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#5 Big Opportunities in Indian Aerospace Industry There are more than three million parts in a plane that requires hundreds of vendors to complete

By Arvind Melligiri

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The aerospace industry in India is at a turning point. Several research and estimates have predicted an exciting future for the industry.

In the next 10 years, an estimated, INR 5 lakh crore ($ 100 billion) will be invested on acquisitions in the aerospace and defence sector in India.

The robust growth potential of the industry attracts original equipment manufacturers (OEMs) in this sector to setup facilities in India. Although the gestation period is long, companies who have made their capital investments are looking at CAGR of nearly 50 per cent every year.

1. India's Strong Framework

India has a strong framework to provide all requisite resources for this industry — research and development capabilities, leading information technology and engineering services, manufacturing expertise with global firms located in India, and a huge pool of semi-skilled manpower. Entrepreneurs, who want to enter this field, and even existing players must recognize the opportunities with the most yield.

2. Government Policies

Favourable policies made by the government have promoted expansion and growth in this sector. The recent "Make in India" initiative has acted as a push for airframe manufacturers to increasingly use indigenous aerospace suppliers. The policies introduced by the Ministry of Civil Aviation have set a predecessor for government initiatives that would boost aerospace manufacturing.

The offset clause of a country defines the policy for rerouting procurement funds paid to international contractors back into India.

The Defense Procurement Policy (DPP-2005) gave great benefits to Indian Defense industry.

Direct offset meant international players would agree to coproduce specific components of its products or obtain related services in India. This percentage was increased which helped international players get a low cost manufacturing base and in return, gave Indian companies access to technology and helped establish India as a hub for aerospace components.

3. India as an Aerospace hub

India's aerospace and defense manufacturing sector continues to grow and expand through partnerships, new factories and research facilities. The flurry of activities in the recent past has helped the country earn the recognition of being one of the world's major aerospace hubs. The combination of public and private players playing an active role has ensured this.

Telangana boasts of the country's first Aerospace and Precision Engineering SEZ Park. Karnataka has also encouraged SEZs to be set up in various smart cities.

In the private sector, Reliance Defense Limited had announced plans to launch a global aerospace technology research center in Bengaluru.

Boeing also has continued to expand its footprint in the country in the form of the Boeing Research and Technology India Center, which is the Indian counterpart to its research and technology organization in the US. Aequs Aerospace had launched its aerospace ecosystem in Belagavi which has attracted several contracts to India.

4. Growing Competition

There are more than three million parts in a plane that requires hundreds of vendors to complete. While competition may be perceived as negative in most sectors, it is positive sign for the Indian Aerospace & Defence industry. The sector encourages more players to invest in and optimize the manufacturing process. A competitive market promotes innovation and mutual growth. The aerospace sector is heavily dependent on the supply chain and with increased players, more components can be manufactured within India. This way, there will also be specialization in manufacturing of certain critical components.

There is also huge scope for other industries to contribute to this sector. However, despite India's information technology sector being globally recognized, the Aerospace& Defence industry is yet to leverage this strength.

5. Large Pool of Manpower

Considering the novelty of the aerospace industry, a number of graduates have not been able to match the requirement in the industry. Aerospace requires certain skills that complement the zero error policy in aerospace manufacturing.

Considering the precision of skill required, there has to be rigorous training given to all those who would be directly working on the components. While there is a dearth of skilled labour in the aerospace sector, those who have been trained on machinery in the automobile industry can be re-skilled to fit the aerospace sector.

Companies have taken the initiative to train professionals in this respect. Aequs Aerospace had launched the Aerospace Knowledge Center (AKC), with a vision to educate freshers and employees in the skills that precision aerospace manufacturing needs. It is a niche skill that holds high value and is not traditionally available in India. Since the company has presence in France and US, they were able to bring highly-experienced instructors to teach about every aspect of aerospace manufacturing. They also provide counselling to students in colleges in Belagavi as it is among the most preferred fields in engineering.

6. Capabilities and Capacity

India has always had ample capacity to produce components at low costs. Considering the labour cost is very low and there are enough resources, manufacturing in aerospace is possible with relative ease as compared to other countries.

However, since India is still at a nascent stage, there is a dearth in available technology. Internationally, countries like France and USA have been able to innovate with technology over the years and optimize procedures.

This ensures highly efficient processes that ensure highest quality of product. With international partners, there is a possibility technology transfer and at the same time, the partners are able to take advantage of the low cost of production. Being focused on two key areas, increasing internal capabilities and building smart partnerships, is what helps increase the margins. Specializing and being competitive globally is important.

The Indian Aerospace & Defence Industry is on the path of becoming self-reliant. The manufacturing sector especially is experiencing a revolution with profits soaring and several firms being represented globally. With a booming sector and big opportunities, investments in Aerospace Manufacturing are now at an all-time high.

Arvind Melligiri

Chairman and CEO, Aequs

Aravind Melligir is the CEO and Chairman of Aequs.
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