Master Class : Defence & Aerospace Startups

01 April 2024
Master Class : Defence and Aerospace Startups
► Objectives ► Outcomes
 Explore and Discover Innovators/ Startups/ MSMEs  Understanding of Defence and Aerospace
which can co-create innovative defence Manufacturing Eco System.
technologies with the Indian Armed Forces &
other establishments.  Identifying Opportunities for Innovators/
Startups/ MSMEs in Defence and Aerospace
Manufacturing Sector.
 Mentor and Nurture such Innovators/ Startups/
MSMEs.
 Understanding the Peculiarities of
Procurement for Indian Armed Forces.
 Support the identified Innovators/ Startups/ MSMEs
with prototyping and piloting defence related  Introduction to iDEX, and TDF Schemes.
products/ technologies.
 Understanding of Market Access, and Funding
 Encourage Innovators/ Startups/ MSMEs to submit for Startups.
potential solutions for product requirements of
the Indian Armed Forces.  Incubation through 5Ms – Means, Methods,
Mentoring, Market and Money

 Encourage participation of Innovators/ Startups/  Through a combination of lectures, case studies,

MSMEs in iDEX challenges and TDF Projects. and networking opportunities, participants will
gain insights into cutting-edge technologies,
supply chain innovations, and avenues for
funding and scaling their ventures.
Overview of Indian Aerospace & Defence Sector

01 April 2024
Geopolitics: India and the world

Key factors influencing India’s defence business:

Challenges in global defence industry:
• Disruption in global supply chain due to Covid-19
• Industry under strain due to the rate of ammunition
and armaments expenditure in the ongoing conflicts
• Proliferation of low-cost commercial systems &
platforms in defence sector
• Rapidly changing industry 4.0 technologies
• Challenges on the Northern and Western Borders
• Major initiatives between India and the US, such as
India Critical and Emerging Technology (iCET),
Defence Technology and Trade Initiative
• Enhanced co-operation with Europe through
maritime security dialogue, deployment of defence
attaché, and naval exercises.
• New partnerships and treaties such as I2U2, QUAD,
India Middle East Europe Economic Corridor,
among others

• India through its revamped Defence Diplomacy is adding

new countries as its customers.
World defence budget outlook (in $ Trillion) • Ongoing talks with Nigeria, Tanzania, Argentina, Egypt,
3
Philippines, Vietnam, etc for various weapon systems.
2.5 R 4.90%
CAG
2
1.5 Over 100 23 times Exports to
2.55 firms rise in more than
1 2.01 actively 85
defence
0.5 exporting exports countries
0 2023 2028
2023 2028
Source: MarketsandMarkets
Indian defence budget: A snapshot

Budget overview

USD 74.8 bn total ~USD 20.72 bn Capital 25% R&D

defence budget budget budget for industry,
Capital budget: new acquisitions
start-ups and academia Revenue budget: maintenance of existing fleet
~USD 8.5 bn Revenue
budget (stores, works,
repairs, refits)

350000
Capital Budget 304,129
300000
273,990
246,838
250000
222,377
200,339
200000 180,486
162,600
152,369
150000 135,060
113,734
103,394
100000 91,580 93,982

50000

0
17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30

• In last 7 years, capital budget has been increasing at a CAGR of 11% on an average
• India may set up a non-lapsable defence modernisation fund
• Project capital outlay by 2030 at CAGR of 11%: US$ 36.5 bn
 Amidst drastic geopolitical changes, India’s national goal of self-reliance in defence
production focusses on indigenous design and development
Total Defence Production
200,000

180,000 176,636
• Given the reforms in defence production and emphasis on defence exports,
defence production is projected to be INR 1,76,635 crore (~US$ 21 bn) at a
160,000
CAGR of 7%
140,000
• Defence production shall be more if platforms like Tejas Mk2 and strategic
120,000 110,000 missiles are cleared for production
102,067
100,000 90,672
84,000 86,687 85,366 • Defence production may also increase if India is awarded more export contracts
78,752
80,000
• Values are presented in real terms (i.e., INR crore)
60,000

40,000

20,000

0
16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 25-26 26-27 27-28 28-29 29-30

Ministry of Defence Targets

INR cr Present Target (2025) Target (2029)

Production 1,08,684 1,75,000 3,00,000
Exports 20,000 35,000 50,000
MSMEs ~12,000 ~16,000
MoD has been allocated INR 6.2L Cr in FY 2024-25, the highest among all ministries

In the past one month, the Cabinet Committee on Security approved several major
defence deals worth over INR 1,00,000 crore:

