Journal of Small Business and Enterprise - March, 2013 - CII

Growth Driverof civil aerospace including aircraft, airengines, aircraft components, design,engineering services, etc. A widerange of weapons and servicesfor counter-terrorism have beenincluded in the list of products underinternal security.Niche SMEsHowever, these opportunities areopen only to niche SMEs that have thewherewithal to cater to this market.These niche SMEs are today seeingmultiple opportunities in design,development, and manufacturing in theaerospace sector. At the same time, tomove up the global defence value chain,these enterprises should have to focuson innovation, building intellectualproperty, and adopt quality and processstandards to be able to offer completesub-systems or assemblies.Aerospace manufacturing is ahigh technology and capital intensiveindustry. Its value chain is characterisedby a long project life cycle spanningR&D, engineering design, manufacturing,assembly, maintenance, repair andoverhaul. Intensive technology andsafety requirements require significantinvestments in R&D and quality control.Firms that focus on multipurposetechnology have secured their positionin the market by becoming specialisedsuppliers serving different globalvalue chains. SMEs of aerospace andprecision engineering sectors havebecome conscious of their competitivestrengths, which they associate inparticular to flexibility and qualityof their offer.Looking ahead, two key areas thatmerit expeditious interventions areMSME R&D in aerospace industry, andtalent development for building a globalworkforce for the niche SMEsPrivate sector participation indefence R&D is growing. Governmentshould look to create an ecosystemthat encourages more private playersto pursue high-level R&D in theaerospace industry.Meanwhile, United Nations IndustrialDevelopment Organisation (UNIDO)and the Society of Indian AerospaceTechnologies and Industries (Siati)have partnered to create a longtermdevelopment programme forBangalore-based aerospace SMEs. Thetwo organisations are to help SMEs insub-contracting and partnershipexchange, prepare for supplierdevelopment programmes and helpthem through matchmaking services viaglobal networks.As regards talent management,the focus for SMEs should be todevelop new employees throughspecialised training programs andassimilation, while keeping currentemployees and attracting highly skillednew workers to join the workforce. Itis a highly strategic effort and takes aconscious effort from management tosource, attract, select, train, develop,promote, and move employees throughthe organisation.Way ForwardIndian industry has time to timemade various suggestions to helpSMEs take full benefit from the newdevelopments in the global aerospaceindustry. They are:India should leverage its strengthsin the information technology andautomotive industries to graduate intodesign, development and manufacturingin the aerospace and defence sector.Indian SMEs should aim tointegrate into the global aerospaceand defence value chain throughIndian prime contractors involvedin global defence programs and/orbuild relationships with internationalSMEs in niche technology areas.OEMs in the aerospace and defencesector are shifting their focusto design and systems integration fromvertically integrated manufacturing.This provides an added opportunity toSMEs to venture into areas of aerospaceand defence manufacturing which wereearlier the exclusive domains of OEMs andlarge prime contractors.The Indian aerospace and defenceindustry needs rapid development ofdomain knowledge. This would requireactive industry-government-academiapartnership with leading technologyinstitutes across the globe, to upgrade,design and offer tailor made coursesfor the aerospace and defenceindustry in India.SMEs in the aerospace anddefence industry should focus onbuilding complementary activities andcapacities and sharing common facilitiesthrough clusters.Government may consider focusingon areas of strategic importance andgradually integrate the private sectorinto non-strategic areas. To enable theprivate sector to plan their investmentsand supply chain in advance, the privatesector could be closely involved inplanning and project categorization.Private sector participation indefence R&D should be activelyencouraged and primarily financed bythe government, given the fact thatdefence R&D is expensive and markedby an element of uncertaintyOverall, there is a need to mitigatethe common challenges faced by SMEs,like credit shortage, through urgentpolicy interventions by governmentto support SMEs, which in turn willsustain and enhance the businesscompetitiveness.These steps will greatly help theIndian aerospace industry to account fora larger share of the $930 billion globalaerospace industry.9MSME Business March 2013