Description
the strategies have to be set so that the maximum can be made out of each country. I have given a broader preoperative while concluding the paper. The main Idea behind this paper is to think that BRIC countries are not each other’s competitors but partners. If the work as a group they can speed up their economic growth.Tools such as PEST and SWOT along with latest industry trends are used to draw conclusions
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
1
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
Submitted
By:
Ashish
Jude
Michael
Participant
PGPEx
(OUC
China
+
IIM
Shillong,
India)
*Image
show
Embraer,
Sukhoi,
Tejas
and
Comac
from
Brazil,
Russia,
India
&
China
respectively.
2
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
Table
of
Contents
Executive
Summary
1
Introduction
to
Aerospace
&
Defense
Industry
1.1 Brief
History
about
development
of
A&D
Industry.
1.2 Present
Scenario.
1.2.1 Effect
of
Euro
Zone
crisis
on
A&D
Industry.
2 A
Brief
Introduction
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
2.1
A&D
Industry
in
Brazil
2.1.1 Present
Scenario
2.1.2 PEST
Analysis
2.1.3 SWOT
Analysis
2.1.4 Market
Growth
2.1.5 Opportunities
2.1.6 Suggestions
2.2 A&D
Industry
in
Russia
2.2.1 Present
Scenario
2.2.2 PEST
Analysis
2.2.3 SWOT
Analysis
2.2.4 Market
Growth
2.2.5 Opportunities
2.2.6 Suggestions
2.3 A&D
Industry
in
India
2.3.1 Present
Scenario
2.3.2 PEST
Analysis
2.3.3 SWOT
Analysis
2.3.4 Market
Growth
2.3.5 Opportunities
2.3.6 Suggestions
2.4 A&D
Industry
in
China
2.4.1 Present
Scenario
2.4.2 PEST
Analysis
2.4.3 SWOT
Analysis
2.4.4 Market
Growth
2.4.5 Opportunities
2.4.6 Suggestions
2.6
How
to
grow
together
as
BRIC
using
A&D
industry
as
a
tool?
Exhibits:
1
-?9
Sources
&
References:
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
3
Executive
Summary:
This
paper
is
about
how
the
BRIC
nations
can
use
A&D
industry
as
tool
for
growth
for
combined
growth.
We
have
analyzed
each
country
through
PEST
&
SWOT
analysis
and
found
their
Core
Competencies
and
Competitive
Advantage.
Then
accordingly
the
strategies
have
to
be
set
so
that
the
maximum
can
be
made
out
of
each
country.
I
have
given
a
broader
preoperative
while
concluding
the
paper.
The
main
Idea
behind
this
paper
is
to
think
that
BRIC
countries
are
not
each
other’s
competitors
but
partners.
If
the
work
as
a
group
they
can
speed
up
their
economic
growth.
1
Introduction
to
Aerospace
&
Defense
Industry:
1.1
Brief
History
about
development
of
A&D
Industry.
Aerospace
&
Defense
Industry
now
days
generally
referred
as
A&D
industry.
If
we
want
to
find
the
history
of
this
industry
we
can
say
it
started
in
1908
when
Wright
Brothers
got
an
order
from
U.S.
Army
to
make
one
aircraft
and
also
when
they
licensed
their
patents
to
Astra
Company
to
manufacture
aircraft
in
France.
Europeans
took
an
earlier
advantage
in
A&D
business
right
from
the
start
of
First
World
War
in
1914
during
which
French
firms
built
about
200O,
Germans
about
1000
and
Britain
also
approximately
1000
aircrafts.
And
Americans
hardly
100
aircrafts.
After
the
First
World
War
most
of
the
aircraft
companies,
which
survived,
were
basically
because
of
entrepreneur
sprit.
Americans
invested
on
R&D
and
got
many
patents
and
this
give
them
an
upper
hand
over
Europe
and
became
a
major
player
in
A&D
Industry.
In
the
six-?year
period
1940
through
1945.In
1943,
the
aviation
industry
was
America's
largest
producer
and
employer
with
1,345,600
people
bent
to
the
task
of
making
aircraft.
We
can
say
this
was
the
start
of
American
dominance
in
A&D
Industry.
Production
reached
maximum
during
World
War
II,
despite
a
minor
blip
for
the
wars
in
Korea
and
Vietnam.
Instead,
research
ruled
the
industry.
During
cold
war
the
demand
of
stealth
and
UAV
increased.
This
lead
to
new
technologies
prompted
a
massive
restructuring
of
the
industry.
Established
airframe
firms
shifted
from
manufacturing
to
research,
while
the
military
channeled
funds
to
technology-? specific
startup
firms.
And
after
the
Cold
war
season
started
Globalization
and
the
world
became
a
Global
Village.
Hence
the
civil
aviation
became
an
important
means
of
transport
and
this
boost
the
A&D
Industry.
And
at
present
Boeing
and
Airbus
are
major
players
in
Commercial
sectors.
Where
else
Boeing,
United
Technologies
were
leaders
in
A&D
Sectors
during
2011
as
per
Fortune
500
(Refer
Exhibit
2).
1.2
Present
Scenario.
Aerospace
and
defense
industry
delivers
a
second
consecutive
Year
of
record
revenues
and
Profit
in
year
2011
as
per
data
from
Boeing
&
EADS
(Refer
Exhibit
3).
If
we
consider
commercial
aerospace
market
things
were
appearing
good
and
Industry
leaders
were
optimistic
as
Air
Traffic
was
strong
and
steady
which
was
driving
the
after
market
business
also
the
industry
had
delivered
a
record
number
of
large
aircraft
and
orders
are
available
for
next
8
years.
1.2.1
Effect
of
Euro
Zone
crisis
on
A&D
Industry:
4
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
With
the
onset
of
Eurozone
crisis
it
is
difficult
that
the
forecasted
figures
of
3.5%
by
IATA
for
the
Air
traffic
in
year
2012
can
be
met.
This
is
because
Europe
is
the
largest
Air
Travel
market
in
the
world
and
the
condition
of
Eurozone
Crisis
is
deteriorating
day
by
day.
Still
the
implication
of
Eurozone
Crisis
on
Commercial
Aerospace
OEMs
and
after
market
suppliers
remains
unclear.
Though
certain
suppliers
will
be
negatively
affected
by
stringent
credit
standards
and
higher
oil
prices.
And
also
the
after
market
suppliers
will
be
at
greater
risk
than
the
Commercial
Aerospace
OEMs.
2
A
Brief
Introduction
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
1800
1600
1400
1200
1000
800
600
400
200
0
2007
2008
2009
2010
2011
World
BRICS
100.00 %
World
BRIC
16.83 %
As
we
can
see
from
A&D
Insights
2011
by
pwc
(Refer
Exhibit
2)
that
A&D
industry
is
still
not
totally
globalized
it
ranks
at
8
out
of
total
15
stated
industries.
There
is
a
huge
potential
for
emerging
economies
such
as
BRIC
in
A&D
industry.
And
the
economic
slowdown
is
in
some
manner
helping
this
as
the
top
line
is
reducing
hence
OEMs
are
trying
to
maximize
profit
by
decreasing
the
bottom
line.
One
way
of
reducing
the
bottom
line
is
by
reducing
the
cost
in
manufacturing
and
R&D.
OEMs
are
doing
this
by
outsourcing
the
manufacturing
&
R&D
to
offset
locations.
And
if
observe
the
graphs
shown
above
we
can
see
that
even
the
defense
budget
for
BRIC
is
increasing
continuously
from
2007
onwards
and
if
we
compare
to
the
world
trend
the
increase
in
defense
expenditure
is
at
lower
rate
then
BRIC
,
in
near
future
BRIC
will
be
the
leading
spenders.
Even
now
they
are
accounting
for
about
16%
of
world
total
defense
expenditure.
This
can
observed
from
the
recent
data
provided
in
A&D
Insights
2011
by
pwc
(Exhibit
6),
where
a
relation
is
shown
in
terms
percentage
of
Total
GDP
the
expenditure
for
each
country.
Where
China
spends
maximum
approximately
12
%
and
India
is
lowest
about
4%
with
Brazil
&
Russia
at
6%
&
10%
respectively.
Similarly
if
we
consider
the
commercial
air
traffic
market
we
can
observe
that
the
U.S.
&
European
market
are
nearly
saturated.
And
the
BRIC
countries
have
large
countries
they
have
neary
40%
of
world’s
total
population
scattered
over
25%
of
earths
land
which
they
cover
and
with
a
combined
GDP
growth
of
about
25%
of
world.
This
is
further
strengthen
by
the
recent
statics
given
in
A&D
Insights
2011
by
pwc
(Exhibit
5)
,
which
speaks
that
the
air
traffic
in
Asia-? pacific*
is
expected
rise
from
present
21%
in
2008
to
31%
in
2028
of
total
world’s.
This
is
further
confirmed
from
the
order
books
of
Boeing
&
Airbus
who
have
to
deliver
about
37%
of
their
remaining
orders
for
the
period
of
(2009-?2028)
to
Asia-?pacific*
region.
(*Asia-?pacific
region
includes
India
&
China,
which
are
key
constituents
of
BRIC).
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
5
And
the
rise
in
commercial
air
traffic
also
opens
gates
for
MRO
(Maintaince,
Repair&
Overhaul)
in
India
&
China.
At
present
the
MRO
center
for
Asia-?pacific
region
is
Singapore.
Just
to
give
an
idea
about
the
potential
of
MRO
market
I
would
like
to
tell
you
that
the
total
cost
spent
on
MRO
activities
for
an
Commercial
Aircraft
in
its
useful
service
life
is
equivalent
to
the
total
initial
cost
of
that
Aircraft.
Just
analyzing
the
recent
trends
we
can
see
that
in
2009,
the
number
of
investments
made
by
Top
50
Global
A&D
firms,
in
R&D
side
maximum
12
were
done
in
India
followed
by
6
in
Russia
and
4
in
China,
in
manufacturing
side
maximum
23
were
done
in
China
followed
by
20
in
India,
9
in
Russia
and
2
in
Brazil.
Hence
we
can
observe
a
trend
that
India
is
soon
becoming
a
R&D
hub
for
A&D
this
may
be
also
contributed
to
the
government
policies
and
political-?socio-? economic
factors
which
I
will
be
discussing
later
in
this
paper
for
each
country.
China
is
still
maintaining
its
brand
of
“World’s
Factory”
in
A&D
sector
too
with
one
and
only
Airbus
assembly
line
operating
in
Tenzin.
The
challenges
faced
by
BRIC
countries
to
retain
and
develop
the
A&D
sectors
are
investment
risk
to
IPR
and
the
Frauds.
The
gravity
of
these
issues
can
be
understood
from
Exhibits
8&9,
which
are
taken
from
A&D
Insights
2011
by
pwc.
It
can
be
suggested
that
the
governments
of
BRIC
nations
should
have
stringent
laws
dealing
with
IPR
&
Frauds
issues
and
also
speed
up
the
legal
activities
related
to
them.
2.1
A&D
Industry
in
Brazil
Aerospace
Industry
Export
&
Import
6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
-?
2007
2008
2009
2010
2011
Brazil
Export
Brazil
Import
2.1.1
Present
Scenario
Brazil
is
one
of
the
countries
in
BRIC,
which
is
already
playing
a
major
role
in
A&D
industry.
Embraer,
which
is
a
major
player
in
business
jets,
is
from
Brazil.
Also
it
is
the
second
largest
exporter
in
Aerospace
Industry
after
China
among
BRIC.
It
exported
5469.01
million
USD(United
States
Dollar)
while
it
imported
935.77
million
USD
worth
of
Aerospace
goods.
It
is
facing
a
tough
competition
from
China
&
India
now.
Its
core
competency
can
be
said
to
lie
in
Business
Jets
and
some
offset
business
generated
by
Boeing
in
Brazil.
If
we
analysis
the
Defense
spending
it
was
relatively
consistent
in
terms
of
growth
in
2011
it
was
3.53
billion
USD
and
has
been
increased
by
18%
for
2012.
