August 2007
Prepared by
Jaimie Rogers
Aerospace Sector Special Advisor
UK Trade & Investment
UKTI Aerospace Sector - India
4th Monthly report - August 07
Contents
Page
Contents
Achievements
Actions In the Next Month
02
03
05
The Indian Civil Aviation Industry
Aim
Economic Background
The Indian Civil Aviation Industry
Governing Bodies
Changing Industry
The Indian Airlines
The other Sectors in the Aviation Sector
Infrastructure to Support the Industry
Opportunities for UK Companies
Table of Airlines and their Aircraft Fleets
References and Sources of Data
06
07
07
09
11
13
14
17
22
32
39
41
The Indian Public Sector Aerospace Industry
The Indian Armed Forces
Offset
Public Sector Units
Research Establishments
Opportunities for UK Companies
Appendices of Military Aircraft and Missiles
43
44
44
45
51
55
58
Composite Manufacture
65
Avionics Design & Manufacture
67
Shows & Conferences
70
Consultants & Agents
72
Special Economic Zones
74
2
Achievements
33 visits undertaken in Hyderabad and Bangalore
•Focus for these visits has been on:
•Civil Aviation
•Avionics Manufacture
•Composites manufacture
•Research Organisations
•Public Sector Companies
Presented at The Engineering Design.In Conference & Expo to be held in Bangalore 9-11 August
•Key note speaker - provided an overview of UKAI and feedback to the Indian Engineering Services Sector
•Lead the UKTI Stand
•A good opportunity to give the UKTI sector teams a more technical appreciation of the aerospace sector
•A good spin off has been that I have circulated the presentation to the UKTI Aerospace team in India which gives them a good overview of what
is happening in the UKAI today
Update to the Genser Report Completed
Active marketing to the Indian aerospace engineering service providers for inward investment in the UK
A letter and background information sent to the top 10 companies highlighting the need for them to set up European technical integration centres and
why these should be based in the UK. A follow up meeting held with TCS to discuss issues and best locations for offices
Opportunities on MRO and R&D communicated to UKAI on the following Companies:
•Hamco
•Paramount Airways
•NAL
•IISc
Support and advice given to a number of UK Companies
Such as Marilake Instruments Ltd, Aerologistics, Action Aviation and Consensus.
3
Achievements
Companies and Organisations met in the last month:
(These are only companies where I have had an extended meeting with the representatives)
Hyderabad Visits:
ASIA - Consortium of Aeropsace Compnaies in Hyderabad
Zetatek Industries Ltd - Siva Kumar - Managing Director
SKM Technologies Ltd - Krishna Rao - Managing Director
Astra Microwave Products Ltd - G J Prabhakar - Inter. Marketing Manager
Pet Aviation - Prabhat Singhee - Exec Director
Anath Technologies Ltd - Subba Pavuluri - Managing Director
MTAR - Ravindra Reddy – Company Director
Hamco - Uday Naidu - Chairman & CEO
Sigma Microsystems Pvt Ltd - Narasimha Reddy - CEO
Jaisara Tooling Ltd - Manohar Vangoori - Managing Director
Bangalore Visits:
Action Aviation
ComAvia Systems Tech. Ltd- Thomas Varughese -CEO
ProSim - Dr Shamasundar - Mang Dir.
Digiprotek - Srini Iyer - CEO
EADS, Astrium - Katkuri Venkata Ramu - Liaison Officer
Institute of Engineers (India) - Dr L V Muralikrishna Reddy - Hon Secretary
ATR - Marian Mailhes, Sales Director India
Airbus Pvt Ltd - Alan Roland, IT Manager & Joelle Willaume, Head of Engineering
Tata Advanced Materials - Hemanth Achaya - COO
Larsen & Toubro Ltd - Simha - VP Strategic Electronics Centre
Quest Machining & Manuf Ltd - Aravind Melligeri - CEO Quest Bharat Electronics Ltd - V K Sharma - General Manager International Marketing
National Aerospace Laboratories - Dr Upadhya - Director
David Marshall - President of the Royal Aeronautical Society
The Aeronautical Society of India
Hindustan Aeronautics Ltd - Ashok Baweja - Chairman; Aircraft Division and Engine Division
Taneja Aerospace & Aviation Ltd - Kmaeswaran Managing Director & Nicholas Belbin - CEO Aerostructures
Indian Institute of Science - Department of Aerospace - Prof Raghunandan and his team
Hightemp Furnaces Ltd - Gopal - managing Director
Tata Consultancy Services - Suresh Babu - Director Aerospace Practice
4
Actions in the next Month
Attend the International Astronautical Congress in Hyderabad, 27 Sept
•Meet UK Companies attending
•Meet some of the key Indian Companies
•Made welcome speech on behalf of UKTI at UK Reception
Return to the UK, 30 Sept
Make a series of presentations on my findings in India to UKAI via the UK Aerospace Associations:
Tues 16 Oct Wed 17 Oct Thur 18 Oct Fri 19 Oct Mon 22 Oct Wed 24 Oct Thurs 25 Oct -
Presentation at NWAA
Presentation at MAA
Presentation at WEAF
Presentation at FAC
Presentation at SBAC
Presentation at SDI
Presentation at Invest Northern Ireland
5
The Indian Civil Aviation Industry
6
The Indian Civil Aviation Industry
There is estimated to be $110 B to invested in the Indian Civil Aviation industry by 2020 - $80B on Aircraft and $30B on Infrastructure’
Aim
In this short document I have not been able to go into great depth on such a large sector. The intention is to give some background information,
highlight the key players and look at the trends: past, present and future. I have tried to clearly identify the opportunities and then provide further
sources of information. I have included a number of the latest statistics and exerts from the Indian media. My health warning is that any forecast out to
2020 needs to be taken with a pinch of salt!
