UK well positioned to capitalise on Indian defence industry growth: Report

A report published today (5 July) by the Indian practice of the business advisory firm Deloitte in conjunction with the Confederation of Indian Industry (CII), details how India is fast becoming one of the largest military spenders in the world and discusses how foreign aerospace companies now recognise India as both a critical market to operate in and a potential manufacturing partner. Pauline Biddle, UK head of aerospace and defence at Deloitte said the rapid rate at which India's investment in its defence offering was rising created significant opportunities for specialist foreign firms to increase their business there. India's domestic defence sector was likely to require specialist input into both platform and systems development. "This demand can be met by foreign firms, including those from the UK given our aerospace heritage and market leading R&D programmes and innovation," she believed. "However while the rewards for foreign companies launching operations into the Indian market are significant, the challenges should not be under estimated. The 26% limit for foreign direct investment introduced by the Indian government in 2001 remains, and there are also a range of tax benefits and offset obligations that can provide for long-term foreign participation in the Indian defence industry." There were many opportunities for foreign companies to partner with the Indian defence industry, she went on. UK companies, including BAE and Rolls & Royce, had already started their expansion into the Indian aerospace and defence market. Similarly, other UK companies in the automotive sector who had been in India for a long time had good prospects to tie up with Indian majors in the sector. "I predict that we will see a dramatic rise in the number of Indian joint ventures with foreign firms over the next five to ten years," Biddle concluded. Nidhi Goyal, director in Deloitte's Indian aerospace and defence team, commented: "India is recognised as the next international manufacturing destination given its competitive strengths including wider supplier base, comparative low cost of labour, persistent focus on infrastructure development and huge pool of skilled workforce."