technical know how of manufacturing defence
equipment
- Bullet proof and riot control vehicles
- Jackets
Exports 2014-15
₹ 1,638 Cr.
(USD 248 Mn)
₹ 1,082 Cr
(USD 164 Mn)
Machine tools /
Hand tools
Engineering
goods
₹ 743 Cr.
₹ 718 Cr.
(USD
112 Mn)
(USD 108 Mn)
Auto
spares
Electrical
Accessories
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Advantage Punjab
Competent human capital
 Home to globally renowned educational
institutions including ISB, IIM, IIT, PECDepartment of Aeronautical Engineering,
Thapar University, etc.
Focused educational infrastructure
 193 polytechnics, 369 ITIs and 6 Multi
Skill Development Centers (MSDCs)
 PAMEC offers courses in aircraft
maintenance engineering - light airframe,
piston engine, heavy aircraft and jet
engine
Indian School of Business
Indian Institute of
Technology Ropar
PEC University of Technology,
Chandigarh
Department of Aeronautical
Engineering
 Established aviation clubs in Punjab like
Ludhiana aviation club, Patiala aviation
club, Northern India flying school,
Jalandhar and Amritsar aviation club
Thapar University
Mechanical
Engineering
Particulars
Number
Capacity
Engineering
102
45,013
Polytechnics
193
66,495
ITIs
369
70,000
Aeronautics and aircraft
maintenance Engineering
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SMART infrastructure
Energy surplus State
Well established connectivity
Projected Power Surplus/Deficit (%) for 2015-16
International
airports
Pathankot
Domestic airports
5
Andhra
Pradesh
Karnataka Kerala Tamil Nadu Telangana
Amritsar
-4
Mohali
Ludhiana
Chandigarh
-12
-16
-14
-17
Bathinda
Map not to scale
Road network: 64,037 Kms
All villages connected by all weather roads
Rail Network: 2,126 Kms
More than 2 times of India’s average rail
density
Airports: 5
Highest airport density in the country
International- Amritsar & SAS Nagar (Mohali)
Domestic- Ludhiana, Bathinda and Pathankot
Industrial & Freight corridors
 Delhi-Mumbai Industrial Corridor (DMIC) uses the
Western Dedicated Freight Corridor as the
backbone
 Amritsar - Delhi - Kolkata Industrial Corridor will
use the Eastern dedicated Freight Corridor as the
backbone; will traverse 7 states and houses
about 40% of India’s population
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Highly cost competitive in comparison to its peers
Cost per man-day worked
Most competitive labour rates in the country;
about 25% lower than the national average
Best industrial power tariff; about 20% lower in
comparison with average of major industrial states
Industrial (HT) in Paise/unit
953
Maharashtr
a
809
781
614
716
669
Karnataka
Maharashtra
Haryana
Delhi
Gujarat
Tamil Nadu
Punjab
600
Gujarat
Uttar
Pradesh
564
Commercial space available at the lowest rents; about
50% lower than the average of major industrial states
537
Tamil Nadu
Rentals in ₹ /sq. ft./month
515
Rajasthan
Punjab
840
869
Haryana
Andhra
Pradesh
853
453
109
101
55
424
Mumbai
DelhiGurgaon
Noida
54
Bangalore
50
Pune
42
35
Chennai Hyderabad
30
Mohali
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Attractive fiscal incentives
Fiscal Incentives (FIIP – 2013)
Landmark Incentives
VAT and CST Incentive
Retention based recovery of Fixed
Capital Investment
50-90% Retention
Other Incentives
Stamp Duty exemption
Up to 100 %
Electricity Duty exemption
Up to 100%
Property Tax exemption
Up to 100 %
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Invest Punjab: Unified State regulator
Discover
The new ease of doing business
Unifying powers of 23 departments under
INVEST PUNJAB
Pollution
Revenue
 Invest Punjab is the unified regulator for all State
level regulatory and fiscal clearances
 Reduced investor touch points with individual
government departments
Excise &
Taxation
Forest
and
Wildlife
Local
Government
Labour
Invest
Punjab
Factories
 All clearances given in one month
 Moving away from refund based incentive
disbursement to retention of taxes (VAT/CST)
Town and
Country
Planning Industries
&
Commerc
e
Power
Urban
Development
…. and other administrative departments
15
Investment Opportunities
Opportunities in Punjab’s Aerospace & Defence sector
Development
of Integrated
Aerospace &
Defence Park

Common testing centre

Repair and maintenance facilities

Aircraft parts manufacturing

Aviation and Aerospace training institutes
MRO Hub at Mohali
Skill
Development

Training institutes for ground handling
and line maintenance work

Skill development in automation and
precision engineering

Airlines operating in India get nearly 90% of their MRO done
abroad. With the fleet size likely to double by 2020, the need
for a strong domestic MRO industry is critical

No major MRO in northern India – Hyderabad, Mumbai,
Bangalore and an upcoming MRO in Nagpur

Punjab is strategically located to cater the growing air traffic
movement of States including Himachal Pradesh, Jammu &
Kashmir, Delhi, Haryana

Potential to develop repair and maintenance warehouses in
Aerospace and Defence park
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References
1.
2.
3.
4.
5.
6.
7.
8.
9.
Aerospace and Defence Manufacturing Policy, 2015
Defence Research & Development Organisation, Ministry of Defence, GOI
http://www.makeinindia.com/sector/defence-manufacturing/
http://www.makeinindia.com/sector/aviation/
FICCI-KPMG Aerospace and Defence Report 2015
www.ibef.org/
CCI Report on Defence sector in India, 2015
Airport Authority of India
KPMG discussions with Departments of Industries and Commerce
Acronyms
1. BRD – Base Repair Depots
2. Bn - Billion
3. CAD – Computer Aided Design
4. Cr. – Crores
5. ITIs – Industrial Training Institutes
6. Mn - Million
7. MRO – Maintenance, Repair and Operations
8. MSME – Micro Small and Medium Enterprises
9. USD – US Dollars
10. W.r.t – with respect to
11. YoY – Year on Year
*Though all efforts have been made to ensure the accuracy and currency of the content of this collateral, the Government of Punjab (along with the Knowledge Partner) does not assume any legal liability, whether direct or indirect or responsibility for the
accuracy, completeness or usefulness of this information.
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