Economic Background
When IT companies such as TCS, Wipro, HCL and Infosys were set up in the 1970s to service the US markets and when Texas Instruments set up
their semiconductor design centre facility in Bangalore in 1985 no one imagined where it would lead and the huge impact the IT sector would have on
the Indian economy. The fledging IT sector flourished in the late 90s and grew exponentially when the fears of the millennium bug hit the global IT
industry. India became the global outsourcing capital for all the reprogramming work that was required. This gave India two major advantages: A huge
boost to its economy and its ‘Process Revolution’. i.e. the ability to resolve any complex problem by breaking it down into very small, simple pieces.
This has lead to great development of other industries in India: Telecomms, all forms of engineering, and other technology and science led industries.
India’s GDP is $615.5 Billion (2006). India is one of the fastest growing economies in the World, second only to China. India’s GDP growth about 7% 8% per annum. In 20 years India is expected to become the third largest economy only behind China and the USA.
On the ground, this means today’s generation of Indians have significantly more money in their pockets than their parents and also different
expectations. They are looking at the West as a role model and now expect to be able to fly around India and to travel abroad on vacations and not
spend days sitting on over crowded trains. There is now a significant number of 2 income families, which a decade a go would have been unheard of
The Indian middle class is estimated at about 300 million people of a total population of 1.1 billion. Half the total population is aged between 18 & 24
years old. The other factor is the growth in not only national tourism in India but international tourism. India is now being seen as a new destination for
lots of western holidaymakers. Goa is now seen as the Costa Del Sol of India. These factors have lead to large growth in the number of tourist/
7
The Indian Civil Aviation Industry
leisure/ pleasure flights. With the boom in business and industry there has been a significant growth in business travel, domestically and
internationally. The graph below shows The Indian Domestic Market, Forecast of Business Vs Leisure Passengers until 2010.
CAPA Indian Domestic Market Forecast:
Business Vs Leisure/VFR (1996-2010F*), millions
Graph courtesy for Centre of Asia Pacific Aviation, (CAPA)
8
The Indian Civil Aviation Industry
The Indian Civil Aviation Industry
Until the early nineties Air Indian and Indian Air, the state owned airlines, were India’s only national carriers. In 1991 the Indian Government created
the ‘Open Sky’ policy. Its aim was to open the skies to private sector. This was fairly ineffective because the civil aviation environment then was not
conducive for sustaining a high quality competitive level. The new airlines could only be called air taxies and were not allowed to publish schedules.
The aim was to get these companies to fly to the secondary cities and not compete directly with the state owned carriers. A number of the private
airlines went under and only Jet Airways and Sahara Airlines survived. By the end of 2004 new reforms were introduced to make flying more
affordable. This allowed the Low Cost Carriers (LCCs) to enter the market.
Today the regulations that control the sector are still under constant review. Slowly the bureaucracy is being lifted which is now allowing Indian airlines
to compete against the international competition. These reforms along with the boom in the Indian Economy have lead to the high level of grow we
are seeing in the industry today:
 In the 6 months ended 30 September 2006, domestic traffic has increased by 44% year-on-year.
 India’s airports handled 51.0 million domestic passengers in 2005/06, posting growth of 28% year-on-year, and 22.4 million international
passengers, up 15.1%.
 The Centre for Asia Pacific Aviation (CAPA) projects domestic traffic in India will grow 25-30% p.a., and international by 15% p.a. until 2010
 CAPA research projects that domestic passenger traffic will reach 150-180 million by 2020, with international traffic in excess of 50 million.
 Current estimates are that the Airline industry in India is growing at twice the speed of the Indian GDP growth. In May 2005 the national fleet
comprised 170 aircraft, today it is now almost twice that with 312 units. This number will rise further to approximately 370 by the end of 2007.
CAPA estimates that India’s fleet will reach 500-550 aircraft by the end of 2010.
 In the next 20 years it is estimated that India will be the fastest growing civil aviation industry in the world
 The Indian Ministry of Civil Aviation (MOCA) estimates that by 2020 there will be 1000 aircraft in service in India (conservative estimate)
Why is the industry so bullish? It is only now just stating to tap into the Indian domestic market:
 Only 1% of the Indian population has flown in a commercial aircraft.
 Jet Airways claim that 40% of their passengers are first time flyers
 There are 5 billion passengers on the Indian railways a year. The LCCs are targeting their fares at these 1st and 2nd class passengers.
Today the total number of domestic air travellers is only 1% of this. This percentage will grow.
9
The Indian Civil Aviation Industry
Numbers
in Passenger
Annual Growth
Indian Annual
Growth,
Passenger
Numbers
30.00%
25.00%
20.00%
15.00%
International
Domestic
10.00%
5.00%
0.00%
2000/01
2001/02
2003/04
2002/03
2004/05
2005/06
-5.00%
-10.00%
Graph courtesy for Centre of Asia Pacific Aviation, (CAPA)
10
The Indian Civil Aviation Industry
Indian
Passenger
Traffic
Growth
1999-2006
Passenger
Traffic
Growth
1999-2006
International
Year
No. in
% age
millions change
Domestic
No. in
millions
Total
% age
No. in
% age
change millions change
1999-00
13.29
2.9%
25.74
6.9%
39.04
5.5%
2000-01
14.00
5.4%
28.01
8.8%
42.02
7.7%
2001-02
13.63
(-)2.7%
26.36
(-) 5.9%
39.98
(-)4.9%
2002-03
14.82
8.8%
28.90
9.6%
43.72
9.4%
2003-04
16.65
12.3%
32.04
10.9%
48.69
11.4%
2004-05
19.45
17.0%
40.10
25.0%
59.54
22.3%
2005-06
22.36
15.1%
50.98
27.9%
73.34
23.7%
Table courtesy for Centre of Asia Pacific Aviation, (CAPA)
Governing Bodies
The Indian Civil Aviation Industry is under the control of the Government of India, under the remit of the Ministry of Civil Aviation (MOCA). This Ministry
is responsible for the formulation of national policies and programmes for development and regulation of Civil Aviation and for devising and
implementing schemes for growth and expansion of civil air transport. It also oversees the provision of airport facilities, air traffic services and the
carriage of passengers and freight. Both Air India and Indian Airlines come under the wing of the MOCA.
