This presentation was delivered by Dr V K Saraswat at India's National Competitiveness Forum 2015, the flagship event of India Council on Competitiveness. Institute for Competitiveness (India) the Indian knot in the global network of the Institute for Strategy and Competitiveness at Harvard Business School has initiated the India Council on Competitiveness. The Council, created in collaboration with the U.S. Council on Competitiveness; is based in Gurgaon, India and is an association of distinguished members from industry, academia, think tanks, media and researchers. The mission of the India Council is to set an action agenda to drive Indian competitiveness, productivity and leadership in world markets to raise the standard of living for all Indians. For more information, visit www.compete.org.in

1. BILLION DOLLAR OPPORTUNITIES IN
THE INDIAN DEFENCE SECTOR
Dr VK Saraswat
DAE Homi Bhabha Chair
Former Secretary Dept of Defence R&D;
Scientific Adviser to Raksha Mantri and
Director General DRDO & ADA
Conference on Defence
by Edelweiss Securities Ltd, Mumbai
On
18 Jul 2014

2. Development & Production Culture
1960-2010

3. Indian Defence Industry (Govt & Public)
Product Profile
No. of Factories : 39 + 2 Principal Items - 881
Manpower : 99000 (approx) Anti Tank Guns, Field Guns, Mortars, Small Arms, Bombs,
Rockets, Grenades, Mines, Depth Charge, Explosives,
Propellants, Pyro Technique Stores, Transport Vehicles,
Optical and Fire Control Instruments, Bridges,
Assault Boats, Clothing / Protection Suits, Parachutes
HAL
(19 Div)
BEL
(9 Div)
BEML
(4 Div)
BDL
(3 Div)
SHIPYARDS
(4 Units)
MIDHANI
(1 Div)
Sale Rs.1,43,230
Cr
Sale Rs.6,012
Cr
Sale Rs.3,290 Cr Sale Rs.475
Cr
Sale Rs.2,798 Cr Sale Rs.2,424
Cr
Aircrafts Radars Mining /
Construction
Eqpt
Missiles Ships Super Alloys
Prodn
Helicopters Communicatio
n
Rail / Metro
Products
Torpedoes Submarines Titanium
Spl.Purpose
Steel
UAV EW Systems Wheeled
Vehicles
Launchers Boats Turnover
Rs.510 Cr
Radars Elect/Opt
Systems
Decoys Integration of
Sensors /
Weapons /
Communication
Communication NVD
Defence Public Sector Undertakings
Ordnance Factories
Product Profile
No. of Factories : 39 + 2 Principal Items - 881
Manpower : 99000 (approx) Anti Tank Guns, Field Guns, Mortars, Small Arms, Bombs,
Rockets, Grenades, Mines, Depth Charge, Explosives,
Propellants, Pyro Technique Stores, Transport Vehicles,
Optical and Fire Control Instruments, Bridges,
Assault Boats, Clothing / Protection Suits, Parachutes
Product Profile
No. of Factories : 39 + 2 Principal Items - 881
Manpower : 99000 (approx) Anti Tank Guns, Field Guns, Mortars, Small Arms, Bombs,
Rockets, Grenades, Mines, Depth Charge, Explosives,
Propellants, Pyro Technique Stores, Transport Vehicles,
Optical and Fire Control Instruments, Bridges,
Assault Boats, Clothing / Protection Suits, Parachutes

4. Licensed Production Culture Poor Design innovation capability
No R&D Activity Outdated Production Management System
No Modernisation of production technologies Highly over staffed
Excessive Government Control Poor Participation of private sector
Over Dependence on Licensor No initiatives for indigenization

5. BASANTPUSHPAKKRISHAK
PROGRESS OF INDIAN CIVIL AVIATION
HANSA
1960-70
1990’S AND BEYOND
SARAS

6. MIDDLE YEARS OF INDIAN MILITARY AVIATION
1970-80
MIG-21
MIG-27
JAGUAR

7. LATER YEARS OF INDIAN MILITARY AVIATION
1980-2000 AND BEYOND…..
CHEETAH CHETAK ALH
MIG-29 SU-30 LCA

8. OVERVIEW OF SYSTEMS & TECHNOLOGIES
DRDO
52 Labs
Aeronautics Armament &
Combat Engg
Missiles &
Strategic Sys
Naval
SystemsMaterials &
Life Sciences
Electronics
30,000 Workforce:
• Scientists - 7000
• Technical Staff – 12,000
• Allied Staff – 11,000
OUR MISSIONOUR MISSION
 Design, develop and lead to
production
state-of-art defence systems and
technologies
 Provide technological solutions to the
Services
to optimise combat effectiveness
 Develop infrastructure and committed
quality manpower and build strong
indigenous technology base
10/01/15

