Cost and manufacturing advantages make India the emerging hub of aerospace manufacturing
Today, India boasts of its status as the fastest growing country in the world. It is shortly going to be the world’s most populated country with a very high percentage of youth and this augurs well for the country’s prowess in the industrial world. Due to a steady increase in defense spending, Indian aerospace industry is among the world’s fastest growing aerospace markets.
The other factor that helps India in its role as the emerging hub in aircraft manufacturing is its fast growing civil aviation market due to a burgeoning middle class with increased spending powers. Further, India is today among the top countries that possess the required capability in technology both in terms of knowledge and expertise. Yet another factor that weighs heavily in favor of India’s dominant role in the aerospace industry lies in its cost advantage. According to the Price Waterhouse Cooper’s report titled Changing Dynamics “India’s Aerospace Industry indicates that the rapid growth of this industry has attracted major global aerospace companies to India and has incentivized domestic aerospace players to increase and deepen operations.”
Today there is help from the otherwise lethargic government. In the last (tenth) Aero India air show held in Feb 2015, the Chief Host of the show, the PM of India, Mr. Modi, spoke at length on the subject of rapid modernization and indigenization of the manufacturing industry in general and the defense industry in particular. The air show was attended by large number of representatives from among the aerospace engineering companies in India and especially the aircraft parts manufacturing companies in Bangalore. Mr. Modi impressed on the significance of the Make in India program and how in future it would be very easy for defense manufacturers to invest in India. With the state helping in increasing the impetus of the growing defense manufacturing sector in India, the future does appear very favorable.
According to the Price Waterhouse Cooper’s report, all segments of the aerospace industry, which include, the triad of civil aviation, defense aviation as well as space, are exhibiting an impressive level of growth. According to the Ministry of Civil Aviation “The Indian aviation industry is generating a Compounded Annual Growth Rate or CAGR of 18 cent”.
In the field of Defense Aviation India is “expected to spend USD 100 billion in the next decade towards the purchase of defense equipment”. However, the mode of such production is expected to lean heavily towards Make in India in the years to come. Nevertheless, there is expected to be a sharp growth in the Indian aerospace manufacturing industry in the years to come. This factor will surely be of great advantage to the aircraft parts manufacturers in India.
In the field of space too India is not found wanting. The country’s flagship organization ISRO, Indian Space Research Organization, established in 1969, is today among the top three space agencies in Asia along with China and Japan. There is a substantial quantity of high technology products that need to be manufactured in this area too and this spells well for the indigenous aerospace manufacturing industry.
Price Waterhouse Cooper observed that the “cost savings can range between 15 to 25 percent for manufacturing. These savings are mostly expected in labor intensive processes with import of raw materials. In fact, in some cases local sourcing of raw materials and parts can increase the cost savings by an additional 10 to 20%.”
In conclusion, India is a great destination for defense manufacturing. It has a vibrant aerospace industry that is well supported by various qualified graduates in IT, engineering and science. There is an adequate availability of parts and components as well as a robust expertise in manufacturing and production systems. India has expertise in the entire process of production starting from the basic design and terminating with the product manufacturing.
This is a positive advantage which global companies find very attractive. There is a very supportive government at the center and a healthy R&D environment. The cost of manufacture is also most favorable. Due to all these reasons, several aerospace companies are today looking at India as a viable destination for both manufacturing and MRO. India is surely fast emerging as the hub of aerospace engineering especially in Asia.