11
The Indian Civil Aviation Industry
Two important organisations within the MOCA are:
 Airports Authority of India (AAI) who own and manage over 60 operational airports in India. The AAI operate most aspects of the airport
(including air traffic control) and procure most of their equipment directly.
 Directorate General of Civil Aviation (DGCA) is responsible for regulation of air services to/from/within India and for formulation,
enforcement of civil air regulations, air safety and air worthiness standards. These regulations are not inline with FAA or CAA regulations
currently. The DGCA does recognise it will have to align its regulations with international standards in the near future.
Some of the important regulations are currently being reviewed are:
 49 % equity participation by foreign airlines. This may increase further. Currently a foreign airline cannot invest directly in an Indian airline, it
can only be one of the foreign airline promoters
 49% Foreign Direct Investment (FDI) limits on Air Cargo, Helicopters, MRO and Sea-planes to be raised to 74 percent.
 Indian government to ratify the Cape Town Convention regarding an international legal regime for high-value mobile items, such as aircraft
and space equipment. If ratified, this will benefit airlines by making aircraft purchase and leasing cheaper.
 Minimum equity to start a new airline will be raised from £ 3.7 million and £ 6.2 million
 Director-General of Foreign Trade (DGFT) functions will expand to include enforcement of legislative obligations.
 Upper age limit for aircraft has been stipulated as 8 years, reducing it from the current 15 years.
 Bureau of Civil Aviation Security gets more teeth and special provisions to tackle aviation offences.
 A proposed Aviation Economic Regulatory Act (AERA) to formulate guidelines for large mergers, such as Jet and Sahara and in future Air
India-Indian Airlines.
 The maximum age of pilots – to be raised for 50 to 60 or 65
 Currently an airline must operate domestically for 5 years before it flies internationally. This might be reduced to 3 years
 Allow aircraft to be piloted by 2 overseas pilots. Currently there must be one Indian pilot
Other important regulations:
 FDI on green field airport projects are allowed 100 percent foreign participation
12
The Indian Civil Aviation Industry
Changing Industry
The MOCA and especially the Minister himself, Praful Patel, is getting a great deal of praise for the development and grow the industry. Both the AAI
and the DGCA are trying to support and development whilst retaining regulations and standards. There are also the voices of the airlines themselves
that are trying to influence him:
Federation of India Airlines (FIA) – Was founded at the start of 2007. It is the representative of all the airlines in India. Its aim is look at issues that are
affecting all the airlines, under take research and produce reports and papers to lobby the Government and support them in making informed
decisions. It’s the biggest issues effecting the airlines today are:
 Today none of the airlines are making a profit. CAPA estimates that airlines in India posted a combined loss of $500 million in the year
ended March 2007. Taxation on Aviation Turbine Fuel (ATF) is the biggest influence on this. ATF is estimated to be 65% higher than the global
average. They account for 35-40% of operating cost, as against global average of 20-25%.
 Airport Congestion – Work is already underway on a number of new metro airports and upgrade programmes. This work is just not
happening fast enough to support current growth levels.
The other very influential voice is Dr Vijay Mallya. A Member of Parliament and Chairman of United Breweries, who own Kingfisher Airlines. He is very
influential with the MOCA and is using this to benefit his airline. This, I believe, is currently benefiting the whole industry. He is getting updates to
regulations pushed through in days and weeks not months or years.
13
The Indian Civil Aviation Industry
The Indian Airlines
From about 2002 there have been a number of new airlines enter the sector. At the start of 2007 there were 12 Airlines in India:
2 state owned:
 Air India – (Full Service Carrier, FSC) and Air Indian Express (Low Cost Carrier, LCC) - (international flights)
 Indian (FSC and regional flights).
10 privately owned:
 Jet Airways (FSC) - (currently does international flights)
 Air Sahara (LCC) – (currently does international flights)
 Air Deccan (LCC & Regional Airline)
 Kingfisher (FSC)
 Spice Jet (LCC)
 Jagson – (Air taxi operator)
 Paramount Airways – (Regional Airline)
 Go Air – (LCC)
 Indigo. (LCC)
Further new airlines are looking to enter the market.
There is now a period of consolidation going on. We are seeing a number of airlines joining forces. There are a number of reasons for this:
The formation of aircraft fleets that will allow these Indian airlines to challenge other major airlines in the rest of Asia
The ability to cover the entire market with both FSC & LCC services
14
The Indian Civil Aviation Industry
 Access to more flight slots – e.g. Kingfisher can use Air Deccan’s 450 flight slots. It can also switch the standard of service offered: low cost
or premium depending on the market being targeted for each slot.
 Access to aircraft parking bays- e.g. Kingfisher can use Air Deccan’s 45 parking spaces around India, currently it has none.
 Reducing duplication of support services, such as a engineering – although this is very minor as engineering services are very poor
throughout the sector
By end 2007 a number of these will have occurred:
 The two State-owned airlines will have merged.
 Jet Airways will have acquired Air Sahara. Sahara is now Jetlite
 Kingfisher will have a 51% stake in Air Deccan.
There is also talk that Paramount will buy Indigo or Indigo will join forces with Spice. Jet Airways may acquire Go Air.