9. PRODUCTIONISATION
&DELIVERY
EVOLUTION OF DEFENCE R&DEVOLUTION OF DEFENCE R&D
1958 1970 1980 1990 2000 2010
INCEPTION
INSPECTION
AGENCY REVERSE ENGG.
TECHNOLOGY
GENERATION
SCIENTIFIC
RESEARCH
MAJORSYSTEMS
&PROGRAMMES
INITIATED
PROTOTYPES
&TRIALS
IGMDP
LCA
MBT
EW SYSTEMS
IMPORT/EXPOSURE
TO FOREIGN
TECHNOLOGIES
DESIGN &
DEVELOPEMENT
CONCURRENT
ENGG
LSP,USERTRIALS
&ACCEPTANCE
~ 20 YEARS
NEWSYSTEMS
SYSTEMSTUDIES
ANDANALYSIS
Funding
TYPICAL TIME FRAME FOR FIRST
TIME SYSTEMS ELSEWHERE TOO

11. PROGRAMME DRIVEN PRODUCTION
INFRASTRUCTURE
PROGRAMMES : SLV3, PSLV, IGMDP
1970 – 1980 - 1990
IGMDP Management System
• Three tier management system for
Review and Execution
• Concurrent development & production
• Production agencies identified at
conception of programme
• Involvement of production agencies in
development
• Involvement of R&D labs in setting
production infrastructure
• DRDO/Space invested in HAL(ASD),
BE, BEML, BDL, OF, ECIL
• Strong Review Mechanism
• Policy decision on
- Cost plan development
- Cost control
- Redundancy management
• Involvement of finance at every level
Benifits
• Manufacturing technology
upgradation at production
agency
• Introduction of productionisation
culture
• Improved quality assurance and
certification system – MSQAA
• Ownership of programmes with
synergy between R&D and PA
• Prithvi and PSLV production
achieved in 5 years with
involvement of
- 40 Private Industries
- 09 public Sector Industries

12. PROGRAMME DRIVEN PRODUCTION
INFRASTRUCTURE
(Contd)
INDUSTRIES
HAL LARSEN & TOUBRO
BDL GODREJ & BOYCE
BEL JOHNGALT INTL
BEML SEC INDUSTRIES
OF’S VEM
ECIL RASU TOOLS
KELTECH PRAGA TOOLS
REPUBLIC FORGE
ECHJAY INDUSTRIES
WALCHANDNAGAR
INDUSTRIES
OF TRICHY LAXMI MACHINE TOOLS
TECHNOLOGIES / PRODUCTS
AIRFRAME PROPELLANT TANKS
WINGS NOSECONES
ROCKET MOTORS LAUNCHERS
RADARS PROPELLANTS
WARHEADS DATA LINKS
• HMX, RDX, OCTOL EXPLOSIVES
• LP ENGINE COMPONENTS
• HYDRAULIC / PNEUMATIC ACTUATION SYSTEMS
• INERTIAL SENSORS
• INERTIAL NAVIGATION SYSTEMS
• ON-BOARD COMPUTERSTECHNOLOGIES /
PRODUCTS
FACILITIES
 4/5 Axis Machining Centres
 Automatic Welding Equipment
 Magnesium Casting Facility
 Process Shop – Surface Treatments
 Vacuum Brazing
 Precision M/c Shop
 NDT Facilities for Propellants
 HIP, CIP, Spinning, Flow Forming
 Investment Casting; Powder Metallurgy
products like Tungston
AEROSPACE MATERIAL PROCESSING
 Alluminium Alloys
 Magnesium
 Maraging Steel, 15 CDV6
 Titanium
 Ni based super alloys
 Tungston
 Glass Fibre & Carbon Fibre

