Open Skies


With the push for favourable policy and technological capabilities, global OEMs are seriously considering India as an aerospace destination. Is it India’s time to soar?

by Mitalee Kurdekar

There is no doubt that the aerospace market offers an exciting prospect, especially considering its growth trajectory, as projected by various agencies. This market is further expected to grow exponentially in the next 5-10 years. And the most heartening fact is that a major part of that growth seems to be happening in the Asia Pacific region, more so in two of the key, growing economies – China and India.

Pratyush Kumar, president, Boeing India, gives a fair idea about the current scenario, when he suggests, “Aerospace is a very large market – a trillion-dollar market globally – and it’s growing steadily. In fact, it generally outpaces global GDP growth, especially in this part of the world, that is in India and Asia. This region is witnessing much faster growth than the rest of the world. We just came out with our own forecast of the current market outlook, which projects a pretty healthy growth for aviation and aerospace products.”

Of course, India’s aerospace & defence market is currently quite modest at $250 million, but is expected to grow manifold in the next 5-10 years. The pie is growing bigger, in turn enticing many global OEMs, who wish to take advantage of the encouraging government policies to set up quality manufacturing facilities – either on their own or in co-operation with Indian majors. It is a fact that, with the new policy support, bringing in cutting-edge technologies as well as setting up manufacturing bases swiftly, has become far easier. And change has only just begun. As Kumar puts it, “If you look at it, India has a very mature automotive components industry. When you look at aerospace, traditionally, it has been the domain of public sector companies like HAL, BEL etc. So, the new private enterprise actually has relatively new entrants in the space.”

State of Encouragement
And that signal for change is definitely promising, buoyed by the Government’s changing outlook, which has seen large OEMs making their presence felt in India. Of course, the Indian manufacturing sector is starting to acquire global regard as one that possesses efficient manufacturing facilities and follows international standards of quality. While it all started with the Government’s Make in India initiative, the strategy deployed to make India an attractive destination for setting up manufacturing hubs that can produce quality products in proximity to markets growing in demand, appears to be working.
The Government is complementing this push by encouraging global players with superior technology hitherto not available in the country to bring the same in joint ventures with Indian OEMs. This will make India self-reliant with regard to a lot of products she currently imports. But that is not all. The aim is to not only meet growing domestic demand, but gradually also promote the export of these products from Indian manufacturing hubs to developing markets in Asia and Africa.
Kishore Jayaraman, president, Rolls-Royce, India & South Asia, is positive about India’s contribution in the future, and states, “The growth of India’s aerospace industry indicates that the country is rapidly building capabilities to emerge as a preferred destination to support the global A&D supply chain. Depending on the type of component, India offers cost advantages of between 15-25% in manufacturing. Additionally, the industry offers the technological capabilities to undertake complex manufacturing required for the sector.” He adds, “Many global and domestic players are collaborating and forming joint ventures for manufacturing of aero components for civil and military aviation sectors, besides overhaul and maintenance of aero engines.”

So, what is causing this sudden fillip? Lokesh Srivastava, COO, aerospace business unit, TAL Manufacturing Solutions, explains, “There are pull and push factors driving this growth. On the defense side, modernisation of the fleet, easing investments and policies on doing business, and related defense offsets, are all reasons. While on the civilian side, the major drivers are the continuous cost pressures on airplane manufacturers to maintain competitiveness, their demonstrated commitment to the country that they make sales to.”

Of course, the setting up of aerospace manufacturing facilities is a capital-intensive activity, requiring huge investments and a long gestation period. In fact, aerospace manufacturing by nature is a high technology and capital-intensive industry, characterised by a long project life cycle that includes R&D, engineering design, manufacturing, assembly, maintenance, repair and overhaul.

Leveraging on Indian Competence
Having said that, the prevailing business environment in India is extremely conducive for the growth of the aerospace market. As a result, stakeholders are keen to explore and exploit new avenues and forge valuable partnerships with each other. “It’s like a sunrise sector; there is a lot of opportunity for new entrants to get in, and get embedded in the global supply chain for aerospace. It’s an open field for Indian private industry to get in; it is an attractive growing market; it’s high technology plays to India’s strength, so a consonant of all those factors really makes it quite attractive for Indian industry to contemplate getting into aerospace,” avers Kumar.

India epitomises the macro trends, namely growing urbanisation and rising consumer class, demographics and talent pool, favourable government policies and reforms, stable and robust economy as well as increasing domestic demand, that indicate growth. “This region has a lot to offer in terms of significant supply-side advantages by way of competitive cost, skilled talent, world-class IT and BPO industries, as well as growing engineering and manufacturing capabilities. In terms of long-term growth, India is extremely important. Additionally, the Make in India initiative has further built momentum and this translates into opportunities for companies like us,” Jayaraman confesses.

Rolls-Royce has plans to leverage India’s cost competitiveness across the engineering, manufacturing and supply chain domain to capture new growth opportunities. Together with HAL, they intend to grow their JV partnership, International Aerospace Manufacturing Private Limited (IAMPL), which manufactures a wide range of engine components including compressor shrouds and cones for their gas turbines, with a focus on opportunities to collaborate on co-development. They are also building future competencies required by the Indian aerospace industry through a partnership with the Rajiv Gandhi National Aviation University (RGNAU).
On the other hand, Walchandnagar Industries, which is collaborating with ISRO and like agencies for India’s space programmes, sees that segment of the market expanding. The current number of PSLV launches is almost set to double in the next 2-3 years. Also, ISRO is planning to increase the launch frequency of GSLV MKIII and will float necessary requirements in the coming year. Given ISRO’s ambitious plans to export its satellite launching capabilities, demand for Walchandnagar’s own capabilities of optimal cost manufacture is set to rise too.