HAL (with DRDO): SU-

30MKI upgrade: integration
220 extended range (450 km) HAL (with Russia): new
new radars, mission control
BrahMos missiles for IN: engines for MiG-29 fighters
systems, EW capabilities, and
INR 19,500 cr for IAF: INR 5,300
weapon systems: INR 60,000
cr

L&T: high-powered radars HAL : Acqn of 34 x ALH

L & T : Close-in Weapon Dhruv Mk III - 8073 Cr
and new versions of the L-70
System project: INR 7,000
air defence guns: INR 6,000 Midlife Upgrade of Dornier
crore
cr each Aircraft : INR 2,890 crore

Capital acquisitions worth over Rs 4.3 lakh crore have been approved
-Hon’ble RM
 2024: Highlights of the Indian Defence Sector

RFIs/RFPs

System Category RFI/RFP Qty Issued by Likely contenders

Advanced Turbo Gas Generator (ATGG) Engines NA RFP 20 DG Propulsion, Aerostrovilos, Paninian, Godrej
GTRE
MTAR
Light vehicle GS 4x4 700-900 kg (hard top) Mahindra,
IDDM RFI NA IHQ

Contracts

Company About
Blurgs Innovations iDEX winner ; Contract from BEL for intelligent maritime domain awareness tool TRIDENT
Jupiter Wagons Ltd 697 Bogie Open Military (BOM) Wagons worth INR 473 Cr under IDDM
BEML 56 Mechanical Minefield Marking Equipment (MMME) Mark II worth INR 329 Cr under IDDM
ECIL INR 980 crore contract from BEL, Hyderabad for IEWS COM segment systems for Indian Army

• INR 695 crore contract from Mazagon Dock Shipbuilders Ltd, for supply of spares related to missile systems
BEL • INR 339.31 crore, related to Combat Management System, Composite Communication System, Transmit / Receive Modules, Mobile Autonomous Stabilization
System and other spares / services

Aerolloy Technologies (PTC

• Titanium cast parts for Rafale aircraft for Dassault Aviation
WOS)
TASL • Bulk cargo door for A320neo aircraft for Airbus
Dynamatic Technologies • Flight Critical Aerostructures for Falcon 6X for Dassault Aviation
MDL • Contract for 14 FPVs for INR 1070 crore

• Contract from (Maritime Energy Heli Air Services Pvt) MEHAIR for ZA600 hydrogen-electric engines
ZeroAvia • Pre-order of 2000+
• They are also working towards establishing a fuel supply for the operator’s services throughout India
 2024: Highlights of the Indian Defence Sector

Industry Buzz

Company About

DGCA has granted authorization for Remote Pilot Training Organization (RPTO) for Small and Medium Class drones
Garuda Aerospace
Only drone company in India with a dual certification for both training and manufacturing of small and medium class drones

Dvipa Armour India Private

Developed assault rifle ‘Ugram’ with ARDE in 100 days for IA and Paramilitary forces
Limited (DAIPL)

Bharat Forge Acquired 51% stake in Indian arm of Ukrainian firm Zorya Mashproekt

DG Propulsion Pvt Ltd successfully completed demo test runs for powerful and precise DG J 40 jet engine; Used for variety of UAVs

Dr Kalam Advanced UAV

Patented a tethered drone to which power is supplied from the ground through a Kevlar-coated glass fiber cable
Research Centre, CASR, Anna
The vehicle can also function as a hybrid system wherein the drone can be detached for free flight
University

• Proposed:
• production of missiles and counter-drone systems in Telangana
Adani • development of a pumped storage power facility
• wind energy project.
• interest in establishing a data centre project alongside an aerospace park in Telangana

• Demonstrated Combat Cloud platform, a swarm autonomy stack which allows remote control of swarms of drones over large distances using a 4/5G mesh network
NRT
architecture

Gopalan Aerospace • Dispatched a custom-built, four-axle, hydraulic suspension, steerable ground vehicle capable of carrying a hefty 54-ton payload to DRDO
IA’s Corps of EME • Developed Atharva, a fusion tank with the T-72’s hull with the T-90s turret

• AI Powered Landmine, utilizes AI to identify and differentiate between friendly and enemy forces, and will detonate only when it identifies hostile intent with human
Major Rajprasad
confirmation

• IA asked them to produce and supply 59 Zorawar light tanks

DRDO and L&T • In a separate project, the Indian Army will organize a competition to purchase 295 more Zorawar light tanks, for which six to seven companies are submitting their light tank
offerings

