Indian industry could drown in defence offsets flood: Mahindra

BANGALORE: A top private sector company today warned that defence offsets opportunity for Indian firms could lead to complacency and underlined the need for using the policy smartly and wisely to build long-term capability.

Vice-Chairman and Managing Director of Mahindra & Mahindra Ltd, Anand G Mahindra said Indian industry needs to use the defence offsets policy wisely. "The offsets policy in its progressive incarnation is a fundamental game-changer".

"It (defence offsets policy) is a powerful mechanism to ensure that large purchases from abroad are matched by large spends domestically", he said at the Aero India 2011 international seminar here.

"And it's certainly opening up new way of doing business, leading to partnerships, co-investments and joint development plans", Anand Mahindra said while cautioning that the offset situation was creating a flood and "our industries were positioning themselves to serve these waters".

"But really the danger is that the flood could drown us....," he said, adding that guaranteed business always "lulls us into complacency".

"I believe offset policy is only an enabler and not an end in itself. If we are smart, we are going to use this as a stepping stone to become part of the global supply chain", Mahindra said.

Offset policy should be used to build long-term capability.

Mahindra also said India should go in for technology co-creation. "Being co-developers of future technologies, we immediately establish our utility in the global supply chain, we enhance our capability to generate future technologies and ensure we are not left behind in the growth of technology".

He also stressed the need for India to become increasingly collaborative."We must move towards increased public-private partnership".

India's private sector in aerospace and defence sectors should go beyond domestic focus and Tier-III capability and aspire to gain a larger share in aerospace and defence products.

At present, India's private sector in aerospace and defence sector is far from being effective partner it should be.

"Private sector today lacks scope and scale," he said. Global experience has shown that entering into collaboration results in greater innovation, Mahindra said, adding "We would benefit from adopting this model."

Mahindra Aerospace, a division of the $7.1 billion Mahindra Group, is participating in Aero India 2011, which is commencing here from February 9 and will showcase the GA8 TC-320 Airvan, designed and built by GippsAero.

Airvan is a 8-seat multi-role aircraft that can readily be converted to carry freight or passengers

The company is positioning it as an ideal aircraft for a variety of operations including humanitarian relief, charter, tourism, medevac, aerosports (parajumping), surveillance, freight and training.