Looking to the future of the Indian Civil Aviation Industry there will be 2 or 3 FSCs, national carriers; 3 or 4 LLCs and a small number of regional
Airlines. The view today is these are the mostly likely contenders:
 India Air (FSC & LCC)
 Jet Airways & Jetlite - (FSC & LCC)
 Kingfisher & Air Deccan (FSC, LCC & Regional Carrier)
 Indigo (LCC) – Have some serious backing, CEO is COO of US Airways
 Paramount (Regional Carrier)
Items of News on the Indian Airlines:
 Jet Airways is looking to set up a European hub in Brussels
 Air India is also looking at setting up a major hub in Europe. This will probably be in Germany.
 Ryan Air is doing a due diligence of Spice Jet. Spice Jet is trying to raise US $40 million to fund its fleet expansion from 11 to 18 aircraft. It is
also looking at flying abroad.
15
The Indian Civil Aviation Industry
Indian Domestic Market Share by Carrier: Oct 05 to Nov 06
36%
30%
Jet Airways
24%
Indian
Airlines
Air Deccan
18%
Air Sahara
Kingfisher
12%
SpiceJet
6%
GoAir
Others
0%
Oct-05
Feb-06 May-06 Aug-06
Oct-06
Nov-06
Graph courtesy for Centre of Asia Pacific Aviation, (CAPA)
16
The Indian Civil Aviation Industry
The other Sectors in the Indian Civil Aviation Sector
Currently all the headlines are about the national passenger carriers. There are 4 other sectors that are also growing and although being
overshadowed by the ‘sexy’ airline stories we are going to see large levels of growth: Cargo, Regional Airlines, General Aviation and Helicopters.
Cargo
In 2004-05 export tonnage increased by 13%, an increase of 45,000 Tonnes compared with 2003-04 and Import tonnage increased by 26%, an
increase of 51,000 Tonnes through the same time period. This is fuelled by the fast growing economy and by a strong industrial base. Future forecasts
remain high.
 Freight carriage in India currently around 4200 tons per day
 It is forecast that the Indian logistics industry is set to be a US $ 125 billion market by 2010 and is set to grow by 25 per cent in next 5 years.
 Express logistics business is over US$ 1.55 billion in 2007 and is growing at a compounded annual growth rate of 11 per cent per annum
and this is expected to continue until 2011
 A recent Airbus report had predicted that India would order in access of 165 cargo aircraft by 2025
These levels of growth are supported by the levels of growth we have seen since 2000, see table on the next page.
To support the growth in the cargo sector The MOCA is proposing exclusive cargo airports, which may well be privately owned. The MOCA has also
raised FDI from 49% to 74% in the cargo sector to facilitate building of cargo airports at various business centres across the country. It is expect
shortly that the Government will grant Nagpur as a major cargo hub. Nagpur is one of India’s secondary cities, located in the centre of India.
Currently there is only one main player in the market that is Blue Dart, which is based in Chennai and is 81% owned by DHL Express. It currently has
a fleet of 7 aircraft: 5 x B737 and B757 aircraft. In the next year there will be 3 or 4 new entrants:
17
The Indian Civil Aviation Industry
 Reliance Retail - who have an fleet estimated at 40 aircraft
 Jet Airways - in partnership with Lufthansa plan to launch a dedicated cargo airline by the end of 2007 and is aiming to increase cargo
revenues from 6% to 10% of their total revenues.
 Air India Cargo - will be converting six Airbus A-310 aircraft into freighters at an estimated cost of $ 6 million each. It is also planning to
convert a few of its Boeing 747-300 combi aircraft into freighters. It has just taken receipt of a new 777-200 ER. Operations commenced July
07.
 Flyington Freighters – based in Hyderabad. Are starting operations with 4 leased A300-600F and has placed orders for 6 A330-200Fs,
delivery 2009 and will order a number of B777-200Fs in 2009
Looking slightly further ahead in the next 5 years we will see one or two of the other airlines entering such as Go Air and also some participants from
the retail sector such as Bharti/Wal Mart and some of the other international freight carriers. There will also be room for some regional freight carriers.
18
The Indian Civil Aviation Industry
Cargo Traffic Growth 1999-2006
International
Domestic
Total
Year
Tonnes
‘000
%
change
Tonnes
‘000
%
change
Tonnes
‘000
%
change
1999-00
531.8
12.0%
265.6
18.3%
797.4
14.0%
2000-01
557.8
4.9%
288.4
8.6%
846.2
6.1%
2001-02
560.2
0.4%
294.1
2.0%
854.3
1.0%
2002-03
646.1
15.3%
333.2
13.3%
979.4
14.6%
2003-04
693.3
7.3%
375.08
12.6%
1068.44
9.1%
2004-05
824.88
19.0%
465.04
24.0%
1289.91
20.8%
2005-06
920.15
11.7%
483.79
5.9%
1403.94
9.7%
Table courtesy for Centre of Asia Pacific Aviation, (CAPA)
19
The Indian Civil Aviation Industry
Regional Aviation
The current focus for the Indian Civil Aviation Industry is to get the infrastructure in place to allow passengers to travel between major cities and
internationally, i.e. mobilise the national carrier fleets. The next step is to link the secondary cities to these major Metro hubs. With the poor country
infrastructure the aim is to do this by developing a number of regional airports. 35 non-metro airports are starting to be commissioned. The MOCA is
trying to encourage this sector by offering breaks such as a reduction in the sales tax on ATF for aircraft with less than 80 seats.
Currently within the existing fleets there are 47 RJs (see table of Indian Airlines: Existing Fleets and New Orders). There are new orders for 80 RJ. By
far the most successful manufacturer is ATR with 30 aircraft already in service and 65 on order. Bombardier and Embraer are also in India. India has
only become a market for regional aircraft since 2002.
The 3 biggest regional operators are:
 Air Deccan - currently 14 aircraft and a further 30 on order
 Kingfisher – with 35 ATRs on order
 Paramount – currently with 5 Embraers and 15 more on order
The Kingfisher/ Air Deccan Airline will potential dominant this sector
General Aviation
With the up surge in Indian business, the poor country infrastructure and changes in expectations the demand of smaller aircraft for both business and
recreation is on the rise. This is not only from a practical point of view i.e. the ability to travel more quickly around the country but also from a status
viewpoint. It seems that the wealth Indians like to be able to demonstrate their wealth and do use their aircraft to woo clients and decision-makers.