Boeing • BIETC inaugurated

Aerostrovilos • Developed small turbines

Azad Engg and Rolls Royce • Agreement for engine components in India

GRSE and Rolls Royce • Will manufacture S4000 engines in Ranchi

 January 2024: Highlights of the Indian Defence Sector

Industry Buzz

Company About

• Developed end-to-end secure mobile ecosystem SAMBHAV

• operates on contemporary 5G technology
IA
• to configure 35,000 sets in two phases
• The initial phase aims to configure 2,500 sets by January 15, with the remaining 32,500 sets scheduled to be completed by May 31, 2024

• Opened a small-arms barrel manufacturing facility (worth ~INR 60 crore)

ARDE • 3 sequential machines with the third and most important being the Austrian- origin barrel forging machine procured at a cost of 3.2 million Euros. The machine has a fully
automatic operation sequence and comprises a six axle robot that performs the task.

• Developing wheeled CBRN (8x8) vehicle with DRDO

Mahindra
• Indian Army intends to procure 49 such vehicles

• MEHAIR initiated services in 2011 across the Indian sub-continent, starting with the Andaman and Nicobar Islands. Now, with plans for expansion, MEHAIR aims to cover various
sub-regional routes in India, utilizing both amphibian and wheeled aircraft.
MEHAIR • To finance the acquisition and retrofitting of engines to their upcoming fleet of 10 Cessna Caravan aircraft, MEHAIR is exploring financing options, including potential partnerships
with leasing companies
• Already has a relationship with MONTE as its preferred ZA600 lessor partner

• Developed two new UAVs: The ‘Sabal' series UAVs consist of small, electrically propelled tandem-rotor aerial vehicles designed primarily for cargo and observation applications ;
EndureAir
Sabal-10 and Sabal-20, have a low audio and visual signature and can be transported and operated by two people

DRDO • Looking for Indian Industry Partners for supplying IIR seeker modules for Nag Mark2, ATGM

• BEL and Foundation for Innovation and Technology Transfer (FITT) at IIT-Delhi signed MoU for breakthroughs in Naval Deep Tech research at Centre for Applied Research in
BEL and IIT-D
Electronics (CARE, IIT-D)

DMSRDE, Kanpur • Developed indigenous fuel for the BrahMos supersonic cruise missile ; testing started

Jeh Aerospace • Manufacturing plant in Hyderabad

MIDHANI • Will supply Hastelloy X nickel-based superalloys for GE 414

• Acquired majority stake in Gecko Motors, renamed as JSW Gecko

JSW Defence • Secured INR 250 crore order from MoD for 96 ATOR N1200 specialist mobility vehicles
• Partnered with UK-based Copato for joint venture and technology supply license agreement to manufacture specialist mobility vehicles in India

Thales • MRO facility planned in Delhi

Indian Industry Landscape
Defence manufacturing is open to private sector with upto 74% FDI under automatic route ; 100% under Govt route
illustrative; not exhaustive
Defence sector was opened for Indian private sector participation with FDI permissible up to 26%, both subject to licensing in 2001

Industries

DPSUs

Major private industries

Some MSMEs / start-ups

Some FOEMs in India

(having WOS and JVs)
R&D wing of GoI: Defence Research and Development Organisation

7 clusters, 54 laboratories
and establishments

Micro Electronic
Armament and Combat Electronics and Devices, Computational Missile and Strategic Naval Systems and
Aeronautical Systems Life Sciences Materials
Engineering Communication Systems Systems and Cyber Systems
Systems
FOEMs from various geographies are capturing the Indian market through JVs

Joint Venture Indian partner Foreign partner

TATA Advanced Systems
TATA Boeing Aerospace Ltd Boeing
Ltd.
TATA Advanced Systems Lockheed Martin
TATA Lockheed Martin Aerostructures Ltd
Ltd. Corporation
TATA Advanced Systems
TATA Sikorsky Aerospace Ltd. Sikorsky Aircraft Company
Ltd.
Kineco Kaman Composite Structures Kineco Group Kaman Aerospace Group

Safhal Helicopter Engines Pvt Ltd HAL Safran

Rafael Advanced Defense
Kalyani Rafael Advanced Systems Pvt. Ltd. Kalyani Group
Systems Ltd.
L&T MBDA Missile Systems Limited L&T MBDA
BAE- Mahindra Mahindra & Mahindra BAE Systems
BEL-Thales Systems Limited BEL Thales
BrahMos Aerospace etc DRDO NPO Mashinostroyenia
HALBIT Avionics Pvt. Ltd. HAL Elbit Systems
International Aerospace Manufacturing Pvt. Ltd. HAL Rolls Royce
Governing Policies

