Senior experts from the UK India Business Council (UKIBC) and PwC visited Cardiff recently to outline key opportunities to Welsh manufacturing SMEs looking to enter the Indian market.

The two flagship organisations are working on a joint report highlighting potential areas of collaboration that UK advanced engineering and manufacturing SMEs and supply chain companies can explore in India.

Concentrating on three major subsectors: aerospace and defence, automotive and clean energy, the seminar explored entry routes and barriers to the market.

Aerospace and defence

Devean George, Transaction Services at PwC, introduced the aerospace and defence sector, highlighting that India is the fastest growing market in the world on both civil and military side. In defence, PwC estimates that the country is likely to spend $250bn on capex over the next decade.

Opportunities are also abundant in civil aviation with commercial airlines fleet set to grow from 450 to 1,300 by 2030, an opportunity worth $150bn. Mr George also highlighted that India intends to invest $40bn in airport infrastructure by 2025.

A further area that businesses were urged to consider is the gap between Defence Public Sector Undertaking (DPSU) and SME suppliers. Mr George outlined how the poor performance of DPSUs creates an opportunity for SMEs in the Indian market. Despite being the largest importer of defence equipment in the world, the sector has the second highest number of employees offering a skilled and efficient workforce.

Welsh SMEs looking to enter the market were encouraged to take advantage of the government-to-government and government-to-business outreach programmes. However, Devean George noted that the market and market maker in India is the government, with one buyer and many suppliers, posing challenge for SMEs.

“Due to government policies, it has been difficult for the private sector to grow rapidly,” said Mr George. “Go to India with a long term plan.”

Clean energy

Another rapidly growing sector in India is the power sector. The demand for power is expected to accelerate due to increased urbanisation and living standards, so investment into clean energy is at the forefront of the Indian agenda.

Several renewable energy incentive schemes have been introduced by the Indian government and the National Action Plan for Climate Change (NAPCC) has set the renewable energy target of 15% of total power generation by 2020. In India renewable energy is deregulated, competitive and dominated by the private sector.

Peter Martin Larsen of PwC presented the opportunities in wind, solar, small hydro power and bio-energy in India. In total, the capacity of India’s existing wind power is 18.5GW, the fifth largest in the world, but the onshore wind potential alone is estimated to be 102GW, demonstrating huge untapped potential in this market.

Currently, southern and western states in India have dedicated solar policies and favourable market conditions, which account for approximately 92% of total installed solar energy capacity, and Mr Larsen suggested there were opportunities in the solar supply chain.

The future of clean energy is driven by government policies, energy shortages and the achievement of grid parity (when the renewable energy is sourced at a cost equal or less than if it was accessed from the electricity grid). In order to meet the renewable power generation target of 15% by 2020, the market needs to grow at least three-fold.


According to PwC, the global value of light vehicle production will be at $105m by 2018, and China and India are the key emerging markets in the sector. At present, the domestic vehicle market in India totals $47bn, with exports valued at $6bn, but by 2020 the market size is expected to grow to $100bn with exports at $12bn.

Drivers of growth in this sector are a result of increasing demand. In the financial year 2012-13, 17 million vehicles were sold (across all categories) in India, and this figure is expected to be 25 million by 2020.

India also boasts a low cost and skilled work force producing 400,000 engineering graduates each year, with the cost to employ an entry-level engineer as low as $8000 per annum. And this low cost workforce currently accounts for 26% of the world’s Engineering Service Outsourcing, indicating that it is one of the major growth sectors in the country.

With GDP growth averaging between 4-5% in India, rising affluence and widespread aspiration, the market offers a wealth of business opportunities for Welsh manufacturing SMEs.

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