Aerospace and Defence

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Aerospace and Defence sector in India is at an inflection point

Given the modernisation and indigenisation programmes being undertaken by all the three services of one of the largest military forces in the world. The Ministry of Defence in India has laid out an expansive plan for modernisation of obsolete equipment through the long-term perspective plans, capability plans, capability roadmaps and capital acquisition plans.

India being one of the largest importers of arms and defence platforms, the three services, supported by specialised inter-service commands and institutions, have collectively taken upon themselves to be harbingers of ‘Make in India’ for hardware and infrastructure being inducted into their fold.

The Government of India had also identified the Aerospace and Defence sector as a focus area for the ‘Make in India’ (i.e. ‘Aatmanirbhar Bharat’) programme has taken considerable steps to push forth the establishment of indigenous manufacturing infrastructure supported by requisite research and development ecosystem. This is thoroughly evident in the substantial changes introduced in the defence policy framework in 2020, which is now based on the cornerstone of indigenous manufacturing and value addition. With India also opening its space sector for private and foreign participation, this domain could further help in establishing long term opportunities and partnerships, capitalising the synergies in defence and space.

An interplay of policies governing the sector clearly carve out the integral role of Indian manufacturing and value addition in future procurements. One development supporting the above is the establishment of two defence corridors at Uttar Pradesh and Tamil Nadu. These two corridors shall focus upon development of indigenous manufacturing capabilities and in turn become the springboard for all development activities undertaken by the government in the sector.

Doing business in defence

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How can KPMG in India help?

The Aerospace and Defence practice has a well-established track record of advising government as well as most of the leading global and Indian original equipment manufacturers and other members of the A&D supply chain. We have a well-defined and robust approach to support our clients effectively across a spectrum of projects in business performance services, transaction services and tax and regulatory services including offset advisory.

We provide consulting services across the project lifecycle including but not limited to:

Defence acquisition procedure advisory
Offset advisory and implementation support
Bid management
Programme management
Industrial licensing support
Foreign direct investment assistance

Market research and entry strategy
Partner search and collaboration
Transaction services
Tax optimisation
Supply chain management
Technology transformation

Why select KPMG in India?

We at KPMG in India recognise the significant opportunity that the Aerospace and Defence sector presents to our clients. We have an extensive team of specialists comprising policy experts, personnel who were formerly with the Indian armed forces, defence procurement and programme development along with subject matter experts from aerospace and defence manufacturing who have previously worked with R&D organisations to assist clients and provide comprehensive services from strategy formulation to execution. Our team is complimented by a strong international network of global defence teams, working in tandem with each other. We have played an integral role in serving most of the major stakeholders of the sector viz.

Our credentials across

Assisted some of the largest players in the world in bid structuring, offset filings, entry strategies and devising offset compliant tax-efficient ownership and operating structures, business restructuring etc. Advised numerous entities (including tier-1 vendors) on policy framework, eligibility as an Indian offset partner, collaboration and other business opportunities, sector landscape etc.

Collaborated with the government on various critical and strategically important mandates. Official advisors to the government on a number of marque projects like assisting the nodal agencies for both defence corridors in programme management to achieve specific objectives and assisting space authorities to understand the market for satellite services in India and Indian sub-continent region.

Spearheaded pertinent assignments for public sector undertakings (PSUs) involving diverse range of services like contract negotiation and structuring, strategic and operational assistance in corporatisation and comprehensive market assessment and entry strategy.

Joined forces with leading industry associations in various capacities including those of leaders, knowledge partners and members. Frequent keynote speakers in knowledge sharing events and active participants in numerous policy advocacy initiatives.

Being a sensitive sector critical to national security, the A&D sector is one of the most highly regulated sectors of the Indian economy. Our team helps a number of major defence players to navigate through the interplay of various policies and regulations governing the sector, including procurement policy, import and export regulations as well as tax.

The Aerospace and Defence practice of KPMG in India has also been at the forefront of reform advocacy in the sector. It has led a number of policy-streamlining initiatives with the Ministry of Defence and has developed concept papers and thought leaderships leading to progression of reforms. The firm provided a number of significant inputs to the Indian Ministry of Defence in relation to some important aspects of the procurement policy. Several recommendations contributed towards fine tuning defence contracting in line with global best practices. KPMG in India was also recognised as a key stakeholder in policy formulation by the Ministry while announcing the Defence Acquisition Procedure, 2020.

The practice holds marquee credentials and significant experience across all areas of consulting engagement. The team has been able to leverage the experience that it has garnered from personal engagement with the Aerospace and Defence sector as well as the engagements taken up as a practice to deliver substantial value to our clients and to assist them in their strategic pursuits in the sector.

KPMG in India point of view on the Union Budget 2024-25 - Aerospace and Defence

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