Activities In the Indian Market

According to various reports, Israel is the second largest armaments exporter to India, which is in turn the world’s largest arms importer. Israeli defense exports to India, estimated at several billion dollars per year and includes, among other things, the sale of systems such as ships, artillery, unmanned aerial vehicles (UAV), missiles, radars, defense systems and more.

Starting 2006, by the request of the Indian government, every large scale defense project carried out by an on-Indian, Volume of approximately 50 million USD, committed offset (Industrial Cooperation), consisting of 30% of the total transaction.This means that if India buys Israeli products worth a certain society warrant that that 30% of the booking of the same project will be used for purchases based society of factories in India.

With the increase in the number and volume of transactions, increases the commitment and the challenge that the Israeli defense industry is facing. In the coming years, Israeli defense industry will need to address procurement in India totaling hundreds of millions of dollars necessary that the part will roll on subcontractors within India.

DEGEL.US is active in the Indian market since 2006. In addition, DEGEL.US personnel have many years of accumulated experience in relevant activities in the Indian market.

Projects in India – Main Challenges:
  • Finding qualified vendors

  • Remote Management

  • Logistical and technical support

  • Quality Control

  • Implementation responsibility

DEGEL.US – Service Offering in India:
  • Providing “tailored” solutions according to customer requirements

  • Assistance in identifying the right local partner for the task on hand

  • Manufacturing processes and knowledge transfer, includingaccompanyingprojects to completion

  • Project Management and Execution – small and Turn-key

  • Technical assistance and logistical support for projects in India

  • Marketing/Business Development services in India

  • Offset Solutions expertise – consulting/implementation services

  • COTS – variety of solutions for Military applications

  • Outsourcing Solutions

  • Procurement services (cost reduction)

Offset in India – Riding the Elephant

One of the major changes in Indian DPP (Defense Procurement Procedures) has been the introduction of requirements from foreign defense suppliers for “buy back” in 2006 (Offset). The offset clause is applicable to all procurement proposals where the indicativecost is above Rs 300 Crores (about 54.5M$ according to the rate exchange).

For India, offsets represent a major opportunities to build a world-class defense-industrial capacity. For the foreign suppliersoffsets represent a major challenge.
Fulfilling the offset requirement was accepted by many foreign suppliers with some reluctance. This reluctance led to a negative approach within foreign companies that resulted in an attitude of “this is an impossible mission”.

However, I would like to propose a different point of view and some ideas on how to face this major challenge.

Most importantly, we have to see the offset as a potential bridge between cultures. A bridge between the Indian production culture (which varies from production of the simplest items by hand to space industry) and the Western production culture (which is regulated by inflexible and rigid procedures).

A good place to start is with a positive approach and an understanding that the mission is doable, we do however have to find the best way and approach to do it. We have to find the tools to build the desired bridge, a bridge that will bring us close to our goal: manufacturing according to our requirements.

As I have visited India very often in the past 13 years, I have seen from first hand that India has taken a huge step forward with their infrastructure. India is like a big elephant moving (not running) forward constantly. We can see that this elephant is unstoppable.

Let’s climb the elephant and join the ride

Building a bridge between cultures requires also some effort from the Indian side.
Indian companies need to adapt their approach and standards according to Western standards. Without a willingness to cooperate, it can be impossible to work together.

Several typical mistakes that Israelis are doing:
  1. “I was twice in India, I am already an expert”.

  2. Lack of willingness to compromise.

  3. “Yes” in India means “Yes, I understand you”. It does not mean “Yes, I agree”

Several typical mistakes that Indians are doing:
  1. “We can do everything”

  2. The required schedule is a recommendation onlyand will show a commitment on our side, although it does not represent the real situation.

  3. “We should not bother our customer when we are facing difficulties”

The challenge – how to build the bridge

Both sides of this bridge need to understand the benefits of having a local partner
What are the Indian partner’s main tasks?
  1. Be part of the Israeli team

  2. Be a bridge in to the Indian culture – Explain the “hidden” meanings of language

  3. Identify for the Israeli partner local sources as per the requirements

  4. Monitor activities in India and report back

  5. Accompany Israeli teams during their visits

What are the Israeli partner’s main tasks?
  1. Be a bridge to the Israeli culture – Explain the “hidden” meanings of language

  2. Identify business opportunities related to the Indian partner capabilities

  3. Accompany Indian visits to Israel and prepare them for the meetings

  4. Be a local POC (Point of Contact) for their Indian partner

  5. Monitor local activities

Question: Why should we have a partner? It costs us money!

Answer: Wrong, it saves both time and money

Doing this right from the beginning saves both time and money!