6
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
2.1.2
PEST
Analysis
PEST(ANALYSIS(FOR(A&D(INDUSTRY(IN(BRAZIL(
POLITICAL(&(POLICY( 1.? Stable(government.( 2.? No(na;onalis;c(manufacturing(ambi;ons.( 3.? High(import(du;es(on(behalf(of(Embraer.( 4.? Defense(is(top(priority.( ( ECONOMIC( 1.? Seventh(largest(Economy(&(sixth(as(per(GDP.( 2.? Increased(the(defense(budget(by(18%(this(year( hence(a(big(emerging(market.( 3.? Low(external(&(public(debt.( 4.? Supports(manufacturing,(services(and(natural( resource(development(simultaneously.(
SOCIAL(&(LEGAL( 1.IPR®ula-ons&below&average.& 2.Low&unemployment.& 3.2014&FIFA&world&cup&&&2016&Olympic&will&create& the&market&for&more&commercial&air&tra?c.& 4.&Large&popula-on&&&big&country&scope&for& increasing&air&tra?c.&
TECHNOLOGICAL( 1.? Embraer&DNA.& 2.? Experience&work&force&for&A&D&industry&as& Embraer,&one&of&the&largest&brand&in& commercial&aircraNs&is&from&Brazil.& 3.? Has&all&the&resources&required.& 4.? Non&availability&of&exper-se&in&ITES.&
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
7
2.1.3
SWOT
Analysis
SWOT(ANALYSIS(FOR(A&D(INDUSTRY(IN(BRAZIL(
STRENGTH( 1.? Embraer(DNA.( 2.? Increased(the(defense(budget(by(18%(this(year(hence(a(big( emerging(market.( 3.? Low(external(&(public(debt.( 4.? Supports(manufacturing,(services(and(natural(resource( development(simultaneously.(( 5.? Increased(the(defense(budget(by(18%(this(year(hence(a(big( emerging(market.( 6.? Supports(manufacturing,(services(and(natural(resource( development(simultaneously.( 7.? HighPspeed(development(of(biofuels(for(aviaQon.(( OPPORTUNITIES( 1.? Strategically-located-can-cover-South-American-Market-andAfrican.2.? Has-a-domes<c-brand-Embraer-which-is-one-of-the-majorplayer-in-commercial-business-jets-and-so-can-enter-incommercial-aircraB-business-in-future.3.? Growing-A&D-market-in-BRICS-countries.4.? Can-be-a-preferred-choice-for-manufacturing-for-Europe-&US’s-OEMs-shiBs-their-base-from-Europe-as-it-rela<velyneutral--rather-than-China-&-Russia.WEAKNESS( 1.? IPR(regulaQons(below(average.( 2.? High(import(duQes(on(behalf(of(Embraer.(In(long(run(wil(be( a(problem(as(local(?rms(will(not(be(compeQQve(enough(for( global(market.( 3.? Brazil(is(not(lowPcost.(( 4.? Non(availability(of(experQse(in(ITES.( ( (
THREATS( 1.Rise-in-compe<<on-in-A&D-from-India-&-China.2.-Free-trade-scenario.3.-Increase-in-the-compe<<on-of-Business-jets-faced-by-Embraer.--
2.2.4
Market
Growth
By
studying
the
PEST
and
SWOT
Analysis
we
can
see
that
there
is
still
a
relatively
protective
market
because
high
import
duties
are
levied
may
be
to
protect
Embraer.
On
political
front
government
is
stable
and
they
have
not
started
investing
in
Defense
Aircraft
development.
This
makes
it
still
available
defense
market
for
foreign
companies,
as
there
is
no
domestic
competition.
In
next
four
years
Brazil
is
going
to
hoist
FIFA
Football
World
cup
in
2014
&
Olympic
in
2016.
This
will
increase
the
air
traffic
with
lots
of
tourists
flying
throughout
the
country
hence
is
a
large
potential
market
in
short
term
for
Commercial
aircraft
companies.
The
increasing
GDP
is
raising
the
per
capita
income
and
this
will
increase
the
time
value
of
its
nationals,
which
will
further
encourage
them
to
use
airways
instead
of
roadways
or
railways.
Hence
in
long
term
too
the
domestic
air
traffic
is
expected
to
rise
with
increase
in
economic
growth.
And
the
economic
growth
will
also
provide
the
rise
in
defense
budget,
which
makes
it
an
attractive
defense
market.
2.2.5
Opportunities
We
can
say
unless
it
opens
its
market
for
free
trade
it
will
be
difficult
its
local
companies
to
compete
at
global
level.
It
is
not
a
low
cost
manufacturing
destination
hence
it
can’t
take
that
advantage
from
China.
It
has
a
labor,
which
is
skilled
in
commercial
aircraft
industry
but
over
all
R&D
is
not
up
to
the
mark
and
IPR
regulations
are
below
average.
Again
in
R&D
India
is
becoming
a
global
hub
for
A&D
industry.
2.2.6
Suggestions
8
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
I
would
give
the
following
suggestions:
1. Allow
the
local
companies
to
compete
with
global
companies
in
domestic
market
so
that
they
may
become
strong
to
survive
in
International
Market.
This
can
be
done
by
removing
trade
barriers
and
also
promoting
JV(Joint
ventures)
and
FDI.
2. IPR
regulations
to
be
made
stringent
at
preset
they
are
the
lowest
among
BRIC
countries.(Exhibit
3. They
should
try
to
improve
in
ITES
sector
at
least
so
that
they
can
offer
the
complete
package
as
they
have
all
other
resources
available.
4. They
are
in
South
America
which
is
full
of
Emerging
economies
hence
can
make
their
presence
in
that
growing
market.
5. Can
target
BRIC
market
especially
India,
requires
a
lot
of
business
jets.
2.2
A&D
Industry
in
Russia
800.00
700.00
600.00
500.00
400.00
300.00
200.00
100.00
-?
2007
2008
Aerospace
Industry
Export
&
Import
Russia
Export
Russia
Import
2.2.1
Present
Scenario
Russia
was
once
a
superpower
but
with
time
it
lost
its
glory
is
now
again
want
to
resurrects
for
the
ashes.
It
is
one
of
the
most
technological
advanced
nation
specially
in
defense
sector.
There
are
one
of
the
best
in
Arm
design
and
manufacture
AK-?47
is
one
of
the
example,
even
it
is
considered
better
than
similar
American
&
German
Assault
riffles.
And
in
defense
aircraft
sector
they
have
a
very
successful
Sukhoi
30,
Sukhoi-?35
the
latest.
But
if
we
see
the
exports
and
imports
in
Aerospace
product
its
742.16
and
192.38
million
USD
respectively.
The
core
competency
of
Russians
can
be
said
in
Defense
sector
from
arms
to
aircrafts.
2009
2010
2011
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
9
2.2.2
PEST
Analysis
PEST(ANALYSIS(FOR(A&D(INDUSTRY(IN(RUSSIA(
POLITICAL(&(POLICY( 1.? Poli0cal(instablity.( 2.? Corrup0on.( 3.? Defense(top(most(priority.( 4.? Moderniza0on(of(defense(forces.( 5.? Recently(changed(the(poli0cal(model(from( communist(to(democra0c.( ( ( SOCIAL'&'LEGAL' 1.? Less'English'speaking'popula9on.' 2.? Highly'dependent'on'local'language.' 3.? Deep'impact'of'communist'teachings.' 4.? As'per'area'the'largest'country'and'as'per' popula9on'stands'at'…'hence'local'domes9c' airline'network'exists'but'is'not'operated'in'an' e?ec9ve'manner.' 5.? Unemployment'is'a'major'issue.' 6.? Low'IPR'protec9on'laws.' ECONOMIC( 1.? As(as(Per(GDP(9th(and(6th(largest(economy.( 2.? Basically(based(on(natural(resources.( 3.? A(con0nuously(rise(in(defence(budget(making( it(a(poten0al(market.( 4.? Has(second(largest(numbers(of(air((ports(in( world(hence(a(big(poten0al(for(commercial(air( tra?c.( 5.? Rise(in(Sovereign(debt.( 6.? S0ll(not(a(part(of(WTO.( TECHNOLOGICAL' 1.? DNA'of'an'earlier'Super'power'with'pro?ciency' in'high'end'technology.' 2.? A'leader'among'BRICS'in'A&D'sector'in'terms' of'technology'advancement.' 3.? Have'local'companies'in'R&D,'Manufacturing'&' MRO'sector'of'A&D'industry.'Ie.'Sukhoi,' Antonov'etc'
2.2.3
SWOT
Analysis
SWOT(ANALYSIS(FOR(A&D(INDUSTRY(IN(RUSSIA(
STRENGTH( 1.? 1.(DNA(of(an(earlier(Super(power(with(pro?ciency(in(high( end(technology.( 2.? A(leader(among(BRICS(in(A&D(sector(in(terms(of(technology( advancement.( 3.? Have(local(companies(in(R&D,(Manufacturing(&(MRO(sector( of(A&D(industry.(Ie.(Sukhoi,(Antonov(etc(Defense(top(most( priority.( 4.? A(conMnuously(rise(in(defence(budget(making(it(a(potenMal( market.( 5.? Has(second(largest(numbers(of(air((ports(in(world(hence(a( big(potenMal(for(commercial(air(tra?c.( 6.? Russian(products(are(generally(considered(robust.( WEAKNESS( 1.? (Low(IPR(protecMon(laws.(( 2.? Rise(in(Sovereign(debt.( 3.? SMll(not(a(part(of(WTO.( 4.? Non(avaliablity(of(aVer(sales(service.( 5.? Totally(dependent(on(Russian(language(specially(in( technology(which(makes(it(di?cult(for(entering(into(global( market(&(seWng(global(R&D,manufacturing(&(MRO( centers.( 6.? Geographical(locaMon(leser(number(of(ports(and(country( lies(far(away(from(the(major(growing(market(ie.(Africa,( AsiaYsubconMnent(&(South(America.( 7.? Lack(of(engineers(&(managers(for(A&D(Industry.( 8.? AdaptaMon(of(western(Quality(Standards(and(neither(any( development(of(Quality(Standards.( 9.? No(FDI(in(A&D(sector(and(lack(of(competaMon(due(to(less( number(of(private(players.( THREATS* 1.? The*Overall*Growth*of*China*in*A&D*sector*is*posing*a* serious*compeKKon*to*Russia.* 2.? A&D*industry*accept*the*western*Quality*&*Industry* standards*compulsory*to*adhere*to*sustain*in*Global*Market.* 3.? The*rise*of*outsourcing*business*in*India*for*A&D*Industry.* 4.? HesitaKon*of*western*countries*in*sharing*technology*&* placing*R&D*faciliKes.*
OPPORTUNITIES* 1.? Rise*in*the*A&D*market*in*BRICS*countries.* 2.? Already*a*major*player*in*?ghter*aircraG*manufacturing*&* defense*sector.*** 3.? Has*a*good*relaKon*with*the*governments*of*BRICS*countries* and*that*is*the*major*growing*porKon*in*A&D*sector.*
2.2.4
Market
Growth
Russia
is
a
developing
market
specially
for
commercial
air
traffic.
It
is
the
largest
country
in
terms
of
land
and
for
population
to
travel
across
it
air
travel
is
the
only
option.
As
it
is
already
10
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
a
big
producer
of
arms
and
fighter
aircraft
hence
it
is
not
much
dependent
on
outside
world
for
its
defense
needs.
Still
it
is
a
growing
market
as
its
defense
budget
was
64.12
billion
USD.
2.2.5
Opportunities
I
can
clearly
see
an
opportunity
for
Russia
in
World
Defense
market
especially
in
Arms
&
Fighter
Aircraft
area.
Their
products
are
robust
but
lack
service
support
and
spares.
They
have
a
large
market
among
BRIC
nations
such
as
India
,China
&
Brazil.
They
can
eye
commercial
and
cargo
aircrafts
too.
At
present
one
of
the
largest
cargo
aircraft
Antonov
An
225
was
built
by
Russia
and
is
used
for
transportations
of
space
shuttles,
heavy
machinery
etc.
Suggestions
I
would
suggest
Russia
to
target
markets
of
BRIC
in
defense
market
with
improving
its
service
&
spares
support.
It
can
also
open
its
service
wings
as
a
JV
with
the
local
players
of
each
country
so
that
it
may
have
an
cost
advantage
too.
It
can
focus
the
manufacturing
cargo
aircrafts
and
outsource
offset
activities
to
India
or
China.
India
is
world’s
largest
buyer
of
arms
and
so
Russia
can
target
Indian
market
for
the
same.
2.3
A&D
Industry
in
India
4,000.00
3,000.00
2,000.00
1,000.00
-?
2007
Aerospace
Industry
Export
&
Import
India
Export
India
Import
2008
2009
2010
2011
2.3.1
Present
Scenario
The
above
graph
represents
the
trend
of
Indian
Exports
&
Imports
in
Aerospace
sector.
We
can
clearly
see
that
the
present
exports
are
1990.11
and
57.26
million
USD
in
year
2011.This
also
shows
an
aspect
that
we
are
basically
exporting
the
services
(IT
&
R&D)
and
smaller
level
offset
units
which
are
mostly
tier
3
suppliers.
Hence
a
lager
market
exists
of
tier
1&2
suppliers
also
Indian
Government
promoting
OEMs
to
set
up
an
assembly
line
and
the
R&D.