13. COMBAT AIRCRAFTS
AERONAUTICS
AEROSTAT UAV NISHANT
MICRO UAV TECHNOLOGIES

14. GRADUATION OF INDUSTRY
TECHNOLOGY
TRANSFER
DESIGN & BUILD
–
STRATEGIC
PARTNER TO R&D
EVOLVE
PROCESS &
MFG.
GROWTH
• Process for Fab.
• Eqpt. & Trg.
• KOP
(L&T, BEL & OF)
L&T, Tata &
BEML
DRDO INITIATED
PROGRAMMES
1950-70 1980 1990 2000 2010
• Design by DRDO
• Build to Design
IGMDP, EW
T-72,BMP-II
MCP
MAL
• Build to Specification

15. INDUSTRY PARTNERSHIPINDUSTRY PARTNERSHIP
Tata
MTAR
Godrej
L&T
KCP
CEL
ASTRA
SEC ind.
High
Energy
Batteries
Ajay
Sensors
MACMET
PEL
.
.
Tata
L&T
Deepti
VEM
Astra
Ananth Tech
Data Pattern
Zetatech
MACMET
Dynamatic
Technologies
Dynalog
Alpha Desgn
Apollo Micro
Systems
RAP
.
.
.
.
..
Value
addition
by
industry
System Design specs
1970 1980 1990 2010
50
200
500
2000
100
Fabricator
Fabrication &
Testing
Subsystem, Design,
Fabrication & Testing
LRSAM
DRDO+
Israel+
Indian
Industries
Brahmos
DRDO+
Russia+
Godrej
SRSAM
DRDO+
MBDA
Aero
Engine
GTRE +
CIAM
GTRE +
SNECMA
I2
MC
Uncooled
FPA,
MEMS
.
.
Global
Collaboration
2020

16. FUTURE SYSTEMS &
OPPORTUNITIES

17. Indian Aerospace Industry – an attractive opportunity
India’s presence in all segments of Aerospace Value ChainIndia’s presence in all segments of Aerospace Value Chain
Major global aerospace companies present in India in some way or the other
• India – one of the fastest-growing aerospace markets in the world
• Mostly due to defence spending and growing commercial aviation market
• Expected to add ~ 4000 military and commercial aircrafts in next 15 yrs
• MRO segment estimated to grow at 10% and reach USD 2.6 bn by 2020
This would
require
significant
investment in
capacity
building
17

18. India is expected to be the third largest Aerospace market
after U.S. and China by 2020
Development Programs:
•Aeronautics, Armaments, Combat vehicles
• Electronics, Missiles, Materials
•Medium Multi Role Combat Aircraft (MMRCA)
•Fifth Generation Fighter Aircraft (FGFA)
•Multirole Transport Aircraft (MTA)
•Medium Lift Helicopters (MLH)
•Light Utility Helicopters (LUH)
• Hypersonic vehicles
Development
Programs:
•Satellite Launch
Vehicles
•PSLV , GSLV
•Satellites
•INSAT , IRS
Intensive technology and safety requirements mandate significant investments in
R&D and quality control
• India projected as 5th
largest buyer of
passenger aircrafts
• Commercial aircraft projected to grow
at 6% CAGR
• Business jets to grow at 11% CAGR
• Modernization underway:
• Airports
• Communications
• Radars
• Facilities for MRO
• 10th biggest spender in defense. FY 13 budget –
USD 35bn
• Expected to spend USD 100 bn in next decade
• Military expected to add 1000 rotary & 1200 fixed
wing aircrafts
18

19. WEAPON SYSTEM DEVELOPMENT – NEXT 30 YEARSWEAPON SYSTEM DEVELOPMENT – NEXT 30 YEARS
Missiles
• Hypersonic and sub-sonic cruise missiles
• Long range ballistic missiles with MIRV
( multi-platform – land, air, under-water)
• Ballistic & cruise missile defence
systems with space segment
• Multi-platform tactical missiles &
missile based PGM’s
Naval Systems
• Torpedoes with thermal engines
Aeronautics
• UAV, UCAU, aerostats, airships with
multiuse payloads
• Multi role stealth combat aircraft
EW Systems
• Multi-platform EW systems
• Cyber warfare systems
Armaments & Combat Systems
• Next generation MBT, APC
• Remotely piloted reconnaissance ground
vehicles
• Low cost guided multi-barrel rockets with
PGM’s
• Self propelled guns with PGM’s.
New Concept Weapons
• Directed Energy
- Lasers, micro-wave, particle beams
• Kinetic Energy
- EM cannons, kinetic kill vehicle
• Non-Anti Personnel
- Chemical energy-losing agents,
Low energy-laser blinding weapons,
Omni directional irradiation weapons
19

