India is set to import both passenger and military aircraft in large numbers, and SMEs have their eyes on orders that could result from the offsets policy.
Small and medium enterprises (SMEs) here expect a substantial amount of business from units that will set up shop in the aerospace special economic zone (SEZ) being developed by the Karnataka government near Bangalore International Airport.
Bangalore-based companies such as Bharat Fritz Werner (BFW), Ace Group and Kennametal India Limited (KIL) and Rajkot-based Jyoti Huron are already supplying machining centres for making moulds, prototyping models, forging dyes and precision mechanical parts to the aerospace sector.
Boeing estimates that India will need 1,000 commercial aircraft worth $100 billion over the next 20 years, while PricewaterhouseCoopers estimates that India will spend $25 billion on commercial aircraft and $100 billion on defence until 2014. This will drive growth for domestic components suppliers.
SMEs are looking to supply cutting tools for machining of structural parts and landing gear for Boeing and Airbus as part of the offset facility the government provides. There is also an opportunity in cutting tools for the machining of parts and engines of Sukhoi fighter jets manufactured by Hindustan Aeronautics Limited (HAL).
“The aerospace business was non-existent for us three years ago. It is in a nascent stage now. About 3 per cent of our sales is from this sector, but we hope to grow this to double digits in the next two years,” said Santanoo Medhi, KIL’s managing director.
The Karnataka government has acquired 1,000 acres near the Bangalore International Airport in Devanahalli for the aerospace SEZ. About 55 per cent of the land will be allotted to companies for setting up factories.
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Units in the SEZ will cater to domestic demand as well as the export market. The park will include aviation MRO (maintenance, repair and overhaul) activities too.
So far, state-owned defence suppliers BEML Limited and HAL, Mahindra and Mahindra, Dynamatic Technologies and Japan’s Amada have been allotted land. These companies are eyeing a substantial portion of the business emerging out of the offset business opportunity.
Shrinivas Shirgurkar, managing director of the Ace Group, said, “The aerospace industry requires high-precision and sophisticated components. Machine tool makers in India currently lack the technology and skill-sets to manufacture such components. But, there are immense opportunities for us to meet these requirements and we look forward to meeting them.”
The Indian Machine Tool Manufacturers’ Association (IMTMA) has urged the Central government to help the industry set up a corpus fund to assist companies in adopting new technologies.
“We need to gear up with the latest technology and enhance the skills of our engineers to enable them to produce sophisticated components for aerospace applications,” an IMTMA official said.
However, the aerospace industry requires unsophisticated parts as well, and SMEs in Bangalore (including his own Ace Group) already supply some of these components and turning and milling machines to HAL.
Medhi of Kennametal said, “We are in talks with Spirit Aviation from the United States for the supply of cutting tools. Spirit has an arrangement with Bangalore-based Dynamatic Technologies for outsourcing components like flap track beams for the Airbus A320.”
Kennametal currently supplies cutting tools to HAL (which uses them to make parts for Sukhoi jets and helicopters) and TAL, a joint venture between the Tata Group and Boeing (which uses them to make floor beams of the Boeing 787 Dreamliner).
Some of the SMEs that supply parts to HAL, other defence PSUs and the Indian Space Research Organisation (Isro) have been set up by former employees of HAL and the Defence Research Development Organisation (DRDO).
“Opportunities are there. When the volumes will start flowing in is the moot question. It could become big when the medium multi-role combat aircraft (MMRCA) project-related work starts,” an industry source said, adding that offsets will be the biggest growth drivers for SMEs.
The National Centre of Aerospace and Innovation Research (NCAIR) is being set up at Indian Institute of Technology, Bombay. To be sponsored jointly by the Department of Science and Technology and Boeing, NCAIR will work on innovation and research on avionics and structures in order to build an ecosystem for the manufacture of aerospace components.
Some 50 companies are expected to join and participate in projects. “Companies are expected to use it as a training ground for young engineers to benefit the private and the government sector,” an official added.