Though
the
OEMs
have
started
investing
in
R&D
which
can
be
confirmed
by
the
statistics
given
in
A&D
Insights
2011
by
pwc
(Exhibit
7)
in
a
period
between
2000-?2011
about
12
investments
have
been
made
by
top
50
ranking
companies
as
ranked
by
Flight
International
Top
100
and
about
20
in
manufacturing
sector
of
Aerospace.
India
has
got
an
advantage
where
global
players
are
investing
in
R&D
and
got
a
lead
and
slowly
it
is
gaining
some
momentum
in
manufacturing
though
it
will
take
some
time
to
give
competition
to
China.
Where
else
it
has
definitely
become
a
hot
market
for
defense
deals
with
the
10.2
billion
USD
Rafael
deal
or
the
Hercules
&
P-?8I
aircrafts
deals
which
Boeing
has
won.
In
additional
to
this
India
is
also
developing
its
indigenized
4.5
generation,
single
engine,
single
seater
Light
Combat
Aircraft
(LCA)
or
commonly
known
as
Tejas.
It
is
now
in
its
final
phase
and
it
expected
to
join
the
nation
defense
by
2020.
Also
its
fairly
independent
on
manufacturing
of
Combat
Helicopters
such
as
(LCH)
and
others
as
Dhruv.
This
has
given
India
a
through
experience
of
working
in
R&D
and
manufacturing
of
Fighter
aircrafts.
With
the
organizations
such
as
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
11
DRDO(Defense
Research
and
Development
Organization),
ADA(Aeronautical
Development
Organization),
ADE(Aeronautical
Development
Establishment),
HAL(Hindustan
Aernautical
Limited)
and
BEL(Bharat
Electronics
limited).
Where
DRDO,ADA,NAL
&
ADE
caters
the
R&D
requirement,
BEL
is
manufacturing
the
electronics
related
to
FCS(Flight
Control
System)
and
WMS(Weapon
Management
System)
and
HAL
overall
assembly
and
manufacturing.
The
development
of
UAV(Unmanned
Air
Vehicles)
is
in
very
nascent
stage.
Hence
we
can
say
India
has
the
basic
building
blocks
for
A&D
industry,
which
are
all
following
international
standards
such
as
AS9100
Rev
C
&
EMS
140001.
2.3.2
PEST
Analysis
PEST(ANALYSIS(FOR(A&D(INDUSTRY(IN(INDIA(
POLITICAL(&(POLICY( 1.? Government(support.( 2.? Induc;on(of(GAAR((General(An;(Avoidance(Rule).( 3.? Poli;cal(stability,(regulatory(e?ec;veness,(rule(of(law(and( sovereign(debt.( 4.? Corrup;on( 5.? Regional(issues(overpowering(important(country(level( economic(decisions.( 6.? Defense(Produc;on(policy(&(Defense(Procurement( Policy(DPP).( 7.? Many(eminent(economist(in(poli;cal(senario.( 8.? Defense(of(the(country(is(of(highest(priority.( 9.? Di?culty(in(star;ng(a(business(specially(in(A&D(sector.( SOCIAL(&(LEGAL( 1.? Constant)treat)from)terrorists.) 2.? Many)interna2onal)disputes)with)neighbors.) 3.? Safeguarding)Long)cost)lines.) 4.? Second)largest)army)of)the)world.) 5.? )Low)cost)labor.) 6.? Pool)of)second)largest)English)speakers.) 7.? Large)pool)of)skilled)manpower)required)for)A&D)industry)is) available.) 8.? Labor)problems.) 9.? Improvement)in)IPR)environment)with)the)onset)of) pharmaceu2cals)companies.) 10.? BeQer)equipped)legal)system.))) 11.? Highly)consolidated)SMEs)Base.) 12.? Highest)no.)of)scien2st)&)engineers.)
ECONOMIC( 1.? Major(economic(reforms(done(in(last(20(years.( 2.? One(of(the(fastest(growing(economy(of(world(ranked(at(11( as(per(GDP(and((4th(largest(economy.( 3.? Increase(in(defense(budget(on(an(yearly(average(of(8%.( 4.? Huge(poten;al(for(Air(tra?c(business(as(2nd(largest( country(popula;on)(and(7th(largest((Land).( 5.? One(of(the(highest(saving(fund.( 6.? Defense(O?set(Policy.( 7.? Recently(A&D(sector(opened(for(private(players(with( investment(upto(100%(and(FDI(upto(26%.( 8.? Largest(importer(of(Arms.( 9.? Founding(member(of(WTO.( TECHNOLOGICAL( 1.? Availability)of))founda2ons)for)developing)a)robust)industrial) base)in)the)aerospace)and)defense)(A&D))sector)for) R&D,OEMs)&)MROs)(Maintaince)Repair)and)Opera2ons))ie.) DRDO,)HAL)etc.) 2.? Indigenized)development)of))Helicopters)by)(HAL))and) AircraX)(LCA/TEJAS))is)under)progress.) 3.? Experience)of)producing)robust))A&D)equipment)at)low)cost.) 4.? Availability)of))talent)suitable)for)A&D)Industry.) 5.? Knowledge)&)Implementa2on)of)Interna2onal)Quality) Standards)required)for)A&D)Industry)is)available.) 6.? Availability)of))all)technical)exper2se)ie.)ITES,)Manufacturing,) Management)and)R&D.)Makes)it)a)complete)package.)) 7.? Has)a)well)recognized)and)economical)space)program) operated)by)ISRO)which)is)a)recognized)name)at)Global)level.)
12
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
2.3.3
SWOT
Analysis
SWOT(ANALYSIS(FOR(A&D(INDUSTRY(IN(INDIA(
STRENGTH( 1.? Government(support.( 2.? Availability(of((founda>ons(for(developing(a(robust(industrial(base(in(the(aerospace(and( defense((A&D)(sector(for(R&D,OEMs(&(MROs((Maintaince(Repair(and(Opera>ons)(ie.(DRDO,( HAL(etc.( 3.? Knowledge(&(Implementa>on(of(Interna>onal(Quality(Standards(required(for(A&D(Industry(is( available.( 4.? Recently(A&D(sector(opened(for(private(players(with(investment(upto(100%(and(FDI(upto(26%.( 5.? Increase(in(defence(budget(on(an(yearly(average(of(8%.( 6.? Defense(O?set(Policy.( 7.? Many(eminent(economist(in(poli>cal(senario.(( 8.? Pool(of(second(largest(English(speakers.( 9.? Low(cost(labor.( 10.? Improvement(in(IPR(environment(with(the(onset(of(pharmaceu>cals(companies.( 11.? Be]er(equipped(legal(system.(( 12.? (Huge(poten>al(for(Air(tra?c(business(as(2nd(largest(country(popula>on)(and(7th(largest((Land).( 13.? Strong(IT(service(sector(and(similarly(Automobile(manufacturing(sector.(( 14.? Adaptability(to(changed(scenario.( OPPORTUNITIES( 1.? It%is%one%of%the%fastest%developing%market%and%so%the%items%can%be%manufactured%as%all%required% resources%are%available.% 2.? Can%become%a%MRO%hub%for%A&D%industry%because%of%availability%of%low%cost%human%resource.% 3.? India%is%strategically%%located%and%developing%markets%of%Middle%East,%ASEAN%&%ASIA%can%be% targeted.% 4.? Largest%no.%of%scienKst%and%engineers.%% 5.? Increasing%domesKc%players%involvement%in%Indian%defense%industry%HALNBoeing,%BELNBoeing,% UTCNBEL.% 6.? Increase%in%overseas%suppliers%involvement%in%Indian%defense%industry.% 7.? Because%of%recession%&%Eurozone%crisis%pro?t%margins%of%A&D%?rms%are%squeezed%hence%to% increase%pro?t%they%will%try%to%reduce%their%cost%by%mostly%outsourcing.%% 8.? Can%be%a%preferred%choice%for%manufacturing%for%Europe%&%US’s%OEMs%shiXs%their%base%from% Europe%as%it%relaKvely%neutral%%rather%than%China%&%Russia.% WEAKNESS( 1.? Induc>on(of(GAAR((General(An>(Avoidance( Rule).( 2.? Corrup>on( 3.? Di?culty(in(star>ng(a(business(specially(in( A&D(sector.( 4.? Pool(of(second(largest(English(speakers.( 5.? Low(innova>on.( 6.? Very(long(product(cycle(>me(as(many( approvals(&(checks(to(be(done.( 7.? Labor(problems.( 8.? Regional(issues(overpowering(important( country(level(economic(decions.( 9.? Poli>cal(inbstability,(regulatory(inb e?ec>veness,(rule(of(law(and(sovereign( debt.( 10.? Strategic(Barriers.( 11.? Lack(of(Infrastructure(and(the(increase(in( Energy(de?cient.(( THREATS( 1.Stratergic%barriers%fot%criKcal%technologies%&% source%codes,%IP.%% 2.%US%InternaKonal%Tra?c%in%Arms%RegulaKons%ITAR% restricKons.% 3.Exchange%change%risk%ie.%DepreciaKon%in%dollar.% 4.Tough%compeKKon%from%Brazil,%China%&%Russia.% 5.ReducKon%in%overall%defense%budget.% 6.DegradaKon%of%India’s%raKng%by%InternaKonal% Agencies%ie.%S&P%has%reduced%from%BBB+%to%BBBN.%%% %
2.3.4
Market
Growth
India
has
continuously
raised
its
defense
budget
during
last
5
years,
and
for
the
year
of
2011
it
was
approximately
44.28
billion
USD,
which
is
about
4%
of
its
GDP.
It
is
the
largest
importer
of
Arms.
And
recent
modernization
of
its
Air
Force
has
opened
new
doors
of
opportunity
tor
global
players.
It
is
definitely
an
attractive
market
in
defense.
If
we
see
the
Aerospace
sector
India
has
a
huge
potential
for
Air
Traffic.
As
per
capita
income
is
increasing
hence
the
purchasing
power
of
middle
class
is
also
increasing
which
will
extend
the
air
traffic
market
to
Indian
middle
class.
This
makes
it
a
lucrative
market
for
Global
Commercial
Aircraft
Manufacturers.
2.3.5
Opportunities
Discussing
about
opportunities
we
can
say
that
India
hasn’t
got
much
experience
in
arms
designing
&
manufacturing
but
there
is
definitely
potential
in
Designing
and
manufacturing
of
fighter
and
military
aircrafts
and
offset
outsourcing
of
R&D
and
manufacturing
activities
in
commercial
aircraft
market.
It
has
got
organizations
like
DRDO,
HAL
&
BEL,
which
are
AS9100
Rev
C
certified
(HAL-?LCA
SBU
&
BEL-?EW&A
SBU)
and
HAL,
BEL
&
other
private
companies
acting
as
tier
2
&
1
suppliers
for
Boeing.
There
are
many
R&D
have
been
set
up.
Also
the
players
like
Rafael
Dassault
,
Lockheed
Martin
&
Boeing
have
entered
into
JV(Joint
Venture)
with
Indian
companies.
During
the
Aero
India
2011
about
the
contracts
of
about
2
billions
USD
were
signed
between
Indian
&
Foreign
companies.
Indian
government
has
increased
the
competation
in
A&D
sector
by
allowing
few
of
Indian
private
Companies
such
as
Wipro,
Mahindra,
Infosys,
Tata,
L&T
&
Reliance
and
giving
them
a
title
“Raksha
Ratna”.Earlier
the
A&D
sector
was
dominated
by
PSU
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
13
(Public
Sector
Units)
and
Government.
Also
as
per
DPP(Defense
Procurement
Procedure)
2011
for
any
A&D
contract
at
least
30%
of
job
to
be
outsourced
to
Indian
Companies.FDI
upto
26%
is
allowed
in
A&D
sector,
special
benefits
are
given
to
foreign
companies
setting
up
their
R&D
centers
in
India.
In
India
R&D,
manufacturing
&
(IT)
services
all
three
are
available
hence
it
offers
a
very
good
package
for
global
players
to
outsource
their
activities
to
take
advantage
of
low
cost
skilled
talent.
Also
there
is
a
large
opportunity
in
MRO
(Maintaince
,
Repair
&
Overhaul
sector)
at
present
Singapore
is
the
MRO
hub
for
all
commercial
aircrafts
for
Asia-? pacific
region.
The
problem
is
that
Indian
government
has
put
heavy
import
duties
about
19-? 20%
on
the
equipment’s
required
for
MRO.
As
I
have
already
discussed
earlier
that
the
cumulative
cost
of
service
(MRO)
of
an
aircraft
during
its
useful
life
is
equivalent
to
its
initial
cost.