20. TECHNOLOGIES
MISSILES
• MEMS based actuators, sensors
• RF seekers – Electronically steered arrays,
Power source, klystrons, MPM,
signal processing, ATR
• Gel propulsion systems
• Navigation sensors
- RLG, FOG, DTG, HPM, Navigation on chip
ELECTRONICS
• IIR Seekers – focal plane arrays, bolometers,
CCD’s, adaptive optics, IR domes
• Laser seekers
• Network centric warfare technologies
• Active phased array radars
• Space based IR sensors, SAR
• Secured multi-layer high speed communication
network
• Mini & micro Satellites
• VLF, ELF, blue-green laser
• SDR
MATERIALS
• Ceramic radomes
• High temperature materials
• Stealth materials
AERONAUTICS
• Airborne (AEWS, ESM, ECCM Systems)
• Gas turbine engines
• Stealth technologies
• Robotics & unmanned vehicles
ARMAMENT & COMBAT TECHNOLOGIES
• High energy solid propellants (ADN)
• Pulse detonation engines
• Thermobaric warheads
• Automated, composite, bridging systems
• Soldier as a system
• Low intensity conflict technologies
LIFE SCIENCES
• NBC defence Technologies
NANO TECHNOLOGIES
• NANO materials, nano sensors,
• NANO structures, nano electronics
WARGAMING
• Wargaming, modelling & simulation of
defence systems
TECHNOLOGY DEVELOPMENT – NEXT 30 YEARSTECHNOLOGY DEVELOPMENT – NEXT 30 YEARS
20

21. EMERGING DEFENCE & AEROSPACE MARKET
(2010-2025)
• IMPORT PRODUCTS (BUY-Make) approximate estimates
– MMRCA Rs.42,000 Cr
– Guns Rs.8000 Cr
– C-17 Aircrafts Rs.25,000 Cr
– MIRAGE Upgrade Rs.10,000 Cr
– Helicopters Rs.10,000 Cr
– Missiles Rs.7,000 Cr
• INDIGENEOUS PRODUCTS (Make India)
– Missiles Rs.1,03,600 Cr
– Aircrafts
• Light Combat Aircraft Rs.57,000 Cr
• FGFA Rs.30,000 Cr
• AEW&C Rs.2000 Cr
• AWACS Rs.6000 Cr
• UAV’s Rs.2000 Cr

22. EMERGING DEFENCE & AEROSPACE MARKET
(2010-2025) contd
• INDIGENEOUS PRODUCTS (Make India)
• Rockets Rs.1100 Cr
• Tanks Rs.3000 Cr
• EW Systems Rs.1500 Cr
• Radars Rs.7000 Cr
• Naval Systems Rs.1200 Cr
• Field Gun Rs.2000 Cr
• Electro Optical Systems Rs.1000 Cr
• Helicopters
• ALH Rs.8000 Cr
• LCH Rs.5000 Cr

23. 10/01/15 DRDO - An Overview 23
GLOBAL TECHNOLOGY GROWTH

24. AEROSPACE & DEFENCE MANUFACTURING
CHARACTERIZED BY
• COMPLEX DESIGNS AND LONG PROJECT CYCLE
• LARGE R&D INVESTMENTS
• LARGE INVESTMENTS IN MANUFACTURING & TEST EQUIPMENT
• MATERIALS OF UNIQUE SPECIFICATIONS
• ADVANCED MANUFACTURING TECHNIQUES
• PHYSICAL SIZES RANGING FROM MMS TO FEW METERS.
• LOW BATCH SIZES – OFTEN ONE OFF.
• FAST TECHNOLOGICAL OBSOLESCENCE
• DIVERSE TECHNOLOGIES
• INTENSIVE TECHNICAL, QUALITY AND SAFETY REQUIREMENTS
• STRINGENT REGULATORY ENIVRONMENT
• SUPPLY CHAIN MANAGEMENT