01 April 2024
 Policies and schemes impacting Defence acquisitions

• Increased requirement of IC across categories

• Aero Engines and FAB: projects of national importance
DAP 2020 • Max. equipment to operate on indigenous software
• Military materials for self-reliance

DPM 2009/ • Defence Procurement Manual (DPM) lays out procedure for all revenue procurement
Draft DPM 2021
Ministry of Defence

• Achieve a turnover of Rs 1,75,000 Crores (US$ 25Bn) including export of Rs 35,000 Crore (US$ 5 Billion)
Draft DPEPP 2020 • reduce dependence on imports

Defence testing • Enables establishment of testing infrastructure where 75% of the establishment cost is borne by the government and operations are carried by private entities.
infrastructure scheme • Grant-in-Aid for upto INR 400 cr.
(DTIS)

• Funding up to INR 10 cr (prime) in the form of equity/other relevant structure

iDEX • Start-ups, MSMEs, Individual Innovators

• Funding up to INR 50 Cr to the industry as grant-in-aid

TDF scheme • The industry must be owned and controlled by a Resident Indian citizen with minimum 51% ownership
• Development period - max 2 years

Security
Industrial Export license
Manual 2014
FDI Policy licensing policy
Other

Arms Rules SCOMET list

Arms Act
IDRA. 1951 2020 1959
Reforms to enhance indigenous defence production

• FDI cap has been raised from 49% to 74% under automatic route
Foreign Direct
• This has been enforced via Press Note 4 (2020 series) dt 17 September 2020 issued by DPIIT
Investment (FDI)

Separate capital budget • FY 2020-21 ~US$ 6.94 bn ; FY 2021-22 ~US$ 9.4 bn ;

for domestic • FY 2022-23: ~US$ 12.4 bn FY 2023-24: ~US$ 13.8 bn
procurement • FY 2021-22, AoNs: 97% for indigenous procurement; 60%- Buy (Indian-IDDM), 30-35% - Buy (Indian) ; 5-10%: Buy & Make

Corporatisation of
Ordnance Factory • 7 new DPSUs have been formed (41 factories subsumed)
Board (OFB)

Positive lists for • 5 lists

indigenisation • Import embargo on 509 items after timeline against them

2 DRDO lists • 183 (108 + 75) items for design and development by Indian Industry

Project Management • Setting up of a PMU has been mandated under DAP 2020 to support contract management for faster decision making and time bound
Unit (PMU) for time defence acquisition process
bound procurement • AoN to contract conversion shall take place within 2 years - Hon’ble Defence Minister
DAP 2020: Acquisition Categories and Indigenous Content
Acquisition categories in order of priority

Category IC requirement

Buy (Indian-IDDM) Min 50%

DAC approval for amendment of DAP 2020
Buy (Indian) Indigenous design – Min 50%
Otherwise – Min 60%
Buy & Make (Indian) Min 50% of Make In all categories of procurement, minimum 50% IC shall
be:
Min 50% of Buy plus Make • material
Buy (Global – Manufacture in India)
• components
Buy (Global) Min 30% for Indian vendors • software

Cost of
• Annual Maintenance Contract (AMC)
Other categories of acquisition • Comprehensive Maintenance Contract (CMC)
• After Sale Service to be excluded
Category IC requirement

Make and Innovation - Make I, II, III, iDEX, TDF, IIO Min 50%

D&D - DcPP Min 50%

Strategic Partnership Model NA

Leasing NA
Demand & Opportunity

01 April 2024
Envisaged/ ongoing major procurements

Fighter aircraft – MRFA / TEDBF HALE / MALE UAS

• 114 fighter aircrafts for IAF • HALE: 32 MQ-9s from GA under FMS
• Likely category: Buy (Global - Mfg in India) • MALE: Hermes 900 from Adani – Elbit, Herons
from IAI

Light Utility Helicopter Aeroengine

• IA: RFI to lease 20
• IN: RFI to lease 24 LUH
• Safran and DRDO finalising a framework for joint
development of aero engine
• JV ‘Safhal Helicopter Engines Pvt Ltd’ for IMRH
and DBMRH
• Contract signed for 99 GE 414 engines

Medium Transport Aircraft FICV, FRCV

• RFI to replace ~100 AN-32 aircraft with IAF • FICV: RFI for 1750
• Participants: Embraer, Lockheed Martin, • FRCV: RFI for 1770
Airbus