Hence
it
is
a
market
with
huge
potential.
If
we
consider
the
challenges,
which
India
faces,
are
average
IPR
protective
laws
and
the
risk
of
frauds.
Suggestions
Government
should
continue
its
industry
friendly
policies
and
also
make
some
A&D
specialized
SEZ(Special
Economic
Zone).
Import
duties
on
equipment’s
related
to
MRO
should
be
reduced
or
removed
,
IPR
laws
should
be
made
stringent
and
frauds
should
be
dealt
strictly.
2.4
A&D
Industry
in
China
Aerospace
Industry
Export
&
Import
2.4.1
Present
Scenario
China
as
expected
is
un-?doubly
the
leader
of
BRIC
and
it
is
keeping
its
position
even
in
A&D
industry
too.
Just
referring
this
Aerospace
export
&
import
graph
we
can
see
that
in
year
2011
export
and
imports
were
6391.72
million
USD
and
622.32
million
USD
respectively.
The
exports
are
huge
as
compared
to
Imports,
which
shows
it
is
already
a
manufacturing
factory
of
A&D
industry
though
still
there
is
potential
to
increase
it.
And
even
in
defense
sector
they
are
self-?sufficient.
Their
fighters
are
one
of
the
best
in
world.
And
now
they
are
planning
to
break
the
duopoly
of
Boeing
&
Airbus
from
Commercial
Aircraft
sector
by
launching
their
fully
indigenously
built
commercial
jet.
Comac
ARJ21
and
Comac
14
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
C919
are
two
variants
Comac
(Commercial
Aircraft
Corporation
of
China,
Ltd.)
is
planning
to
launch
challenging
Boeing
&
Airbus.
2.4.2
PEST
Analysis
PEST(ANALYSIS(FOR(A&D(INDUSTRY(IN(CHINA(
POLITICAL(&(POLICY( 1.? Stable(Government.( 2.? Full(Support(to(A&D(sector(by( government.( 3.? No(private(sector(&(No(FDI(in(Defense(&( Defence(Avionics.(( 4.? 35%(FDI(allowed(in(Commercial(AircraK( sector.( ( SOCIAL(&(LEGAL( 1.? High'morale'due'to'recent'economic' success'of'China.' 2.? Required'talent'available'which'can'be' directly'used'for'A&D'industry.' 3.? Language'Barrier.' 4.? China'A&D'sector'works'in'highly'closed' environment'as'dominated'by'SOEs'and' closely'monitored'by'Government.' ECONOMIC( 1.? Second(largest(Economy(&(Second(as(per(GDP.( 2.? ConNnuous(increase(in(Defense(budget.( 3.? SOEs(exists((in(Fighter(aircraK(&(Defense(producNon( but(presently(using(indigenizaNon(and(only( targeNng(domesNc(market.( 4.? (Presently(targeNng(the(domesNc(market(for(defense( sector(&(Global(market(for(Aerospace.( 5.? Low(cost(resource(available.(( TECHNOLOGICAL( 1.? SOEs'directly'coming'into'compeJJon'with'Boeing'&' Airbus'for'building'commercial'jets.' 2.? Has'all'the'technology'for'building'a'successful'A&D' Industry.' 3.? Are'aware'of'InternaJonal'Process'&'Quality' standards'and'can'follow'them.' 4.? Are'good'at'reOengineering.' 5.? Have'a'good'R&D'&'Manufacturing'sector.' 6.? Has'a'weak'IT'support'as'compared'to'India'for'A&D' sector.' 7.? Has'a'recently'developed'very'large'&'successful' Space'program.''
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
15
2.4.3
SWOT
Analysis
SWOT(ANALYSIS(FOR(A&D(INDUSTRY(IN(CHINA(
STRENGTH( 1.? (Stable(Government.( 2.? Full(Support(to(A&D(sector(by(government.( 3.? 35%(FDI(allowed(in(Commercial(AircraH(sector.( 4.? ConJnuous(increase(in(Defense(budget.( 5.? Low(cost(resource(available.(( 6.? Required(talent(available(which(can(be(directly( used(for(A&D(industry.( 7.? Are(aware(of(InternaJonal(Process(&(Quality( standards(and(can(follow(them.( 8.? Are(good(at(reTengineering.( 9.? Has(the(required(Infrastructure.( OPPORTUNITIES( 1.? Can&give&a&tough&compe22on&Boeing&&&Airbus& in&near&future.& 2.? Can&become&leaders&in&2er&1,2,3&suppliers&for& A&D§or.& 3.? China’s&rela2on&with&BRIC&countries.&& WEAKNESS( 1.? No(private(sector(&(No(FDI(in(Defense(&( Defense(Avionics.( 2.? Language(Barrier.( 3.? China(A&D(sector(works(in(highly(closed( environment(as(dominated(by(SOEs(and( closely(monitored(by(Government.( 4.? Chinese(Quality(is(sJll(a(concern(as(the( Chinese(products(are(not(widely(considered( robust.(( 5.? Lacks(the(support(in(IT(where(India(has(an( advantage.( THREATS( 1.? Rise&in&compe22on&from&India&as&a&Tier&1,2,3& supplier&for&A&D§or.&& 2.? Hesita2on&in&western&countries&in&sharing& informa2on&with&China&as&it&can&become&their& compe2tor&in&near&future.& &
2.4.4
Market
Growth
China
is
a
big
market
for
Air
Traffic,
till
now
only
big
cities
are
connected
still
small
towns
are
out
of
reach.
Hence
we
can
say
the
main
market
is
still
not
tapped
to
its
potential.
This
give
a
lot
of
opportunity
for
commercial
airliners
ie.
Boeing
&
Airbus.
As
far
as
defense
is
considered
they
are
independent
enough
and
have
a
strong
domestic
defense
industry.
Also
they
haven’t
open
up
their
defense
sector
for
outside
world.
2.4.5
Opportunities
They
eyeing
opportunity
in
commercial
aircraft
market
which
is
now
dominated
by
duopoly
of
Boeing
&
Airbus.
They
are
planning
to
launch
their
first
aircraft
within
a
couple
of
years.
They
are
already
a
hot
destination
for
offset
manufacturing.
But
are
still
not
into
global
defense
market.
One
basic
reason
may
be
the
absence
of
private
companies
in
Defense
sector.
They
can
also
try
to
tap
the
MRO
segment.
Suggestions
Chins
is
doing
many
things
right.
Just
I
would
suggest
them
to
built
some
trust
in
global
companies
so
that
they
may
open
their
R&D
centers
in
China.
Also
they
should
make
IPR
regulations
more
stringent.
In
order
to
reduce
language
barrier
Chinese
government
has
made
compulsory
English
education
in
schools.
16
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
2.6
How
to
grow
together
as
BRIC
using
A&D
industry
as
a
tool?
Can
BRIC
works
together
as
a
team?
Can
they
develop
a
sustainable
model
of
co-?operation?
I
can’t
answer
this
at
a
general
level
but
at
the
level
of
A&D
industry
it
is
fairly
possible.
One
of
the
basic
thing
is
that
no
two
BRIC
countries
are
similar
in
terms
of
core
competencies
and
this
can
help
them
to
work
together
also
by
doing
so
their
dependence
on
US
&
Europe
will
drastically
reduce.
If
I
would
had
been
given
a
task
to
frame
a
strategic
policy
for
BRIC
in
A&D
sector,
first
of
all
I
would
taken
an
account
of
core
competencies
of
each
BRIC
country.
Starting
with
Brazil
we
can
say
they
have
an
upper
hand
in
Business
Jet
segment
they
can
focus
on
Business
Jet
markets
and
manufacture
them.
India
,China
&
Russia
are
one
of
the
biggest
markets
for
business
jets
as
the
growing
number
of
business
leaders,
politicians
&
eminent
personalities
all
require
business
jets.
India
,China
&
Russia
can
give
a
preference
Brazil’s
business
jets
as
they
will
be
economical
than
those
from
US
&
Europe.
While
speaking
about
Russia
one
thing
comes
into
mind
is
Sukhoi
&
AK
47.
Their
core
competencies
are
Fighter
aircraft
and
Arms.
They
can
produce
them
and
sell
them
to
India,
Brazil
and
China.
Russian
products
are
economical
&
robust
but
the
problem
comes
for
spare
part
availability.
This
can
be
solved
if
Russia
give
some
Indian
or
Chinese
countries
contract
of
producing
spares
parts
for
their
Aircrafts.
At
present
India
is
one
of
the
largest
buyer
of
arms
and
BRIC
constitute
16%
of
total
world
defense
market.
It’s
a
huge
opportunity
for
Russia.
India
masters
of
IT
services
and
a
growing
hub
of
R&D.
India
can
provide
the
IT,R&D
and
all
other
services
to
all
the
requirements
of
Brazil’s
Business
jet
company,
Russian
Defense
industry
and
China’s
commercial
aircraft
industry
&
offset
manufacturing.
It
is
also
a
destination
of
offset
manufacturing
after
China
in
BRIC.
This
can
help
India
to
diversify
its
services
industry
at
global
level.
China
the
most
strongest
economy
of
BRIC.
It
has
bigger
dreams
than
any
of
BRIC
country.
At
present
they
are
targeting
commercial
aircraft/jet
market,
which
means
to
break
the
duo-?poly
of
Airbus
&
Boeing.
For
China
India,
Russia
&
Brazil
are
certainly
hot
markets.
India
,Brazil
&
Russia
can
give
a
preference
to
Chinese
Commercial
airliners
as
they
will
be
economical.
Also
China
is
a
hot
destination
for
offset
business
means
Brazil
can
shift
some
of
its
Embraer
offset
activities
in
China
&
India.
If
the
above
strategy
can
be
implemented
it
will
be
a
WIN-?WIN
situation
for
all
BRIC
Countries.
BRIC
countries
should
look
each
other’s
as
partners
and
not
as
competitors.
-?-?-?-?-?-?-?-?-?-?-?-?-?-?-?-?-?
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
17
Exhibit
1
Present
A&D
Breakup
Exhibit2
Rank Company Revenues Profits Fortune/ %/change/ %/change/ $/millions $/millions 500/rank from/2009 from/2009 36 64,306.00 .5.8 3,307.00 152.1 44 54,326.00 2.7 4,373.00 14.2 52 46,890.00 3.8 2,926.00 .3.2 72 34,757.00 .1.5 2,053.00 21.8 81 33,370.00 8 2,022.00 .6.1 86 32,466.00 1.5 2,624.00 9.6 104 25,183.00 1.2 1,840.00 .4.9 159 15,680.00 0.4 955 6 217 11,155.00 2.3 798 24 233 10,525.00 .0.2 86 N.A. 337 6,966.90 4.2 578.7 .3.1 409 5,539.60 .19.9 921.8 .11.7 472 4,807.70 4.9 278.7 79.7 478 4,665.00 4.4 561 .5.6
1 Boeing 2 United6Technologies 3 Lockheed6Martin 4 Northrop6Grumman 5 Honeywell6International 6 General6Dynamics 7 Raytheon 8 L.36Communications 9 ITT 10 Textron 11 Goodrich 12 Precision6Castparts 13 Alliant6Techsystems 14 Rockwell6Collins Issue6date:6May623,62011 (Source:
Fortune
500)
Exhibit3
Recent
Growth
in
A&D
Sector
2011
Revenue
$677
Operating Profit $60 Operating Margin 8.86% *All
monitory
figures
in
US$ billions (Source: Boeing annual report; EADS annual report)
2010
$648
$59.1 9.13%
Change 5% 2% -27bps
18
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
Exhibit4
Globalization
Exhibit
5
Exhibit
6
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
19
Exhibit
7
Exhibit
8:
IP
Risk
20
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
Exhibit
9
Frauds
&
How
they
are
dealt.
Sources
&
References:
1.A&D
Insights
2011
by
Mr.
Neil
Hampson
published
by
PricewaterCoopers
(PWC).
2.
A&D
Insights
2012
by
Mr.
Neil
Hampson
published
by
PricewaterCoopers
(PWC).
3.
Aerospace
&
Defence
2011
year
in
review
and
2012
forecast
by
Mr.
Neil
Hampson
and
Mr.
Scott
Thompson
published
by
PricewaterCoopers
(PWC).
4.
Unlocking
Potential
Indian
Aerospace
&
Defence
Sector
by
KPMG
&
CII.
5.
SIPRI
Military
Expenditure
Database
2012.
6.
2012
Global
aerospace
and
defense
industry
outlook:A
tale
of
two
industries
by
Deloitte.