 The business aviation market in India grew by 100% from 50 aircraft in 2005 to 100 aircraft in 2006.
 Today in India there are 170 registered non-scheduled aircraft, compared with at least 150,000 in USA.
20
The Indian Civil Aviation Industry
 Of these 170 aircraft 40% are over 20 years old. There is a likely to be a market for up to 500 general aviation aircraft by 2020, including
fleet renewal, with an estimated investment of $2 billion.
 The business aviation industry in India is expected to grow by 30 – 40 % over the next 5 years.
 There are 200 General Aviation aircraft import applications pending with the Government of India.
 100 applications for charters cleared between June – December 2006.
Cessna have about 60% of the corporate jet market in India.
Club One Air - based in New Delhi is the only operator that offers private jet services. It works on a fractional ownership basis.
Ran Air – have 10 small aircraft and currently offer services. Looking to purchase a further 10 small aircraft
Airworks India - based in New Delhi undertake the majority of the MRO for the general aviation market. They are looking to expand and set up centres
throughout India.
Helicopters
For all the same reasons as with general aviation the number of helicopters in the Indian skies is growing and will continue to do so. Congestion and
infrastructure problems are most apparent in India’s cities. These cities hold huge numbers of people, New Delhi 10 million, Bangalore 7 million but
where the road infrastructure is always playing catch up. Helipads are becoming more common. With all the new building going on these are being
included in the specifications. There is suggestion that regulations will make helipads mandatory for new buildings over a certain height.
 Estimate that there are around 200 helicopters in Indian currently. There is a requirement for there to be 1000 in 5 years
Bell Helicopters, Eurocopter, Augusta Westlands and Swycorsky all have sales campaigns in India currently. Their targets are Corporations for their
executives, the Indian Government and the 27 State Governments for ministerial travel. There is also a market to support the offshore oil exploration
21
The Indian Civil Aviation Industry
industry and the emergency services: police, lifeguard, mountain rescue and ambulance. The main interest in India is on the 5 tonne or less craft.
Some larger craft are being sold for the offshore market and VVIPs. As in the regional jet sector none of the OEMs provide MRO support. They will
only supply spares and support.
Global Vectra Helicorp – based in Mumbai is India’s largest helicopter operator with 18 Bell 412s and 2 Eurocopter EC155. It plans to expand its fleet
in the next two years with 6 more Bell 412s and 3 EC155B1s.
Pawan Hans Helicopters – Government run operator. Mainly supports the oil sector.
Airworks India - based in New Delhi undertake the majority of the MRO for helicopters. Being based in Delhi they are close to the centre of Indian
Government and a large number of Corporations headquarters.
Infrastructure to Support the Indian Civil Aviation Industry
It is estimated there will be $110 B invested in the Indian Civil Aviation industry by 2020 - $80B on Aircraft and $30B on Infrastructure
The Indian Airline Industry has grown ‘Aspirationally’ i.e. the airlines have seen the potential in the market and have placed orders for aircraft to
support these numbers. At Paris 2007 half the orders for new aircraft were Indian. This has created a huge vacuum in terms of the infrastructure to
support this increase in passengers and increased numbers of aircraft and flights. This approach has been very successful in making the entire
industry move quickly – ‘necessity being the mother of invention’. Without this pull we would not see the rapid development of the required
infrastructure, which may have taken a further 5 years. The infrastructure can be broken into the following areas:
Airports & Airport facilities
Air Traffic Management (ATM)
22
The Indian Civil Aviation Industry
Maintenance, Repair and Overhaul (MRO) and other Engineering Facilities
Skilled & Qualified Personnel
Airports
There are currently 450 airports and airstrips in India. 128 are under the Indian Airport Authority control. Only 74 are used commercially. 12 are
designated as international airports and of those 6 are metro airports.
Indian Government has announced a national airport upgrade and modernisation plan which will see an investment of approximately US$9 billion by
2010 in the upgrade and redevelopment of the metro airports. Much of the funding is expected to come from the domestic and international private
sectors.
This is a summary of the latest information on the airport developments:
New Delhi & Mumbai - Joint venture companies with 74% private sector participation were appointed in January 2006 to modernise and upgrade New
Delhi and Mumbai Airports. Stage I completion scheduled for 2009/10.
Mumbai Airport - Currently handles 18 million pax and 400,000 tonnes cargo. Expected to increase capacity to 40 million pax and 1 million tonnes
cargo after the current modernisation phase. Planned investment of $1.6 billion by 2020, of which $1.3 billion will take place by 2014.
Delhi Airport - Currently handles 13 million passengers. Expected to increased capacity to 35 million by 2010. Plans include a new 4 million sq. ft
terminal building in the first phase. Development includes an additional parallel runway (to be completed by March 2008) and connectivity by metro
rail. Planned investment of $764 million by 2014 and $1.7 billion by 2020.
Chennai & Kolkata Airports - Both airports are likely to be developed using a joint venture model. Chennai is likely to have a green field airport due to
a shortage of land at the current site. Kolkata could be modernised by the AAI, but there is also a possibility of green field airport. The AAI is spending
23
The Indian Civil Aviation Industry
$27 million to construct a new warehouse and integrated cargo building, with planned investment of $140 million for the construction of a new
domestic terminal and aerolink. The AAI is investing $24 million to extend the second runway, construct 21 parking bays, extend the domestic security
hold and install 3 aerobridges. $53 million is to be spent on the international terminal.
Bangalore & Hyderabad Airports - New green field airports in both cities are under construction and scheduled to open by April 2008.
Bangalore Airport involves an investment of $500 million and will have a capacity of 11 million pax by 2010.
