US defense players fostering Make in India: KPMG

Boeing's annual sourcing from India stands at $1 billion. Lockheed Martin facilitated exports of around $600 million, while Textron sourced substantial quantities of high-value products, components and new technology from the country over the last five years

While India has been importing defence products from the US, on their part US defence companies have not only been sourcing from Indian companies, but have also invested in forging partnerships with Indian companies to manufacture state-of-the-art defence products, says a report by KPMG India-Amcham.

Indian government has already taken a slew of measures to ease the policy framework around defence sector to promote investment and in-country manufacturing. Original Equipment Manufacturer (OEMs) from the US have made existing investments towards building manufacturing and service hubs in India both in civil and defence domains.

These hubs have been generating employment, skill development, development of allied industries, enhancement of exports and technology transfers to the country. Even though majority of the sales to Indian Ministry of Defence by American companies have only been concluded in past 5-7 years, there have been significant investments made by these firms.

US defence players have made significant contributions to generating employment in the country through their direct investments as well as through their network of suppliers and Indian offset partners (IOPs). The total direct employment generated by major defence players stands at over 26,000 employees.

India's partnership with US has aided towards actualisation of its vision for Indian defence. The manufacturing prowess of a nation can be gauged easily from its quantum of exports. US OEMs have contributed to the growing aerospace and defence (A&D) exports from India. In FY19, India's global defence exports grew at a steady pace.

Boeing's annual sourcing from India stands at $1 billion. Lockheed Martin facilitated exports of around $600 million, while Textron sourced substantial quantities of high-value products, components and new technology from the country over the last five years. As per the statistics, US accounts for one of the largest exports of A&D products out of India in the last five years.

Apart from commercial and technological benefits, various US OEMs have also been supporting India through a string of social initiatives covering a number of programmes being run by the government. These investments are being directed towards the future of the country, impacting lives positively.

Gaurav Mehndiratta, Partner and Head - Aerospace and Defence, KPMG India, said: "As India aspires to achieve $5-trillion economy, self-reliance in defence manufacturing has been recognised as one of the key areas of focus. The stage is set in favour of India's establishment as a key defence manufacturer in the global defence supply chain."

He further adds, "Considering the entire ecosystem, Indo-US partnership, specifically in the area of defence is expected to flourish in the years to come, with India gaining from the sophisticated technology and manufacturing prowess of the US and the US playing a significant part in opportunities emerging from the growing Indian defence sector."

Abhishek Verma, Partner – Aerospace and Defence, KPMG in India, said: "India and US strategic ties have grown stronger over the years which has ensured greater military interoperability. The countries are collaborating across all spectrums of warfare in the military sphere wherein defence cooperation has emerged as a major pillar of India and US partnership."

The report suggested changes in FDI policy and defence policy should be in sync with each other and FDI upto 74 per cent should be allowed in all categories of acquisition. In view of synergies between defence, civil aerospace and homeland security, sourcing of civil aviation and HLS products should be an offsetable activity, it said.