7.Wikipedia
doc_219755796.pdf
the strategies have to be set so that the maximum can be made out of each country. I have given a broader preoperative while concluding the paper. The main Idea behind this paper is to think that BRIC countries are not each other’s competitors but partners. If the work as a group they can speed up their economic growth.Tools such as PEST and SWOT along with latest industry trends are used to draw conclusions
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
1
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
Submitted
By:
Ashish
Jude
Michael
Participant
PGPEx
(OUC
China
+
IIM
Shillong,
India)
*Image
show
Embraer,
Sukhoi,
Tejas
and
Comac
from
Brazil,
Russia,
India
&
China
respectively.
2
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
Table
of
Contents
Executive
Summary
1
Introduction
to
Aerospace
&
Defense
Industry
1.1 Brief
History
about
development
of
A&D
Industry.
1.2 Present
Scenario.
1.2.1 Effect
of
Euro
Zone
crisis
on
A&D
Industry.
2 A
Brief
Introduction
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
2.1
A&D
Industry
in
Brazil
2.1.1 Present
Scenario
2.1.2 PEST
Analysis
2.1.3 SWOT
Analysis
2.1.4 Market
Growth
2.1.5 Opportunities
2.1.6 Suggestions
2.2 A&D
Industry
in
Russia
2.2.1 Present
Scenario
2.2.2 PEST
Analysis
2.2.3 SWOT
Analysis
2.2.4 Market
Growth
2.2.5 Opportunities
2.2.6 Suggestions
2.3 A&D
Industry
in
India
2.3.1 Present
Scenario
2.3.2 PEST
Analysis
2.3.3 SWOT
Analysis
2.3.4 Market
Growth
2.3.5 Opportunities
2.3.6 Suggestions
2.4 A&D
Industry
in
China
2.4.1 Present
Scenario
2.4.2 PEST
Analysis
2.4.3 SWOT
Analysis
2.4.4 Market
Growth
2.4.5 Opportunities
2.4.6 Suggestions
2.6
How
to
grow
together
as
BRIC
using
A&D
industry
as
a
tool?
Exhibits:
1
-?9
Sources
&
References:
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
3
Executive
Summary:
This
paper
is
about
how
the
BRIC
nations
can
use
A&D
industry
as
tool
for
growth
for
combined
growth.
We
have
analyzed
each
country
through
PEST
&
SWOT
analysis
and
found
their
Core
Competencies
and
Competitive
Advantage.
Then
accordingly
the
strategies
have
to
be
set
so
that
the
maximum
can
be
made
out
of
each
country.
I
have
given
a
broader
preoperative
while
concluding
the
paper.
The
main
Idea
behind
this
paper
is
to
think
that
BRIC
countries
are
not
each
other’s
competitors
but
partners.
If
the
work
as
a
group
they
can
speed
up
their
economic
growth.
1
Introduction
to
Aerospace
&
Defense
Industry:
1.1
Brief
History
about
development
of
A&D
Industry.
Aerospace
&
Defense
Industry
now
days
generally
referred
as
A&D
industry.
If
we
want
to
find
the
history
of
this
industry
we
can
say
it
started
in
1908
when
Wright
Brothers
got
an
order
from
U.S.
Army
to
make
one
aircraft
and
also
when
they
licensed
their
patents
to
Astra
Company
to
manufacture
aircraft
in
France.
Europeans
took
an
earlier
advantage
in
A&D
business
right
from
the
start
of
First
World
War
in
1914
during
which
French
firms
built
about
200O,
Germans
about
1000
and
Britain
also
approximately
1000
aircrafts.
And
Americans
hardly
100
aircrafts.
After
the
First
World
War
most
of
the
aircraft
companies,
which
survived,
were
basically
because
of
entrepreneur
sprit.
Americans
invested
on
R&D
and
got
many
patents
and
this
give
them
an
upper
hand
over
Europe
and
became
a
major
player
in
A&D
Industry.
In
the
six-?year
period
1940
through
1945.In
1943,
the
aviation
industry
was
America's
largest
producer
and
employer
with
1,345,600
people
bent
to
the
task
of
making
aircraft.
We
can
say
this
was
the
start
of
American
dominance
in
A&D
Industry.
Production
reached
maximum
during
World
War
II,
despite
a
minor
blip
for
the
wars
in
Korea
and
Vietnam.
Instead,
research
ruled
the
industry.
During
cold
war
the
demand
of
stealth
and
UAV
increased.
This
lead
to
new
technologies
prompted
a
massive
restructuring
of
the
industry.
Established
airframe
firms
shifted
from
manufacturing
to
research,
while
the
military
channeled
funds
to
technology-? specific
startup
firms.
And
after
the
Cold
war
season
started
Globalization
and
the
world
became
a
Global
Village.
Hence
the
civil
aviation
became
an
important
means
of
transport
and
this
boost
the
A&D
Industry.
And
at
present
Boeing
and
Airbus
are
major
players
in
Commercial
sectors.
Where
else
Boeing,
United
Technologies
were
leaders
in
A&D
Sectors
during
2011
as
per
Fortune
500
(Refer
Exhibit
2).
1.2
Present
Scenario.
Aerospace
and
defense
industry
delivers
a
second
consecutive
Year
of
record
revenues
and
Profit
in
year
2011
as
per
data
from
Boeing
&
EADS
(Refer
Exhibit
3).
If
we
consider
commercial
aerospace
market
things
were
appearing
good
and
Industry
leaders
were
optimistic
as
Air
Traffic
was
strong
and
steady
which
was
driving
the
after
market
business
also
the
industry
had
delivered
a
record
number
of
large
aircraft
and
orders
are
available
for
next
8
years.
1.2.1
Effect
of
Euro
Zone
crisis
on
A&D
Industry:
4
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
With
the
onset
of
Eurozone
crisis
it
is
difficult
that
the
forecasted
figures
of
3.5%
by
IATA
for
the
Air
traffic
in
year
2012
can
be
met.
This
is
because
Europe
is
the
largest
Air
Travel
market
in
the
world
and
the
condition
of
Eurozone
Crisis
is
deteriorating
day
by
day.
Still
the
implication
of
Eurozone
Crisis
on
Commercial
Aerospace
OEMs
and
after
market
suppliers
remains
unclear.
Though
certain
suppliers
will
be
negatively
affected
by
stringent
credit
standards
and
higher
oil
prices.
And
also
the
after
market
suppliers
will
be
at
greater
risk
than
the
Commercial
Aerospace
OEMs.
2
A
Brief
Introduction
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
1800
1600
1400
1200
1000
800
600
400
200
0
2007
2008
2009
2010
2011
World
BRICS
100.00 %
World
BRIC
16.83 %
As
we
can
see
from
A&D
Insights
2011
by
pwc
(Refer
Exhibit
2)
that
A&D
industry
is
still
not
totally
globalized
it
ranks
at
8
out
of
total
15
stated
industries.
There
is
a
huge
potential
for
emerging
economies
such
as
BRIC
in
A&D
industry.
And
the
economic
slowdown
is
in
some
manner
helping
this
as
the
top
line
is
reducing
hence
OEMs
are
trying
to
maximize
profit
by
decreasing
the
bottom
line.
One
way
of
reducing
the
bottom
line
is
by
reducing
the
cost
in
manufacturing
and
R&D.
OEMs
are
doing
this
by
outsourcing
the
manufacturing
&
R&D
to
offset
locations.
And
if
observe
the
graphs
shown
above
we
can
see
that
even
the
defense
budget
for
BRIC
is
increasing
continuously
from
2007
onwards
and
if
we
compare
to
the
world
trend
the
increase
in
defense
expenditure
is
at
lower
rate
then
BRIC
,
in
near
future
BRIC
will
be
the
leading
spenders.
Even
now
they
are
accounting
for
about
16%
of
world
total
defense
expenditure.
This
can
observed
from
the
recent
data
provided
in
A&D
Insights
2011
by
pwc
(Exhibit
6),
where
a
relation
is
shown
in
terms
percentage
of
Total
GDP
the
expenditure
for
each
country.
Where
China
spends
maximum
approximately
12
%
and
India
is
lowest
about
4%
with
Brazil
&
Russia
at
6%
&
10%
respectively.
Similarly
if
we
consider
the
commercial
air
traffic
market
we
can
observe
that
the
U.S.
&
European
market
are
nearly
saturated.
And
the
BRIC
countries
have
large
countries
they
have
neary
40%
of
world’s
total
population
scattered
over
25%
of
earths
land
which
they
cover
and
with
a
combined
GDP
growth
of
about
25%
of
world.
This
is
further
strengthen
by
the
recent
statics
given
in
A&D
Insights
2011
by
pwc
(Exhibit
5)
,
which
speaks
that
the
air
traffic
in
Asia-? pacific*
is
expected
rise
from
present
21%
in
2008
to
31%
in
2028
of
total
world’s.
This
is
further
confirmed
from
the
order
books
of
Boeing
&
Airbus
who
have
to
deliver
about
37%
of
their
remaining
orders
for
the
period
of
(2009-?2028)
to
Asia-?pacific*
region.
(*Asia-?pacific
region
includes
India
&
China,
which
are
key
constituents
of
BRIC).
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
5
And
the
rise
in
commercial
air
traffic
also
opens
gates
for
MRO
(Maintaince,
Repair&
Overhaul)
in
India
&
China.
At
present
the
MRO
center
for
Asia-?pacific
region
is
Singapore.
Just
to
give
an
idea
about
the
potential
of
MRO
market
I
would
like
to
tell
you
that
the
total
cost
spent
on
MRO
activities
for
an
Commercial
Aircraft
in
its
useful
service
life
is
equivalent
to
the
total
initial
cost
of
that
Aircraft.
Just
analyzing
the
recent
trends
we
can
see
that
in
2009,
the
number
of
investments
made
by
Top
50
Global
A&D
firms,
in
R&D
side
maximum
12
were
done
in
India
followed
by
6
in
Russia
and
4
in
China,
in
manufacturing
side
maximum
23
were
done
in
China
followed
by
20
in
India,
9
in
Russia
and
2
in
Brazil.
Hence
we
can
observe
a
trend
that
India
is
soon
becoming
a
R&D
hub
for
A&D
this
may
be
also
contributed
to
the
government
policies
and
political-?socio-? economic
factors
which
I
will
be
discussing
later
in
this
paper
for
each
country.
China
is
still
maintaining
its
brand
of
“World’s
Factory”
in
A&D
sector
too
with
one
and
only
Airbus
assembly
line
operating
in
Tenzin.
The
challenges
faced
by
BRIC
countries
to
retain
and
develop
the
A&D
sectors
are
investment
risk
to
IPR
and
the
Frauds.
The
gravity
of
these
issues
can
be
understood
from
Exhibits
8&9,
which
are
taken
from
A&D
Insights
2011
by
pwc.
It
can
be
suggested
that
the
governments
of
BRIC
nations
should
have
stringent
laws
dealing
with
IPR
&
Frauds
issues
and
also
speed
up
the
legal
activities
related
to
them.
2.1
A&D
Industry
in
Brazil
Aerospace
Industry
Export
&
Import
6,000.00
5,000.00
4,000.00
3,000.00
2,000.00
1,000.00
-?
2007
2008
2009
2010
2011
Brazil
Export
Brazil
Import
2.1.1
Present
Scenario
Brazil
is
one
of
the
countries
in
BRIC,
which
is
already
playing
a
major
role
in
A&D
industry.
Embraer,
which
is
a
major
player
in
business
jets,
is
from
Brazil.
Also
it
is
the
second
largest
exporter
in
Aerospace
Industry
after
China
among
BRIC.
It
exported
5469.01
million
USD(United
States
Dollar)
while
it
imported
935.77
million
USD
worth
of
Aerospace
goods.
It
is
facing
a
tough
competition
from
China
&
India
now.
Its
core
competency
can
be
said
to
lie
in
Business
Jets
and
some
offset
business
generated
by
Boeing
in
Brazil.
If
we
analysis
the
Defense
spending
it
was
relatively
consistent
in
terms
of
growth
in
2011
it
was
3.53
billion
USD
and
has
been
increased
by
18%
for
2012.