Hyderabad International Airport is being constructed at a cost of $400 million and phase will see capacity of 7 million pax (increasing to 50 million in
phase 2) and 100,000 tonnes of cargo.
Secondary Airports – There is already consideration be given for second airports at Mumbai and Delhi
35 Non-Metro Airports - Development of 35 non-metro airports will proceed at an estimated cost of $1.2 billion. 24 of these will have city side
development through Public Private Partnership (PPP) route. The city side development would include construction of hotels, convention centres,
food courts, flight kitchens, petrol pumps, hospitals, shopping malls, hyper marts, golf courses and cargo warehouses etc. This will require a further
$350 million. This modernisation process should be complete by 2009.
Feasibility studies have been approved for 10 airport such as Ahmedabad, Amritsar, Goa, Guwahati, Jaipur, Lucknow, Madurai, Managlore,
Trivandrum and Udaipur. A further 15 airport approvals are expected shortly and urgent operational requirements are being addressed at a further 10
non-metro airports.
3 green field airport projects are being considered in the Northeast region of India with capability to handle up to ATR-72 sized aircraft. Proposals have
been submitted by other state governments for development of 7 other green field airports.
The government also plans to develop around 300 unused airstrips across India. This would assist in regional connectivity and will be a boom for the
emerging regional jet market in the country.
The Indian government is also considering private airports for cargo.
24
The Indian Civil Aviation Industry
India’s Metro & International Airports
Amritsar
Delhi
Guwahati
Ahmedabad
Kolkata
(Calcutta)
Nagpur
Mumbai
(Bombay)
Hyderabad
Panaji, Goa
Bangalore
Cochin
Metro & International Airport
International Airport
Nagpur: Is to become a large
hub for MRO and Cargo
Chennai
(Madras)
Thiruvananthapuram
25
The Indian Civil Aviation Industry
Nagpur will become a major centre for aviation in India due to its located in the centre of Indian and is equidistant from a number of the metros: Delhi,
Hyderabad, Bangalore, Chennai and Kolkata. Currently as a secondary city land prices in Nagpur are cheap compared to the larger metro cities.
Boeing is already looking at setting up a MRO facility there. It will become a centre for MRO, Cargo and potential training.
Air Traffic Management
The Government of India is spending $25 million per annum on upgrading the Civil Navigation System (CNS) and Air Traffic Management (ATM)
infrastructure. A further $180 million investment is expected over the next 3-4 years on modernisation projects. Large investment is also required in
communications, navigation and surveillance.
The issue today is easing congestion at the current airports. The AAI are looking at equipment such as, navigational aids, night landing equipment
and GPS equipment that may help this. The AAI are looking at plans for SATCOM based Air Traffic Management. By 2010 they hope to have
launched GAGAN, or the satellite-aided geo-augmented navigation project being jointly implemented with ISRO. The aim is that it should improve
management of the skies and reduce flying times, allowing more flights to take off and land at airports.
 Planning, procurement and commissioning of all Communication, Navigation & Surveillance (CNS) facilities and support systems for air
navigation is managed by CNS Planning Department.
 Modernisation of Air Traffic Control services at Delhi & Mumbai has almost been completed at a cost of more than $100 million. This will
provide Air Route Surveillance Radar (ARSR), Monopulse Secondary Surveillance Radar (MSSR), Airport Surveillance Radar (ASR), Airport
Surface Detection Equipment (ASDE), Radar Data Processing Systems, Flight Data Processing Systems, Automatic Message Switching
Systems (AMSS), Automatic Self Briefing Systems ASBS), 12 VORs/DVORs with Remote Monitoring & Maintenance facility co-located with
High Power DMEs for unidirectional airways etc.
 As well as the modernisation at Delhi and Mumbai six more ASRs/MSSRs have been installed one each at Kolkata, Chennai,
Thiruvananthapuram, Hyderabad, Guwahati & Ahmedabad and four more MSSRs are planned to be installed in next two years to cover all
the major air-routes in India by Secondary Radar coverage.
26
The Indian Civil Aviation Industry
 The number of instrument landing systems has grown from 5 to 34.
 By the end of September 2007 the Airports Authority of India (AAI) and Indian Air Force will have launched a pilot scheme to see if they can
manage air traffic together.
Maintenance, Repair and Overhaul (MRO) and other Engineering Facilities
There are no large MRO centres currently in India. MRO and the engineering services are struggling today to cope with the current fleet of aircraft.
Large investments are required to ensure the growing fleets can be serviced and maintained. Today all heavy maintenance – D checks are done
overseas mainly in Dubai or Singapore. HAL is the only organisation that can undertake D Checks, which is does for the state owned carriers.
This will change shortly as a number of the airlines, OEMs and investment groups set up facilities over the next 5 years. Both Boeing and EADS are
using MRO and training to fulfil their offset commitments on the aircraft they have sold to the state owned airlines. They do not see MRO as one of the
key competencies and will withdraw from this once their offset obligation is complete. The MRO facilities in India, once established, will look to offer
their services to the international market due to their low labour costs and their competitive rates.
Of the main Indian airlines there are 3 or 4 who will invest in JVs with other companies and set up their own MRO facilities, e.g. Kingfisher, India Air
and Go Air. The other airlines will look to streamline their activities and sub contract out the MRO work to the independent operators, e.g. Jet, Jetlite
and Indigo. Their primary focus being on passenger services.
Listed below are the major MRO facilities to be set up. Much of this is still to be decided so there is conflicting information circulating at the moment:
 EADS has signed a MoU with Jupiter Aviation (part of the Jupiter Capital Group, a US infrastructure investment company) for MRO and
support of commercial aircraft in India. It will be a $100 million JV with Kingfisher-Air Deccan, based in Bangalore. The venture will look to
attract international customers and will also offer training.
