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International News From the Field: India

Big deals between India and the United States are in the works. With growth in aerospace and automotive and investments in R&D and production, India is set to become a global defense manufacturing hub. For more industry intel and other tidbits, read on.
Jun 27, 2023

Indian Prime Minister Narendra Modi’s ongoing visit to the United States is focused on forging ties with the American defense and security sectors. Likely deals include:

  • Purchasing $3 billion worth of General Atomics’ MQ-9B SeaGuardian military drones to enhance surveillance capabilities under the premise of General Atomics establishing a new facility in India to assemble these drones.

  • Stryker armored vehicles to advance combat systems and enhance mobility for defense forces.

  • The joint manufacture of GE F-414 fighter jet engines for India’s Tejas light combat aircraft by GE and state-owned Hindustan Aeronautics Ltd.

  • The deals also involve technology transfer, knowledge sharing, and co-development opportunities, enabling India to enhance its domestic defense industry and foster self-reliance and an overall defense ecosystem.

Initial discussions have also begun on a security of supply arrangement and a reciprocal defense procurement agreement. Once negotiated, the arrangements will drastically increase opportunities for Indian manufacturers to engage with major U.S. defense manufacturers. Once the RDP is finalized, India will join a list of countries deemed by the Department of Defense to be compliant with the Defense Federal Acquisition Regulation Supplement. Presently, only 26 countries are qualified to supply significant components and parts for American military orders. The agreement will provide major opportunities for India’s manufacturing sectors regarding U.S. military orders for castings and other components made of steel, copper, nickel, titanium, and zirconium.

In addition to visiting with the federal government, Modi met with several industry leaders from Tesla, GE, Applied Materials, Micron, and others to discuss their India-specific business plans.

India’s civil aviation segment is steadily growing and is presently the world’s third-largest aviation market. It witnessed a 22% YOY growth in April, when nearly 13 million passengers flew in a month. In fact, on April 30, a record 456,082 passengers traveled on a single day. To address future growth potential, this past March, Air India ordered about 800 aircraft (split between Boeing and Airbus). Last week, India’s Indigo Airlines released the largest-ever aviation single order of 500 Airbus 320 Neo family aircraft, with a list price worth over $50 billion.

India exported more than $1.5 billion worth of smartphones in May. About 80% were iPhones; Samsung and other brands shared the remaining 20%. Apple is looking to shift about 18% of its global iPhone production to India by 2025. The idea is to enhance its procurement capacity from the country, allowing its vendors to scale up their domestic operations and increase their share further by taking advantage of the government’s production-linked incentive scheme.

A few recently announced projects and investment news items are listed below:

  • United States-based International Battery Co. (IBC) has put in a request with the state of Karnataka to allocate 100 acres of land near the Bengaluru airport to set up a $1 billion giga manufacturing facility for lithium manganese cobalt prismatic cells.

  • Cummins Group plans to invest about $1 billion into its India operations to facilitate the transition from fossil fuel engines to ones powered by hydrogen and other green energy.

  • Micron USA is investing $2.7 billion to set up a semiconductor testing and packing unit in Gujarat.

  • Tata Steel will invest around $2 billion in capacity expansion at its domestic and global steel manufacturing plants.

  • Tata Group plans to invest $1.6 billion in setting up a lithium-ion cell plant in Gujarat.

  • Tata Motors plans to invest $2 billion to roll out six to seven new passenger vehicle models by 2027.

  • Bharat Heavy Electrical Limited and Volvo Eicher Commercial Vehicles Ltd. have signed an MOU to develop and deploy hydrogen/CNG cylinders for commercial vehicles.

For more information, please contact Arun Mahajan at AMahajan@AMTonline.org.

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Author
Arun Mahajan
Director - Chennai Tech Center
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