6
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
2.1.2
PEST
Analysis
PEST(ANALYSIS(FOR(A&D(INDUSTRY(IN(BRAZIL(
POLITICAL(&(POLICY( 1.? Stable(government.( 2.? No(na;onalis;c(manufacturing(ambi;ons.( 3.? High(import(du;es(on(behalf(of(Embraer.( 4.? Defense(is(top(priority.( ( ECONOMIC( 1.? Seventh(largest(Economy(&(sixth(as(per(GDP.( 2.? Increased(the(defense(budget(by(18%(this(year( hence(a(big(emerging(market.( 3.? Low(external(&(public(debt.( 4.? Supports(manufacturing,(services(and(natural( resource(development(simultaneously.(
SOCIAL(&(LEGAL( 1.IPR®ula-ons&below&average.& 2.Low&unemployment.& 3.2014&FIFA&world&cup&&&2016&Olympic&will&create& the&market&for&more&commercial&air&tra?c.& 4.&Large&popula-on&&&big&country&scope&for& increasing&air&tra?c.&
TECHNOLOGICAL( 1.? Embraer&DNA.& 2.? Experience&work&force&for&A&D&industry&as& Embraer,&one&of&the&largest&brand&in& commercial&aircraNs&is&from&Brazil.& 3.? Has&all&the&resources&required.& 4.? Non&availability&of&exper-se&in&ITES.&
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
7
2.1.3
SWOT
Analysis
SWOT(ANALYSIS(FOR(A&D(INDUSTRY(IN(BRAZIL(
STRENGTH( 1.? Embraer(DNA.( 2.? Increased(the(defense(budget(by(18%(this(year(hence(a(big( emerging(market.( 3.? Low(external(&(public(debt.( 4.? Supports(manufacturing,(services(and(natural(resource( development(simultaneously.(( 5.? Increased(the(defense(budget(by(18%(this(year(hence(a(big( emerging(market.( 6.? Supports(manufacturing,(services(and(natural(resource( development(simultaneously.( 7.? HighPspeed(development(of(biofuels(for(aviaQon.(( OPPORTUNITIES( 1.? Strategically-located-can-cover-South-American-Market-andAfrican.2.? Has-a-domes<c-brand-Embraer-which-is-one-of-the-majorplayer-in-commercial-business-jets-and-so-can-enter-incommercial-aircraB-business-in-future.3.? Growing-A&D-market-in-BRICS-countries.4.? Can-be-a-preferred-choice-for-manufacturing-for-Europe-&US’s-OEMs-shiBs-their-base-from-Europe-as-it-rela<velyneutral--rather-than-China-&-Russia.WEAKNESS( 1.? IPR(regulaQons(below(average.( 2.? High(import(duQes(on(behalf(of(Embraer.(In(long(run(wil(be( a(problem(as(local(?rms(will(not(be(compeQQve(enough(for( global(market.( 3.? Brazil(is(not(lowPcost.(( 4.? Non(availability(of(experQse(in(ITES.( ( (
THREATS( 1.Rise-in-compe<<on-in-A&D-from-India-&-China.2.-Free-trade-scenario.3.-Increase-in-the-compe<<on-of-Business-jets-faced-by-Embraer.--
2.2.4
Market
Growth
By
studying
the
PEST
and
SWOT
Analysis
we
can
see
that
there
is
still
a
relatively
protective
market
because
high
import
duties
are
levied
may
be
to
protect
Embraer.
On
political
front
government
is
stable
and
they
have
not
started
investing
in
Defense
Aircraft
development.
This
makes
it
still
available
defense
market
for
foreign
companies,
as
there
is
no
domestic
competition.
In
next
four
years
Brazil
is
going
to
hoist
FIFA
Football
World
cup
in
2014
&
Olympic
in
2016.
This
will
increase
the
air
traffic
with
lots
of
tourists
flying
throughout
the
country
hence
is
a
large
potential
market
in
short
term
for
Commercial
aircraft
companies.
The
increasing
GDP
is
raising
the
per
capita
income
and
this
will
increase
the
time
value
of
its
nationals,
which
will
further
encourage
them
to
use
airways
instead
of
roadways
or
railways.
Hence
in
long
term
too
the
domestic
air
traffic
is
expected
to
rise
with
increase
in
economic
growth.
And
the
economic
growth
will
also
provide
the
rise
in
defense
budget,
which
makes
it
an
attractive
defense
market.
2.2.5
Opportunities
We
can
say
unless
it
opens
its
market
for
free
trade
it
will
be
difficult
its
local
companies
to
compete
at
global
level.
It
is
not
a
low
cost
manufacturing
destination
hence
it
can’t
take
that
advantage
from
China.
It
has
a
labor,
which
is
skilled
in
commercial
aircraft
industry
but
over
all
R&D
is
not
up
to
the
mark
and
IPR
regulations
are
below
average.
Again
in
R&D
India
is
becoming
a
global
hub
for
A&D
industry.
2.2.6
Suggestions
8
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
I
would
give
the
following
suggestions:
1. Allow
the
local
companies
to
compete
with
global
companies
in
domestic
market
so
that
they
may
become
strong
to
survive
in
International
Market.
This
can
be
done
by
removing
trade
barriers
and
also
promoting
JV(Joint
ventures)
and
FDI.
2. IPR
regulations
to
be
made
stringent
at
preset
they
are
the
lowest
among
BRIC
countries.(Exhibit
3. They
should
try
to
improve
in
ITES
sector
at
least
so
that
they
can
offer
the
complete
package
as
they
have
all
other
resources
available.
4. They
are
in
South
America
which
is
full
of
Emerging
economies
hence
can
make
their
presence
in
that
growing
market.
5. Can
target
BRIC
market
especially
India,
requires
a
lot
of
business
jets.
2.2
A&D
Industry
in
Russia
800.00
700.00
600.00
500.00
400.00
300.00
200.00
100.00
-?
2007
2008
Aerospace
Industry
Export
&
Import
Russia
Export
Russia
Import
2.2.1
Present
Scenario
Russia
was
once
a
superpower
but
with
time
it
lost
its
glory
is
now
again
want
to
resurrects
for
the
ashes.
It
is
one
of
the
most
technological
advanced
nation
specially
in
defense
sector.
There
are
one
of
the
best
in
Arm
design
and
manufacture
AK-?47
is
one
of
the
example,
even
it
is
considered
better
than
similar
American
&
German
Assault
riffles.
And
in
defense
aircraft
sector
they
have
a
very
successful
Sukhoi
30,
Sukhoi-?35
the
latest.
But
if
we
see
the
exports
and
imports
in
Aerospace
product
its
742.16
and
192.38
million
USD
respectively.
The
core
competency
of
Russians
can
be
said
in
Defense
sector
from
arms
to
aircrafts.
2009
2010
2011
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
9
2.2.2
PEST
Analysis
PEST(ANALYSIS(FOR(A&D(INDUSTRY(IN(RUSSIA(
POLITICAL(&(POLICY( 1.? Poli0cal(instablity.( 2.? Corrup0on.( 3.? Defense(top(most(priority.( 4.? Moderniza0on(of(defense(forces.( 5.? Recently(changed(the(poli0cal(model(from( communist(to(democra0c.( ( ( SOCIAL'&'LEGAL' 1.? Less'English'speaking'popula9on.' 2.? Highly'dependent'on'local'language.' 3.? Deep'impact'of'communist'teachings.' 4.? As'per'area'the'largest'country'and'as'per' popula9on'stands'at'…'hence'local'domes9c' airline'network'exists'but'is'not'operated'in'an' e?ec9ve'manner.' 5.? Unemployment'is'a'major'issue.' 6.? Low'IPR'protec9on'laws.' ECONOMIC( 1.? As(as(Per(GDP(9th(and(6th(largest(economy.( 2.? Basically(based(on(natural(resources.( 3.? A(con0nuously(rise(in(defence(budget(making( it(a(poten0al(market.( 4.? Has(second(largest(numbers(of(air((ports(in( world(hence(a(big(poten0al(for(commercial(air( tra?c.( 5.? Rise(in(Sovereign(debt.( 6.? S0ll(not(a(part(of(WTO.( TECHNOLOGICAL' 1.? DNA'of'an'earlier'Super'power'with'pro?ciency' in'high'end'technology.' 2.? A'leader'among'BRICS'in'A&D'sector'in'terms' of'technology'advancement.' 3.? Have'local'companies'in'R&D,'Manufacturing'&' MRO'sector'of'A&D'industry.'Ie.'Sukhoi,' Antonov'etc'
2.2.3
SWOT
Analysis
SWOT(ANALYSIS(FOR(A&D(INDUSTRY(IN(RUSSIA(
STRENGTH( 1.? 1.(DNA(of(an(earlier(Super(power(with(pro?ciency(in(high( end(technology.( 2.? A(leader(among(BRICS(in(A&D(sector(in(terms(of(technology( advancement.( 3.? Have(local(companies(in(R&D,(Manufacturing(&(MRO(sector( of(A&D(industry.(Ie.(Sukhoi,(Antonov(etc(Defense(top(most( priority.( 4.? A(conMnuously(rise(in(defence(budget(making(it(a(potenMal( market.( 5.? Has(second(largest(numbers(of(air((ports(in(world(hence(a( big(potenMal(for(commercial(air(tra?c.( 6.? Russian(products(are(generally(considered(robust.( WEAKNESS( 1.? (Low(IPR(protecMon(laws.(( 2.? Rise(in(Sovereign(debt.( 3.? SMll(not(a(part(of(WTO.( 4.? Non(avaliablity(of(aVer(sales(service.( 5.? Totally(dependent(on(Russian(language(specially(in( technology(which(makes(it(di?cult(for(entering(into(global( market(&(seWng(global(R&D,manufacturing(&(MRO( centers.( 6.? Geographical(locaMon(leser(number(of(ports(and(country( lies(far(away(from(the(major(growing(market(ie.(Africa,( AsiaYsubconMnent(&(South(America.( 7.? Lack(of(engineers(&(managers(for(A&D(Industry.( 8.? AdaptaMon(of(western(Quality(Standards(and(neither(any( development(of(Quality(Standards.( 9.? No(FDI(in(A&D(sector(and(lack(of(competaMon(due(to(less( number(of(private(players.( THREATS* 1.? The*Overall*Growth*of*China*in*A&D*sector*is*posing*a* serious*compeKKon*to*Russia.* 2.? A&D*industry*accept*the*western*Quality*&*Industry* standards*compulsory*to*adhere*to*sustain*in*Global*Market.* 3.? The*rise*of*outsourcing*business*in*India*for*A&D*Industry.* 4.? HesitaKon*of*western*countries*in*sharing*technology*&* placing*R&D*faciliKes.*
OPPORTUNITIES* 1.? Rise*in*the*A&D*market*in*BRICS*countries.* 2.? Already*a*major*player*in*?ghter*aircraG*manufacturing*&* defense*sector.*** 3.? Has*a*good*relaKon*with*the*governments*of*BRICS*countries* and*that*is*the*major*growing*porKon*in*A&D*sector.*
2.2.4
Market
Growth
Russia
is
a
developing
market
specially
for
commercial
air
traffic.
It
is
the
largest
country
in
terms
of
land
and
for
population
to
travel
across
it
air
travel
is
the
only
option.
As
it
is
already
10
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
a
big
producer
of
arms
and
fighter
aircraft
hence
it
is
not
much
dependent
on
outside
world
for
its
defense
needs.
Still
it
is
a
growing
market
as
its
defense
budget
was
64.12
billion
USD.
2.2.5
Opportunities
I
can
clearly
see
an
opportunity
for
Russia
in
World
Defense
market
especially
in
Arms
&
Fighter
Aircraft
area.
Their
products
are
robust
but
lack
service
support
and
spares.
They
have
a
large
market
among
BRIC
nations
such
as
India
,China
&
Brazil.
They
can
eye
commercial
and
cargo
aircrafts
too.
At
present
one
of
the
largest
cargo
aircraft
Antonov
An
225
was
built
by
Russia
and
is
used
for
transportations
of
space
shuttles,
heavy
machinery
etc.
Suggestions
I
would
suggest
Russia
to
target
markets
of
BRIC
in
defense
market
with
improving
its
service
&
spares
support.
It
can
also
open
its
service
wings
as
a
JV
with
the
local
players
of
each
country
so
that
it
may
have
an
cost
advantage
too.
It
can
focus
the
manufacturing
cargo
aircrafts
and
outsource
offset
activities
to
India
or
China.
India
is
world’s
largest
buyer
of
arms
and
so
Russia
can
target
Indian
market
for
the
same.
2.3
A&D
Industry
in
India
4,000.00
3,000.00
2,000.00
1,000.00
-?
2007
Aerospace
Industry
Export
&
Import
India
Export
India
Import
2008
2009
2010
2011
2.3.1
Present
Scenario
The
above
graph
represents
the
trend
of
Indian
Exports
&
Imports
in
Aerospace
sector.
We
can
clearly
see
that
the
present
exports
are
1990.11
and
57.26
million
USD
in
year
2011.This
also
shows
an
aspect
that
we
are
basically
exporting
the
services
(IT
&
R&D)
and
smaller
level
offset
units
which
are
mostly
tier
3
suppliers.
Hence
a
lager
market
exists
of
tier
1&2
suppliers
also
Indian
Government
promoting
OEMs
to
set
up
an
assembly
line
and
the
R&D.