“To meet the increased requirement, our facility augmentation is in the last phase and will be operational by the end of the current fiscal year. We have a dedicated team of design and engineering professionals with cutting-edge skills as well as the requisite manufacturing facilities to cater to the next generation aerospace manufacturing requirements,” believes GK Pillai, MD & CEO, Walchandnagar Industries.

Godrej Aerospace has a similar role to play. Domestic projects and awards from ISRO, DRDO and BrahMos, besides other private sector companies, are a promising opportunity for them. Maturity of projects and international as well as domestic users’ satisfaction will open further avenues in India, as also for the export market.

In fact, the company is very strong in precision assemblies and aims to continue developing this further. “We are preparing to offer a complete solution i.e. building to specification for Line Replaceable Units (LRUs) and engine sub-systems, and are developing a few critical technologies and metal forming, welding and a composite, which can withstand very high temperatures,” declares SM Vaidya, executive VP & business head, Godrej Aerospace.

Overall, Indian manufacturers have witnessed a lot of deals being struck, wherein global majors have joined hands with local Indian companies to create successful ventures in view of future opportunities. TAL claims to be the leading global supplier of Advanced Composite Floor beams to Boeing for their 787 Dreamliner airplanes, which involves a complex composite and metal assembly. They are also sole suppliers of a majority of components for Section 15 and 19.1 of the Airbus A320 family of aircrafts (through a tier-2 relationship as suppliers to RUAG Aerostructures GmbH). Apart from this, they are in the final developmental phase of complex fabs to Rolls-Royce for their Trent 1000 and Trent XWB aero engines. TAL’s aerospace manufacturing plant is spread over 30 acres, with over 3,50,000 sq-ft of manufacturing shop floor.

Srivastava proudly announces, “Our specific strategy is around a one-stop solution – we have composites, hard and soft metal machining, forming and welding capabilities in-house, which have the world’s major civilian airplane OEMs’ approvals. Having established these, and with a tier-1 status, we are now looking at leveraging our proximity to an international airport, by adding capabilities in assembly, so that these could be built in our plant and shipped globally.”

Looking beyond the Domestic Market
According to the Confederation of Indian Industry (CII), the Indian aerospace industry is one of the fastest growing sectors in the economy and could become the third largest aerospace industry by 2020. Export is going to be a massive opportunity as many India-based companies aim to become regional or global sources. Another opportunity is in the area of setting up Maintenance Repair Overhaul (MRO) facilities to save on a drain of foreign exchange in sending civilian and military aircrafts to other countries in the region. In times to come, the expertise attained in MRO services would also come in handy to provide cost-effective services to neighbouring, regional hubs of aviation.

Commenting on this opportunity, Pillai says, “Manufacturers need to scale up on all fronts viz. facilities, execution, operating efficiencies and skills to meet growing domestic as well as export demand. Civilian aircraft manufacturers are increasingly spreading their supply chains in India, and the result has been small and mid-sized companies dedicated to manufacturing of precision components and sub-assemblies.”

However, it is not that simple. Jayaraman cautions that the way forward for India will be to play a balancing act. He says that maximum possible growth for the manufacturing sector under the Make in India programme can only be possible if the country strikes a balance between export-led and domestic demand-led growth.

Explaining their strategy on global sourcing out of India, Kumar says, “Boeing is starting production in a joint venture – Tata Boeing Aerospace Limited (TBAL) – and has quadrupled outsourcing to India, which will cross a billion dollars this year. Those things are a sign of our deep commitment to India. He further refers to Boeing’s partnership with Tata for manufacturing fuselages for Apache. “That is tremendous, because it actually allows us to harness the best they can bring, and we bring the global volume to that partnership. And that’s how it grows the whole business case and capability. Similarly, the manufacturing at TAL in Nagpur for 787 floor-beams is done on a global scale and following global quality standards, and there is a collaboration between Seattle and Nagpur to make sure that the frontline workers are well-trained and skilled,” he says.

Regarding MRO opportunities, with the fleet size of Indian scheduled and non-scheduled operators likely to double by 2020, the need for a strong, domestic MRO industry is critical. Historically, due to certain structures, planes used to fly out of India to places like Colombo, Singapore or Beijing for MRO services. The government has since recognised this structural sub-optimisation and fixed it in the recent budgets as well as in the GST regime. This should give a boost to the domestic MRO industry, which should now be able to capture these opportunities that were, so far, going overseas.

While the ground work has been initiated, there is need for a better infrastructure to truly capitalise on the potential opportunity. Vaidya stresses on the need for qualified manpower, better infrastructure and easy tax regimes. He adds, “New airports in central India shall utilise this advantage and, while investing in expansions, shall also provide special zones for MRO in SEZ areas with competitive advantages.”

Jayaraman feels that India offers competitive talent, which can be easily trained as per the requirement to support growth in the segment. “Going forward, there is a need for successful implementation of the provisions of the National Civil Aviation Policy, along with other structural reforms in the MRO sector. This would lead to the growth of the Indian MRO industry,” he proclaims.

If one goes by the positive sentiments expressed by both international and Indian manufacturers, it would not be out of place to suggest that India is on its way to becoming a strong global aerospace player. That’s definitely in keeping with the country’s plan to surge ahead in its aerospace game. But, as they say, one must learn to walk before one can run. India too will need to gain a firm footing in the industry, before she can break free to soar the open skies.


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May 2019
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