The Aerospace and Defence (A&D) market in India is estimated to reach around $70 billion by 2030 as the momentum is expected to further pick up with improving infrastructure and government thrust. The growth of airlines and passenger traffic in India has been highly rapid in the past five years at over 15 percent per year and this has increased from around 70 to 200 million passengers in the past 10 years in domestic and international air travel. Further, the number of flyers from India for international travel is also estimated to be around 100 million last year which indicates high demand for airline services and seats.
From a single carrier, viz. Air India /Indian Airlines until the 1990s, today there are strong private airlines like Indigo, Jet, Go Air, Vistara etc. which are competing for a share in the rapidly growing market pie. This is giving rise to unprecedented demand for new airplanes with all airlines placing large orders for airplanes over the next five years to meet the growing needs of the domestic and international Indian traveler. This growth trend is expected to continue strongly in future years as the economy develops and fuels the demand from a growing middle class for air travel for tourism, business, other visits etc.
There is large growth expected for smaller aircraft, business jets, helicopters etc. for regional connectivity and faster movement as the demand from business and other travelers increases with economic growth.
Today there are strong private airlines competing for a share in the rapidly growing market pie.
Source: Tata Industries Ltd & Tata Advanced Materials Ltd
This makes a strong case for global OEMs and their suppliers to examine India as a destination to play a vital role in the global supply chain for aerospace components and parts. There could be several advantages to gain from the low costs in India along with the technical and engineering expertise / skills available for high-precision and high-quality components. What has been witnessed in the automobile components and auto (small car) industry can very well be replicated for aerospace and related components and services.
In the past century, the progress of the domestic aerospace manufacturing of local aircrafts, helicopters and other aerospace products has largely been limited to the government-owned entities like HAL, NAL, ISRO etc. but the turn of this century has seen an aggressive growth of the private industry participation, backed by large corporate houses such as Tata, Mahindra, L&T and Godrej. These companies have made a successful entry into the
aerospace industry on the strength of their engineering skills and expertise acquired in other industry sectors.
Many private companies have made rapid strides in developing India as a preferred
destination for aero structures, components, sub-assemblies and complex system assemblies. Leading global OEMs have established JVs in India for the manufacturing of aerospace related parts and assemblies which find their way into many commercial and defence aircraft and helicopters. The sector has seen adoption of best practices and maintains international standards in quality for components but India as a
country has yet to address the need to develop more facilities that provide end-to-end aerospace solutions.
The industry structure can be broadly classified into following areas:
Commercial airlines and air services operators: Offering passenger and cargo services and procuring airplanes, helicopters etc. from global companies like Boeing, Airbus, Sikorsky etc.
MOD and other government entities: For purchasing aircraft and other equipment for defence and other requirements.
Aircraft/airplane, helicopter, space equipment manufacturers: OEMs largely restricted to PSUs like HAL, NAL, ISRO and other government entities.
Ancillary manufacturers of aerospace components and assemblies: Various types of metallic, non-metallic and composite parts for engines, aero structures, airplane interiors, space programs etc. for both domestic supply and exports to international manufacturers.
MRO and other service operators: For maintenance and repair services for airplanes and other aircrafts.
Defence procurement and offset obligations
Today the Indian Aerospace industry for the manufacture of components is relatively small ($250 million) as compared to developed Western economies. However, it is poised for an aggressive growth phase over the next 10 years based on significant tailwinds.
Factors driving the growth are as illustrated:
- a) Large acquisition of
defence aircraft with offset obligations and opportunities;
- b) India is poised to break into the top three markets in the world for civil aviation with a growth in traffic of 20%+ in the past five years leading to large orders for commercial airplanes for domestic airlines;
- c) Availability of engineering skills and talent;
- d) Enabling policy framework by the Government towards “Make in India”, infrastructure development, ease of doing business and the maiden National Civil Aviation Policy.
The growth in all the areas mentioned would also lead to increasing need for MRO and related services in India, and many global majors like Boeing have been looking at the opportunities available for the same. All these have substantial potential to generate employment opportunities for technicians and engineers to fulfill the need for manufacturing and services for aerospace industry. The MRO market for repairs and maintenance services for aircraft is itself expected to touch $4 billion by 2025. In addition, there is scope for design and engineering services related to components and assemblies to be given as services to OEMs. There would also be requirement of leasing,
financial, ground support and other types of services with growth of the aerospace sector.
The MRO market for repairs and maintenance services for aircraft is expected to touch $4 bn by 2025. (KEEP $4 and bn TOGETHER)
Source: Tata Industries Ltd & Tata Advanced Materials Ltd
In conclusion, the Indian aerospace industry is close to catapulting itself into a global arena with rapid rise in demand for aircraft and components. The country has many advantages such as low labor costs, high availability of engineering, design and
technical manpower andexpertise, high growth markets etc and active support from the government’s new policies. This presents a unique opportunity for global companies to tap into the Indian aerospace market across the entirevalue chain for aero structures, components, assemblies and even complete equipment / aircraft and related services.