Though
the
OEMs
have
started
investing
in
R&D
which
can
be
confirmed
by
the
statistics
given
in
A&D
Insights
2011
by
pwc
(Exhibit
7)
in
a
period
between
2000-?2011
about
12
investments
have
been
made
by
top
50
ranking
companies
as
ranked
by
Flight
International
Top
100
and
about
20
in
manufacturing
sector
of
Aerospace.
India
has
got
an
advantage
where
global
players
are
investing
in
R&D
and
got
a
lead
and
slowly
it
is
gaining
some
momentum
in
manufacturing
though
it
will
take
some
time
to
give
competition
to
China.
Where
else
it
has
definitely
become
a
hot
market
for
defense
deals
with
the
10.2
billion
USD
Rafael
deal
or
the
Hercules
&
P-?8I
aircrafts
deals
which
Boeing
has
won.
In
additional
to
this
India
is
also
developing
its
indigenized
4.5
generation,
single
engine,
single
seater
Light
Combat
Aircraft
(LCA)
or
commonly
known
as
Tejas.
It
is
now
in
its
final
phase
and
it
expected
to
join
the
nation
defense
by
2020.
Also
its
fairly
independent
on
manufacturing
of
Combat
Helicopters
such
as
(LCH)
and
others
as
Dhruv.
This
has
given
India
a
through
experience
of
working
in
R&D
and
manufacturing
of
Fighter
aircrafts.
With
the
organizations
such
as
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
11
DRDO(Defense
Research
and
Development
Organization),
ADA(Aeronautical
Development
Organization),
ADE(Aeronautical
Development
Establishment),
HAL(Hindustan
Aernautical
Limited)
and
BEL(Bharat
Electronics
limited).
Where
DRDO,ADA,NAL
&
ADE
caters
the
R&D
requirement,
BEL
is
manufacturing
the
electronics
related
to
FCS(Flight
Control
System)
and
WMS(Weapon
Management
System)
and
HAL
overall
assembly
and
manufacturing.
The
development
of
UAV(Unmanned
Air
Vehicles)
is
in
very
nascent
stage.
Hence
we
can
say
India
has
the
basic
building
blocks
for
A&D
industry,
which
are
all
following
international
standards
such
as
AS9100
Rev
C
&
EMS
140001.
2.3.2
PEST
Analysis
PEST(ANALYSIS(FOR(A&D(INDUSTRY(IN(INDIA(
POLITICAL(&(POLICY( 1.? Government(support.( 2.? Induc;on(of(GAAR((General(An;(Avoidance(Rule).( 3.? Poli;cal(stability,(regulatory(e?ec;veness,(rule(of(law(and( sovereign(debt.( 4.? Corrup;on( 5.? Regional(issues(overpowering(important(country(level( economic(decisions.( 6.? Defense(Produc;on(policy(&(Defense(Procurement( Policy(DPP).( 7.? Many(eminent(economist(in(poli;cal(senario.( 8.? Defense(of(the(country(is(of(highest(priority.( 9.? Di?culty(in(star;ng(a(business(specially(in(A&D(sector.( SOCIAL(&(LEGAL( 1.? Constant)treat)from)terrorists.) 2.? Many)interna2onal)disputes)with)neighbors.) 3.? Safeguarding)Long)cost)lines.) 4.? Second)largest)army)of)the)world.) 5.? )Low)cost)labor.) 6.? Pool)of)second)largest)English)speakers.) 7.? Large)pool)of)skilled)manpower)required)for)A&D)industry)is) available.) 8.? Labor)problems.) 9.? Improvement)in)IPR)environment)with)the)onset)of) pharmaceu2cals)companies.) 10.? BeQer)equipped)legal)system.))) 11.? Highly)consolidated)SMEs)Base.) 12.? Highest)no.)of)scien2st)&)engineers.)
ECONOMIC( 1.? Major(economic(reforms(done(in(last(20(years.( 2.? One(of(the(fastest(growing(economy(of(world(ranked(at(11( as(per(GDP(and((4th(largest(economy.( 3.? Increase(in(defense(budget(on(an(yearly(average(of(8%.( 4.? Huge(poten;al(for(Air(tra?c(business(as(2nd(largest( country(popula;on)(and(7th(largest((Land).( 5.? One(of(the(highest(saving(fund.( 6.? Defense(O?set(Policy.( 7.? Recently(A&D(sector(opened(for(private(players(with( investment(upto(100%(and(FDI(upto(26%.( 8.? Largest(importer(of(Arms.( 9.? Founding(member(of(WTO.( TECHNOLOGICAL( 1.? Availability)of))founda2ons)for)developing)a)robust)industrial) base)in)the)aerospace)and)defense)(A&D))sector)for) R&D,OEMs)&)MROs)(Maintaince)Repair)and)Opera2ons))ie.) DRDO,)HAL)etc.) 2.? Indigenized)development)of))Helicopters)by)(HAL))and) AircraX)(LCA/TEJAS))is)under)progress.) 3.? Experience)of)producing)robust))A&D)equipment)at)low)cost.) 4.? Availability)of))talent)suitable)for)A&D)Industry.) 5.? Knowledge)&)Implementa2on)of)Interna2onal)Quality) Standards)required)for)A&D)Industry)is)available.) 6.? Availability)of))all)technical)exper2se)ie.)ITES,)Manufacturing,) Management)and)R&D.)Makes)it)a)complete)package.)) 7.? Has)a)well)recognized)and)economical)space)program) operated)by)ISRO)which)is)a)recognized)name)at)Global)level.)
12
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
2.3.3
SWOT
Analysis
SWOT(ANALYSIS(FOR(A&D(INDUSTRY(IN(INDIA(
STRENGTH( 1.? Government(support.( 2.? Availability(of((founda>ons(for(developing(a(robust(industrial(base(in(the(aerospace(and( defense((A&D)(sector(for(R&D,OEMs(&(MROs((Maintaince(Repair(and(Opera>ons)(ie.(DRDO,( HAL(etc.( 3.? Knowledge(&(Implementa>on(of(Interna>onal(Quality(Standards(required(for(A&D(Industry(is( available.( 4.? Recently(A&D(sector(opened(for(private(players(with(investment(upto(100%(and(FDI(upto(26%.( 5.? Increase(in(defence(budget(on(an(yearly(average(of(8%.( 6.? Defense(O?set(Policy.( 7.? Many(eminent(economist(in(poli>cal(senario.(( 8.? Pool(of(second(largest(English(speakers.( 9.? Low(cost(labor.( 10.? Improvement(in(IPR(environment(with(the(onset(of(pharmaceu>cals(companies.( 11.? Be]er(equipped(legal(system.(( 12.? (Huge(poten>al(for(Air(tra?c(business(as(2nd(largest(country(popula>on)(and(7th(largest((Land).( 13.? Strong(IT(service(sector(and(similarly(Automobile(manufacturing(sector.(( 14.? Adaptability(to(changed(scenario.( OPPORTUNITIES( 1.? It%is%one%of%the%fastest%developing%market%and%so%the%items%can%be%manufactured%as%all%required% resources%are%available.% 2.? Can%become%a%MRO%hub%for%A&D%industry%because%of%availability%of%low%cost%human%resource.% 3.? India%is%strategically%%located%and%developing%markets%of%Middle%East,%ASEAN%&%ASIA%can%be% targeted.% 4.? Largest%no.%of%scienKst%and%engineers.%% 5.? Increasing%domesKc%players%involvement%in%Indian%defense%industry%HALNBoeing,%BELNBoeing,% UTCNBEL.% 6.? Increase%in%overseas%suppliers%involvement%in%Indian%defense%industry.% 7.? Because%of%recession%&%Eurozone%crisis%pro?t%margins%of%A&D%?rms%are%squeezed%hence%to% increase%pro?t%they%will%try%to%reduce%their%cost%by%mostly%outsourcing.%% 8.? Can%be%a%preferred%choice%for%manufacturing%for%Europe%&%US’s%OEMs%shiXs%their%base%from% Europe%as%it%relaKvely%neutral%%rather%than%China%&%Russia.% WEAKNESS( 1.? Induc>on(of(GAAR((General(An>(Avoidance( Rule).( 2.? Corrup>on( 3.? Di?culty(in(star>ng(a(business(specially(in( A&D(sector.( 4.? Pool(of(second(largest(English(speakers.( 5.? Low(innova>on.( 6.? Very(long(product(cycle(>me(as(many( approvals(&(checks(to(be(done.( 7.? Labor(problems.( 8.? Regional(issues(overpowering(important( country(level(economic(decions.( 9.? Poli>cal(inbstability,(regulatory(inb e?ec>veness,(rule(of(law(and(sovereign( debt.( 10.? Strategic(Barriers.( 11.? Lack(of(Infrastructure(and(the(increase(in( Energy(de?cient.(( THREATS( 1.Stratergic%barriers%fot%criKcal%technologies%&% source%codes,%IP.%% 2.%US%InternaKonal%Tra?c%in%Arms%RegulaKons%ITAR% restricKons.% 3.Exchange%change%risk%ie.%DepreciaKon%in%dollar.% 4.Tough%compeKKon%from%Brazil,%China%&%Russia.% 5.ReducKon%in%overall%defense%budget.% 6.DegradaKon%of%India’s%raKng%by%InternaKonal% Agencies%ie.%S&P%has%reduced%from%BBB+%to%BBBN.%%% %
2.3.4
Market
Growth
India
has
continuously
raised
its
defense
budget
during
last
5
years,
and
for
the
year
of
2011
it
was
approximately
44.28
billion
USD,
which
is
about
4%
of
its
GDP.
It
is
the
largest
importer
of
Arms.
And
recent
modernization
of
its
Air
Force
has
opened
new
doors
of
opportunity
tor
global
players.
It
is
definitely
an
attractive
market
in
defense.
If
we
see
the
Aerospace
sector
India
has
a
huge
potential
for
Air
Traffic.
As
per
capita
income
is
increasing
hence
the
purchasing
power
of
middle
class
is
also
increasing
which
will
extend
the
air
traffic
market
to
Indian
middle
class.
This
makes
it
a
lucrative
market
for
Global
Commercial
Aircraft
Manufacturers.
2.3.5
Opportunities
Discussing
about
opportunities
we
can
say
that
India
hasn’t
got
much
experience
in
arms
designing
&
manufacturing
but
there
is
definitely
potential
in
Designing
and
manufacturing
of
fighter
and
military
aircrafts
and
offset
outsourcing
of
R&D
and
manufacturing
activities
in
commercial
aircraft
market.
It
has
got
organizations
like
DRDO,
HAL
&
BEL,
which
are
AS9100
Rev
C
certified
(HAL-?LCA
SBU
&
BEL-?EW&A
SBU)
and
HAL,
BEL
&
other
private
companies
acting
as
tier
2
&
1
suppliers
for
Boeing.
There
are
many
R&D
have
been
set
up.
Also
the
players
like
Rafael
Dassault
,
Lockheed
Martin
&
Boeing
have
entered
into
JV(Joint
Venture)
with
Indian
companies.
During
the
Aero
India
2011
about
the
contracts
of
about
2
billions
USD
were
signed
between
Indian
&
Foreign
companies.
Indian
government
has
increased
the
competation
in
A&D
sector
by
allowing
few
of
Indian
private
Companies
such
as
Wipro,
Mahindra,
Infosys,
Tata,
L&T
&
Reliance
and
giving
them
a
title
“Raksha
Ratna”.Earlier
the
A&D
sector
was
dominated
by
PSU
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
13
(Public
Sector
Units)
and
Government.
Also
as
per
DPP(Defense
Procurement
Procedure)
2011
for
any
A&D
contract
at
least
30%
of
job
to
be
outsourced
to
Indian
Companies.FDI
upto
26%
is
allowed
in
A&D
sector,
special
benefits
are
given
to
foreign
companies
setting
up
their
R&D
centers
in
India.
In
India
R&D,
manufacturing
&
(IT)
services
all
three
are
available
hence
it
offers
a
very
good
package
for
global
players
to
outsource
their
activities
to
take
advantage
of
low
cost
skilled
talent.
Also
there
is
a
large
opportunity
in
MRO
(Maintaince
,
Repair
&
Overhaul
sector)
at
present
Singapore
is
the
MRO
hub
for
all
commercial
aircrafts
for
Asia-? pacific
region.
The
problem
is
that
Indian
government
has
put
heavy
import
duties
about
19-? 20%
on
the
equipment’s
required
for
MRO.
As
I
have
already
discussed
earlier
that
the
cumulative
cost
of
service
(MRO)
of
an
aircraft
during
its
useful
life
is
equivalent
to
its
initial
cost.