25. FRAMEWORK OF ADVANCED MANUFACTURING TECHNOLOGY
Source: IDA Report 2012, Emerging Global Trends in Advanced Manufacturing

26. FRAME WORK OF ADVANCED MANUFACTURING TECHNOLOGY
ADVANCED PRODUCTS
• Technologically Complex
• Use New Materials
• Highly Sophisticated designs
• Innovative products
SMART MANUFACTURING ENTERPRISE
CONCEPTS
• Manufacturing goes beyond the
factory floor
• Paradigms of “Manufacturing as Eco-
System” have emerged
• Smart Enterprises create and use
data and information throughout he
product life cycle
• Create Flexible Manufacturing
processes to cater for changes in
demand at low cost without damage
to environment
• Product design to facilitate efficient
production and re-cyclability
ADVANCED PROCESSES &
TECHNOLOGIES
• Advanced Manufacturing
consisting of ‘Know How’ of
production with focus on
Advanced Processes &
Technologies
BUILDING BLOCKS (DRIVERS)
• Breakthroughs in Physics, Chemistry, Material Science & Biology
• Convergence of Physics, Chemistry, Material Science & Biology
• Advances in computational modelling & prediction along with computational power

27.  Water Jet Machining
 Hexapod Machining
 Multi Tasking Machines
 Role Extrusion for Missile cases
 Single Crystal based Super Alloys for
Gas Turbines Engines (BLISK)
 Integral Fuselage Design & Manufacture
(Welded structures) – Extrusions, Laser
Beam Welding, Friction Stir Welding
 Near Net Shape Manufacturing
 Advanced Aluminum Alloys &
Fabrication technologies for Space
Transportation Systems – Near Net
Extrusion
ADVANCED AEROSPACE & DEFENCE
MANUFACTURING TECHNOLOGIES 2005 & BEYOND

28.  Roll Forging Cryogenic Tanks
 Shear Forging Adaptor Rings
 Spin Forming for Tank Domes
 Friction Stir Welding Internally Stiffened
Extrusions
 High Voltage electron Beam Welding
- Reactive Material Ti-6Al-4V Alloy
- Multiple Tier Welding, Multi-thickness welding
 Friction Stir Welding
 Laser Consolidation Processing
 Laser Engineered Net shaping
 Vacuum Plasma Sprays
 Photo Chemical Machining
ADVANCED AEROSPACE & DEFENCE MANUFACTURING TECHNOLOGIES
2005 & BEYOND (CONTD)

29.  MESO / Micro Mechanical Manufacturing (M4)
 Micro EDM
 Focused Ion Beam Machining (FIB)
 Feinto – Second Lasers
 Micro USM
 Micro Turning
 Thermal Barrier Coating Processes
 Near Net Shape manufacturing of Advanced
Ceramics – Gel Cast Ceramic Radome
 Surface Micro Machining & Bulk Micro
Machining processes for Sensors, Actuators
 Nano Technology
ADVANCED AEROSPACE & DEFENCE MANUFACTURING TECHNOLOGIES 2005
& BEYOND (CONTD)

30. Metallic Materials Aerospace Grade Shape Application
Aluminum
Alloys
2xxx (Al-Cu-Mg)
7xxx (Al-Zn-Mg-Cu-Zr)
6xxx (Al-Mg-Si)
Sheet
Plate
Extrusion
Forgings
Aircrafts, Missiles,
Launch Vehicles,
UAVs, Bridges
Lithium – Aluminum
Alloys
- do - Aircraft Structures
Titanium Alloys Ti-6Al-4v
Ti-10V-2Fe-Al
- do - Aircrafts, Missiles,
Tanks, Rockets,
Armaments,
Engg Eqpt
High Temperature
Materials
Titanium Alloys
Nimonic Alloys
Niobium Alloys
- do -
Metallic
Honey Comb
& Foams
Missiles,
Aero-Engines,
Launch Vehicles,
Scramjet,
Hypersonic Aircrafts
and Missiles
Metal-Metal composites
based on Nb, Ti, Polymer
and SiC
C-C
C-SiC
SiC-SiC
TaC / Ta2C
Mo-Si-B
NB-Si-C
Mo-Si-B
Investment opportunities in Aerospace & Defence Materials
Characteristics : High Quality – Low Volume – Technology Denied