27
The Indian Civil Aviation Industry
 Indian Airlines have also signed a JV with Jupiter Aviation to set up an MRO facility. EADS will help the joint venture find a third partner who
will carry out the maintenance and repair work. The facility, which will be set up with an investment of up to $ 60 million and will cater for
around 300 aircraft per annum. The facility will be in one of three cities: Delhi, Mumbai and Hyderabad. The engine repair facility will be in
Delhi. The facility will undertake airframe maintenance and repair of Airbus aircraft of Indian to begin with. Later, it will extend the facility of
Airbus aircraft of other airlines and also to aircraft other than the Airbus family. The facility should be ready in the next 1-2 years and will also
cater to markets of Bhutan, Sri Lanka, Pakistan and Bangladesh.
 Boeing plans to invest $185million in a joint venture with Air India as part of a deal for the sale of 68 aircraft. The proposed JV will offer
MRO facilities for 777 and 787 aircraft to third parties. The Boeing investment will comprise of $100million for setting up the unit, $75million
for training and $10million for general purposes. The plan is to set up the facility in an Special Economic Zone (SEZ) in Nagpur. Boeing and
Air India are still to select a third partner who would run the MRO unit. This will not be operational until 2009/10 when the first of the 68 new
Boeing aircraft is delivered. Development of the site is due to commencing by the end of 2007.
 Lufthansa Technik has signed an agreement with GMR Hyderabad International Airport to set up an MRO facility at then new Hyderabad
Airport. From there it will support its existing customers. Jet Airways is very interested in using this facility because Lufthansa currently
support their fleet.
 GMR Hyderabad International Airport has also signed a lease agreement with Indian Airlines to set up a MRO facility.
 Go Air is considering plans to launch an MRO in joint venture with Singapore Airlines Engineering Company (SAEC) for line maintenance
and heavy maintenance of aircraft. An investment of over US $30 million was be required. While line maintenance would be carried out at
major airports by this JV company, the location for the heavy maintenance MRO is being selected.
 Hamco, part of Satyam, is looking to open its MRO facility at the new Hyderabad Airport in 2008. They are looking to offer MRO and aircraft
maintenance engineer training. They currently have contracts from 3 airlines for their services. Hamco are looking for companies with
technical capability to carry maintenance and servicing in a number of areas, see details further on.
28
The Indian Civil Aviation Industry
 General Electric are investing $20 million in an engineering shop as part of Air India/ Boeing aircraft offset commitment
 Paramount Airways and Embraer are looking to set up an MRO and pilot training facilities in Chennai. They are looking for a strategic
partner to support this venture
 Airworks India currently undertake most of the MRO on general aviation and helicopters in India. They have just signed a deal with Global
Tech (USA) to expand their business to have a centre at each Indian Airport. They will also do airline maintenance engineering training.
 Bombardier is also planning a MRO facility at Mumbai or Hyderabad.
Skilled and Qualified Personnel
Right across the sector there is a severe lack of skilled and qualified personnel, even at today’s air traffic levels. This will only be exacerbated by the
growth in the industry:
 Pilots – Currently there are 3000 pilots in India, which is 200 short of that required. By 2010 5000 additional pilots will be required.
 Aircraft Licensed Engineers (AME) – Hamco predicts that over 20,000 licensed engineers will be required by 2020, today there are currently
less than 1000.
 Air Traffic Controllers (ATC) – Airports authority Indian estimates it will need an additional 400 ATC in the next 2 years.
 Cabin Crew and all the different skilled staff that are required on the ground to manage passengers, baggage, cargo in the terminals as well
as air side.
29
The Indian Civil Aviation Industry
There are currently 26 operational flying training schools in India which provide training for various licences like Private Pilot Licence and Commercial
Pilot Licence. 14 of these are run by various State Governments. The remaining 11 are run by private entrepreneurs. These currently produce about
150 commercial pilots a year.
The Directorate General of Civil Aviation (DGCA) has received 37 proposals to set up new flying training institutes around India. All the institutes have
to conform to the requirements laid down by DGCA.
As you will see from the section above many of the companies opening MRO facilities will also offer training of pilots and engineers.
 As part of their plans Jupiter Aviation and Kingfisher Airlines are setting up a new independent crew-training centre in Bangalore for both
Airbus and Boeing aircraft. Thales has won the contract to supply the flight simulators. Lower level training devices will also be required.
Jupiter has also signed a collaboration agreement with France-based ESMA and EADS Services for setting up aviation training schools in
four places in the country. The first one is likely to be established at Hassan.
 At the Airbus centre in Bangalore they have just started a course where pilots can undertake their Airbus type training, which will train
around a 1000 pilots a year
 Boeing are to invest $75million in training for Air India
 Lufthansa Technik are in partnership with Flytech Aviation Academy to offer full pilot training, AME and cabin crew training
 The Airport Authority of India (AAI) and Canadian Aviation Electronics (CAE) of Canada have signed an MoU to form a Joint Venture to
establish the National Flying Training Institute (NFTI) Maharashtra. As per the MoU, the JV will have 49 percent equity of AAI and 51 percent
of CAE. The Flying Training Institute is estimated to come up at a cost of $23 million. The Institute is expected to produce 200 pilots a year.
 The Bird Group, an aviation consultant is now all set to open an institute for training pilots. The group has an annual turnover of $ 40 millon,
and plans to commence operations by the end of 2007. It will take around 120 students into its first batch.
30
The Indian Civil Aviation Industry
 Skyblue Aviation Academy, a start-up training institute launched operations mid 2007 is in the process of setting up flying schools in Andhra
Pradesh and Perth in Australia at a cost of $20 million. The institute is also planning to open 10 extended campuses in the country by August
2008. At present, Skyblue is functioning through a 6,000-sft facility in Hyderabad, which includes a cabin mock-up for training cabin crew.