Hence
it
is
a
market
with
huge
potential.
If
we
consider
the
challenges,
which
India
faces,
are
average
IPR
protective
laws
and
the
risk
of
frauds.
Suggestions
Government
should
continue
its
industry
friendly
policies
and
also
make
some
A&D
specialized
SEZ(Special
Economic
Zone).
Import
duties
on
equipment’s
related
to
MRO
should
be
reduced
or
removed
,
IPR
laws
should
be
made
stringent
and
frauds
should
be
dealt
strictly.
2.4
A&D
Industry
in
China
Aerospace
Industry
Export
&
Import
2.4.1
Present
Scenario
China
as
expected
is
un-?doubly
the
leader
of
BRIC
and
it
is
keeping
its
position
even
in
A&D
industry
too.
Just
referring
this
Aerospace
export
&
import
graph
we
can
see
that
in
year
2011
export
and
imports
were
6391.72
million
USD
and
622.32
million
USD
respectively.
The
exports
are
huge
as
compared
to
Imports,
which
shows
it
is
already
a
manufacturing
factory
of
A&D
industry
though
still
there
is
potential
to
increase
it.
And
even
in
defense
sector
they
are
self-?sufficient.
Their
fighters
are
one
of
the
best
in
world.
And
now
they
are
planning
to
break
the
duopoly
of
Boeing
&
Airbus
from
Commercial
Aircraft
sector
by
launching
their
fully
indigenously
built
commercial
jet.
Comac
ARJ21
and
Comac
14
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
C919
are
two
variants
Comac
(Commercial
Aircraft
Corporation
of
China,
Ltd.)
is
planning
to
launch
challenging
Boeing
&
Airbus.
2.4.2
PEST
Analysis
PEST(ANALYSIS(FOR(A&D(INDUSTRY(IN(CHINA(
POLITICAL(&(POLICY( 1.? Stable(Government.( 2.? Full(Support(to(A&D(sector(by( government.( 3.? No(private(sector(&(No(FDI(in(Defense(&( Defence(Avionics.(( 4.? 35%(FDI(allowed(in(Commercial(AircraK( sector.( ( SOCIAL(&(LEGAL( 1.? High'morale'due'to'recent'economic' success'of'China.' 2.? Required'talent'available'which'can'be' directly'used'for'A&D'industry.' 3.? Language'Barrier.' 4.? China'A&D'sector'works'in'highly'closed' environment'as'dominated'by'SOEs'and' closely'monitored'by'Government.' ECONOMIC( 1.? Second(largest(Economy(&(Second(as(per(GDP.( 2.? ConNnuous(increase(in(Defense(budget.( 3.? SOEs(exists((in(Fighter(aircraK(&(Defense(producNon( but(presently(using(indigenizaNon(and(only( targeNng(domesNc(market.( 4.? (Presently(targeNng(the(domesNc(market(for(defense( sector(&(Global(market(for(Aerospace.( 5.? Low(cost(resource(available.(( TECHNOLOGICAL( 1.? SOEs'directly'coming'into'compeJJon'with'Boeing'&' Airbus'for'building'commercial'jets.' 2.? Has'all'the'technology'for'building'a'successful'A&D' Industry.' 3.? Are'aware'of'InternaJonal'Process'&'Quality' standards'and'can'follow'them.' 4.? Are'good'at'reOengineering.' 5.? Have'a'good'R&D'&'Manufacturing'sector.' 6.? Has'a'weak'IT'support'as'compared'to'India'for'A&D' sector.' 7.? Has'a'recently'developed'very'large'&'successful' Space'program.''
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
15
2.4.3
SWOT
Analysis
SWOT(ANALYSIS(FOR(A&D(INDUSTRY(IN(CHINA(
STRENGTH( 1.? (Stable(Government.( 2.? Full(Support(to(A&D(sector(by(government.( 3.? 35%(FDI(allowed(in(Commercial(AircraH(sector.( 4.? ConJnuous(increase(in(Defense(budget.( 5.? Low(cost(resource(available.(( 6.? Required(talent(available(which(can(be(directly( used(for(A&D(industry.( 7.? Are(aware(of(InternaJonal(Process(&(Quality( standards(and(can(follow(them.( 8.? Are(good(at(reTengineering.( 9.? Has(the(required(Infrastructure.( OPPORTUNITIES( 1.? Can&give&a&tough&compe22on&Boeing&&&Airbus& in&near&future.& 2.? Can&become&leaders&in&2er&1,2,3&suppliers&for& A&D§or.& 3.? China’s&rela2on&with&BRIC&countries.&& WEAKNESS( 1.? No(private(sector(&(No(FDI(in(Defense(&( Defense(Avionics.( 2.? Language(Barrier.( 3.? China(A&D(sector(works(in(highly(closed( environment(as(dominated(by(SOEs(and( closely(monitored(by(Government.( 4.? Chinese(Quality(is(sJll(a(concern(as(the( Chinese(products(are(not(widely(considered( robust.(( 5.? Lacks(the(support(in(IT(where(India(has(an( advantage.( THREATS( 1.? Rise&in&compe22on&from&India&as&a&Tier&1,2,3& supplier&for&A&D§or.&& 2.? Hesita2on&in&western&countries&in&sharing& informa2on&with&China&as&it&can&become&their& compe2tor&in&near&future.& &
2.4.4
Market
Growth
China
is
a
big
market
for
Air
Traffic,
till
now
only
big
cities
are
connected
still
small
towns
are
out
of
reach.
Hence
we
can
say
the
main
market
is
still
not
tapped
to
its
potential.
This
give
a
lot
of
opportunity
for
commercial
airliners
ie.
Boeing
&
Airbus.
As
far
as
defense
is
considered
they
are
independent
enough
and
have
a
strong
domestic
defense
industry.
Also
they
haven’t
open
up
their
defense
sector
for
outside
world.
2.4.5
Opportunities
They
eyeing
opportunity
in
commercial
aircraft
market
which
is
now
dominated
by
duopoly
of
Boeing
&
Airbus.
They
are
planning
to
launch
their
first
aircraft
within
a
couple
of
years.
They
are
already
a
hot
destination
for
offset
manufacturing.
But
are
still
not
into
global
defense
market.
One
basic
reason
may
be
the
absence
of
private
companies
in
Defense
sector.
They
can
also
try
to
tap
the
MRO
segment.
Suggestions
Chins
is
doing
many
things
right.
Just
I
would
suggest
them
to
built
some
trust
in
global
companies
so
that
they
may
open
their
R&D
centers
in
China.
Also
they
should
make
IPR
regulations
more
stringent.
In
order
to
reduce
language
barrier
Chinese
government
has
made
compulsory
English
education
in
schools.
16
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
2.6
How
to
grow
together
as
BRIC
using
A&D
industry
as
a
tool?
Can
BRIC
works
together
as
a
team?
Can
they
develop
a
sustainable
model
of
co-?operation?
I
can’t
answer
this
at
a
general
level
but
at
the
level
of
A&D
industry
it
is
fairly
possible.
One
of
the
basic
thing
is
that
no
two
BRIC
countries
are
similar
in
terms
of
core
competencies
and
this
can
help
them
to
work
together
also
by
doing
so
their
dependence
on
US
&
Europe
will
drastically
reduce.
If
I
would
had
been
given
a
task
to
frame
a
strategic
policy
for
BRIC
in
A&D
sector,
first
of
all
I
would
taken
an
account
of
core
competencies
of
each
BRIC
country.
Starting
with
Brazil
we
can
say
they
have
an
upper
hand
in
Business
Jet
segment
they
can
focus
on
Business
Jet
markets
and
manufacture
them.
India
,China
&
Russia
are
one
of
the
biggest
markets
for
business
jets
as
the
growing
number
of
business
leaders,
politicians
&
eminent
personalities
all
require
business
jets.
India
,China
&
Russia
can
give
a
preference
Brazil’s
business
jets
as
they
will
be
economical
than
those
from
US
&
Europe.
While
speaking
about
Russia
one
thing
comes
into
mind
is
Sukhoi
&
AK
47.
Their
core
competencies
are
Fighter
aircraft
and
Arms.
They
can
produce
them
and
sell
them
to
India,
Brazil
and
China.
Russian
products
are
economical
&
robust
but
the
problem
comes
for
spare
part
availability.
This
can
be
solved
if
Russia
give
some
Indian
or
Chinese
countries
contract
of
producing
spares
parts
for
their
Aircrafts.
At
present
India
is
one
of
the
largest
buyer
of
arms
and
BRIC
constitute
16%
of
total
world
defense
market.
It’s
a
huge
opportunity
for
Russia.
India
masters
of
IT
services
and
a
growing
hub
of
R&D.
India
can
provide
the
IT,R&D
and
all
other
services
to
all
the
requirements
of
Brazil’s
Business
jet
company,
Russian
Defense
industry
and
China’s
commercial
aircraft
industry
&
offset
manufacturing.
It
is
also
a
destination
of
offset
manufacturing
after
China
in
BRIC.
This
can
help
India
to
diversify
its
services
industry
at
global
level.
China
the
most
strongest
economy
of
BRIC.
It
has
bigger
dreams
than
any
of
BRIC
country.
At
present
they
are
targeting
commercial
aircraft/jet
market,
which
means
to
break
the
duo-?poly
of
Airbus
&
Boeing.
For
China
India,
Russia
&
Brazil
are
certainly
hot
markets.
India
,Brazil
&
Russia
can
give
a
preference
to
Chinese
Commercial
airliners
as
they
will
be
economical.
Also
China
is
a
hot
destination
for
offset
business
means
Brazil
can
shift
some
of
its
Embraer
offset
activities
in
China
&
India.
If
the
above
strategy
can
be
implemented
it
will
be
a
WIN-?WIN
situation
for
all
BRIC
Countries.
BRIC
countries
should
look
each
other’s
as
partners
and
not
as
competitors.
-?-?-?-?-?-?-?-?-?-?-?-?-?-?-?-?-?
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
17
Exhibit
1
Present
A&D
Breakup
Exhibit2
Rank Company Revenues Profits Fortune/ %/change/ %/change/ $/millions $/millions 500/rank from/2009 from/2009 36 64,306.00 .5.8 3,307.00 152.1 44 54,326.00 2.7 4,373.00 14.2 52 46,890.00 3.8 2,926.00 .3.2 72 34,757.00 .1.5 2,053.00 21.8 81 33,370.00 8 2,022.00 .6.1 86 32,466.00 1.5 2,624.00 9.6 104 25,183.00 1.2 1,840.00 .4.9 159 15,680.00 0.4 955 6 217 11,155.00 2.3 798 24 233 10,525.00 .0.2 86 N.A. 337 6,966.90 4.2 578.7 .3.1 409 5,539.60 .19.9 921.8 .11.7 472 4,807.70 4.9 278.7 79.7 478 4,665.00 4.4 561 .5.6
1 Boeing 2 United6Technologies 3 Lockheed6Martin 4 Northrop6Grumman 5 Honeywell6International 6 General6Dynamics 7 Raytheon 8 L.36Communications 9 ITT 10 Textron 11 Goodrich 12 Precision6Castparts 13 Alliant6Techsystems 14 Rockwell6Collins Issue6date:6May623,62011 (Source:
Fortune
500)
Exhibit3
Recent
Growth
in
A&D
Sector
2011
Revenue
$677
Operating Profit $60 Operating Margin 8.86% *All
monitory
figures
in
US$ billions (Source: Boeing annual report; EADS annual report)
2010
$648
$59.1 9.13%
Change 5% 2% -27bps
18
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
Exhibit4
Globalization
Exhibit
5
Exhibit
6
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
19
Exhibit
7
Exhibit
8:
IP
Risk
20
Development
&
Opportunities
of
Aerospace
&
Defense
(A&D)
Industry
in
BRIC
Countries
Exhibit
9
Frauds
&
How
they
are
dealt.
Sources
&
References:
1.A&D
Insights
2011
by
Mr.
Neil
Hampson
published
by
PricewaterCoopers
(PWC).
2.
A&D
Insights
2012
by
Mr.
Neil
Hampson
published
by
PricewaterCoopers
(PWC).
3.
Aerospace
&
Defence
2011
year
in
review
and
2012
forecast
by
Mr.
Neil
Hampson
and
Mr.
Scott
Thompson
published
by
PricewaterCoopers
(PWC).
4.
Unlocking
Potential
Indian
Aerospace
&
Defence
Sector
by
KPMG
&
CII.
5.
SIPRI
Military
Expenditure
Database
2012.
6.
2012
Global
aerospace
and
defense
industry
outlook:A
tale
of
two
industries
by
Deloitte.
7.Wikipedia
doc_219755796.pdf