Submarines 2nd IAC

• Project P75I: RFP issued for 6 submarines • Approval-in-principle by DPB

• Participants: Navantia (L&T), Thyssenkrupp • Likely to be manufactured CSL
(MDL)
AoNs granted in 2023 are expected to fructify into contracts in next 2 years

Value (INR Value

System Likely category
cr) (USD bn)
HELINA Anti-Tank Guided Missiles, launchers and associated support equipment for ALH
VSHORAD (IR Homing) missile system
Buy (Indian- IDDM) 4,267 0.51
Brahmos Launcher and Fire Control System (FCS) for the Shivalik class of ships & Next Generation Missile Vessels (NGMVs) of
Indian Navy
32 MQ-9B (16 Sky Guardian and 15 Sea Guardian) HALE RPAS for Tri-Services FMS from GA, US 25,531 3.072
Electronic Warfare (EW) Suite on Mi-17 V5 Helicopters
Ground-Based Autonomous System for mechanised infantry and armoured regiments
7.62x51 mm Light Machine Gun (LMG) Buy (Indian- IDDM) /
7,800 0.93
Bridge Laying Tank (BLT) Buy (Indian)
Weapons for MH60R Helicopters
Ruggedised Laptops and Tablets for the Indian Army under Project Shakti
Light Armoured Multipurpose Vehicles (LAMV) and Integrated Surveillance and Targeting System (ISAT-S)
High Mobility Vehicle (HMV) Gun Towing Vehicles for swift mobilisation and deployment of Artillery Guns and Radars Buy (Indian- IDDM) /
Avionic upgradation of Dornier Aircraft for Indian Air Force Buy (Indian) 45,000 5.41
Dhruvastra Short Range Air-to-Surface Missile for ALH Mk IV
12 Su-30 MKI Aircraft with associated equipment
Area Denial Munition (ADM) Type - 2 and Type-3 for Indian Army
400 Towed Gun System (TGS) for Indian Army
155 mm Nubless projectile for use in 155 mm Artillery guns
156 Light Combat Helicopter (LCH) for Indian Air Force (IAF) & Indian Army Buy (Indian- IDDM)
97 Light Combat Aircraft (LCA) Mk 1A for IAF 2,23,000 26.83
84 Upgrade of Su-30 MKI Aircraft
Medium Range Anti-Ship Missiles (MRAShM) for surface platform of Indian Navy
Automatic Target Tracker (ATT) and Digital Basaltic Computer (DBC) for T-90 Tanks Buy (Indian)

ER: 1 USD - INR 83.11

 Snapshot of Technology Perspective and Capability Roadmap (TPCR) 2018
Illustrative ; not exhaustive

Programme Approx. Brief Requirements

Quantity
Air to Air 500+ Fire & Forget, Range> 7Kms
Missile System
WEAPONS AND SYSTEMS 26% for Helicopter
30%
SHIPS / CRAFT Surface to 200 Less than 1 ton in weight, range
Surface Missiles over 150km and launch capability
from various platforms
EW AND COMMUNICATIONS
Shore Based 100 Land based system with range more
AMMUNITION Missile for than 250km having its own integral
MMCBs radar support complex
SENSORS ATGM (ICV) 2000 3rd Generation ATGM, range >4km,
1000mm twin launcher, LOBL and
ARMOURED FIGHTING 4% 12% LOAL features
VEHICLES SYSTEMS ATGM (Tank) 4250 3rd Generation ATGM, range >5km,
Depth of Penetration > 650 mm
Others 8%

10%
10%
Major contracts signed in the last three years
Illustrative ; not exhaustive
Platform Quantity Value (USD mn) OEM Foreign/Indian
Next Generation Offshore Patrol Vessels 11 117 GRSE, GSL Indian
Medium Power Radars (MPR) ‘Arudhra’ NA 336 BEL Indian
Kamikaze Swarm Drones 200 36 Veda Aeronautics Ltd Indian
LCA Tejas Mk1A 83 576 HAL Indian
F404-GE-IN20 engines and support services 99 716 GE Aviation Foreign
Light Machine Guns 16000 105 IWI, Israel Foreign
Apache helicopters 6 930 Boeing Foreign
MH-60R helicopters 24 2600 Lockheed Martin Foreign
C295 aircraft 56 2800 Airbus Defence and Space Foreign

Other major RFIs/ planned acquisitions:

Equipment Quantity Service
FICV 1750 Indian Army
FRCV 1770 Indian Army
Light Tanks 350 Indian Army
LUH 24 Indian Navy
LPDs 4 Indian Navy
HALE UAS ~30 Joint
Jai Hind

23