31. Metallic Materials Aerospace Grade Shape Application
Super
Alloys
Nickel based
Titanium based
Thermal Protection
Coatings
Zircon
Yiltrium stblised Zr
Si3N4
Special Steels 11-10 PH Steel
Maraging Steel
350/250
Ultra High Strength
Steels (AB2/AB3)
Ship, Submarine,
Rocket Engines,
Aero Engines,
Engg.Structures,
Armaments
Investment opportunities in Aerospace & Defence Materials - contd
Metallic Materials Shape Application
Silicon
Gallium Arsenide
Germanium
Cadmium Zinc Telluride
Mercury Cadmium
Telluride
Gallium Nitride
Bulk Crystals
Wafers
Epitaxial
Layers (nm -
µm
Sensors, Lasers /
Detectors, VLSI,
MEMS, MMIC,
Optical Components
Functional Materials
Characteristics : Ultra High Purity R/M 7 N to 9N

32. EMERGING SCENARIO IN INDIA
AND
TRANSFORMATION STRATEGY FOR
MEETING THE CHALLENGES

33. Emerging Eco System 2000 +Emerging Eco System 2000 +

34. Emerging Eco System 2000 +Emerging Eco System 2000 +

43. New Collaboration Models
TYPE SYSTEM PARTNERS
JOINT DEVELOPMENT - LR SAM – LONG RANGE
SURFAVCE TO AIR MISSILE
- INDIA (DRDO)
- ISRAEL (IMI)
JOINT VENTURE - BRAHMOS - INDIA (DRDO)
- RUSSIA
EXCHANGE OF SCIENTISTS - BMD PROGRAMME - INDIA
- BELARUS
COLLABORATIVE RESEARCH - GYRO & NAVIGATION
SENSORS DEVELOPMENT
- PGM DEVELOPMENT
- INDIAN UNIVERSITIES /
RESEARCH INSTITUTIONS -
GLOBAL PARTNERS

44. Royalty Model (Outright sale off of mature
technologies )
Total Risk-Revenue Partnership Sharing
Model ( Partnership from the stage of
Conceptualization)
Partial Risk-Revenue Sharing Partnership
Model ( Partnership from certain level of
Maturity)
Models for Public Private Partnership

45. Micro financing in Indian Defence Sector
• Promoting Micro financing in Indian Defence Sector, specifically,
in Sensitive & Strategic areas is essential to achieve sustainability
in defence supplies to services.
• Initially, High cost investment vs Low volume turn over in defence
sector.
• Raising FDI limit with certain overriding protection clauses to
safeguard Industry / Self Reliance Interest.
• Indian Private industry must be promoted & supported by micro
financing to ensure Indian defence sector commercially
competitive.
• Modes of Micro Financing to Private Industry.
– Micro financing by Govt.
– Micro financing by Private institutions
– Availability of subsidized loans.
– Operation of facilities on GOCO basis

46. Creation of a National Aerospace and Defence
Technology Commission to Coordinate, Review,
Prioritize and take decisions on investment,
collaborations, Export and joint ventures & give
direction to aerospace & defence production
for improving countries self reliance, GDP and
finding the right place as developed nation in
the aerospace sector against global
competition.
Strategy for Accelerated TechnologyStrategy for Accelerated Technology
UpgradationUpgradation

47. Strategies for Improved Industry
Participation in
Defence & Aerospace Sectors
Collaboration and Synergy with indigenous R&D System to
strengthen “Know-How” and “Know-Why” aspects of
technology development and production. It will provide
 High Performance
 Cost Effectiveness
 Availability on Demand
 Product Life-Cycle Support
 Software Upgradation
 Concurrency of Development and Productionisation
and augmentation of production infrastructure
and Technology Transfer and Absorption
 Shorter time from Concept to Delivery to market

48. Aerospace & Defence Industry Complex
Aerospace Industrial Complex
- Comprehensive solution for Space & Defence Sectors
• Proposed Aeroparks can become Industrial
Complexes
• Existing skills of Auto Industry will complement
the Aviation in utilizing the highly skilled &
qualified manpower
• UAVs, Civil Aircraft – Production and
Maintenance opportunities
• Existing IT skills can be utilised for CAD/CAM
• Deposits of titanium Ore – highly used in
aerospace industry
• World Class research facilities to be tapped
for industrial application