 Spice jet has announced a strategic tie up with Oman Air to provide Spice with pilots
 The departing US Air Attaché in India is looking at setting up a flying school in Florida to train pilots for the Indian Civil Aviation Industry. His
intention is to take on 20 students a month. This is a service he will offer to the airlines. In the long run he expects to open a school in India
 Many more are in the offing such as Deccan Aviation's venture with ATR
Air Traffic Management Training
The Airports Authority of India has four training institutes:
 National Institute of Aviation Management & Research (NIAMAR), New Delhi
 Civil Aviation Training College, (CATC), Allahabad – undertakes ATM and CNS training
 Fire Training Centre, (FTC), New Delhi
 Fire Services Training Centre, (FSTC), Kolkata
These Institutes meet all requirements for resource development and manpower training for AAI in terminal management, Air Space Management, Air
Cargo, Airport Fire & Safety Services, Airport Commercial aspects. The CATC and the NIAMAR are approved ICAO. Many courses at FSTC, Kolkata
& FTC, Delhi are on the approved ICAO training schedule.
Currently AAI is aware that they cannot deliver enough qualified air traffic controllers to meet the demands of the industry, i.e. 200 ATCs in the next
two years.
31
The Indian Civil Aviation Industry
 Pet Aviation, a private company based in Hyderabad supports the AAI ATC training by providing lectures from experienced ATCs on ATM in
India.
 The UK’s NATS, National Air Traffic Services, has signed a Memorandum of Co-operation with AAI to help them deal with the shortage of air
traffic controllers in India.
Opportunities for UK Companies
Airlines: There is an opportunity for an experienced regional airline operator to tie up with an Indian partner and run a Regional Airline. We will see 2
or 3 enter the market in the next 5 years.
Aircraft: India will buy a large number of aircraft in the next 10 to 15 years. For aircraft sales the focus should be on the regional aircraft and below
(rather obvious I know!):
Indian operators and companies are interested in pre-owned aircraft as well as new.
Regional Aircraft: The ATR is the most successful RJ in India and is in high demand. Pre-owned ATRs will sell very well in India. The regional
operators should be approached directly.
General Aviation and helicopters: Target customers should include:
 The Large Companies, many are headquartered in Delhi, Mumbai and Bangalore
 The Indian Government and Indian State Governments
 The regional operators and smaller operators
 Flying training schools
 Emergency Services
 Oil Exploration Industry
32
The Indian Civil Aviation Industry
5 Tonne or less is the main size of helicopters selling in India
Aircraft Components, Parts and replaceable Items: The table -Indian Airlines: Existing Fleet and New Orders identify the airline and regional
aircraft in service currently in India. Cessna has about 60% of new sales on smaller aircraft. These will all need parts during MRO. Customers to be
targeted are:
 The airlines and operators
 The MRO providers
A route into the market may well be by ‘piggybacking‘ in with the OEM. i.e. who has an OEM sold their aircraft to that uses a UK company’s
equipment.
Taking Advantage of the Development of the Indian Civil Aviation Infrastructure – The UK needs to generate a strategic Plan: Infrastructure is
recognised as the major bottleneck holding back the Indian Aviation Industry. It is, however, such a ‘green field’ that it is very hard for individual UK
companies to enter:
 Who to talk to?
 Who to work with?
 Will the AAI deal with individual companies?
This is where the UK Aviation Industry needs to generate a strategic plan on how to approach the Indian market. One of the first activities would be for
a group of representatives from the UK Aviation Industry to present the capabilities of the UK Industry to the Indian Government, States’
Governments, MOCA & AAI. The group should be lead by the UK Government (UKTI or Berr) and consist of representatives from the likes of BAA,
BAG, SBAC, NATS and some UK 1st tier suppliers. This will allow the various organisations to start direct talks with the Indian counterparts, i.e. BAA
to AAI, to discuss the priority issues and then identify UK companies that could support. This in turn would allow UK companies to enter the fray. In
Summary:
33
The Indian Civil Aviation Industry
UK Government talks to Indian Government
(May involve Organisations such as BAA and BAG)
Allows
UK Organisations to talk to Indian Organisations
(e.g. BAA to AAI)
Allows
UK Companies to talk to Indian Companies and Organisations
The news article below demonstrates that the United States are certainly thinking along these lines:
‘India and the United States have signed a Memorandum of Understanding (MoU) to establish an Aviation Co-operation Programme for modernisation
of the civil aviation sector. The agreement was signed between Civil Aviation Minister Praful Patel and Secretary, US Transportation Department, Mary
Peters in Washington. As per the MoU, the United States Trade and Development Agency (USTDA), Civil Aviation Ministry, the Federal Aviation
Administration (FAA) and public sector entities of both countries will co-operate to identify infrastructural lapses and support modernisation of the
Indian civil aviation sector. The programme covers issues like infrastructure, safety, enhancing air service quality, operational efficiency, flight security,
air-space management and system capacity. The USTDA would provide funds for training and technical assistance programmes, while the FAA and
US aviation companies would facilitate in-kind support’. (22 June 2007)
I would suggest the above is the preferred approach. This should not stop UK Companies entering the Indian Market independently.
The opportunities in infrastructure can be broken into a number of areas:
 Airports: Construction and Airport Infrastructure
 Air Traffic Management
 Maintenance, Repair and Overhaul (MRO) and other Engineering Facilities
 Training of Personnel
34
The Indian Civil Aviation Industry
Airport Construction: The opportunity now is all non-metro airports where the developments are still in the very early stages. Developers who are
interested in investing in infrastructure in India will be well received. The Indian Government is looking for a great deal of capital from the private
sector. Malaysia is investing heavily in the Indian airports. Astonfield Management Co, US based infrastructure project management company plans to
invest $500 million will be in Indian Airports.
This will include all aspects i.e. the major constructions, but also all interiors and retail facilities.
The AAI and the private developers should be approached.
Airport Infrastructure: The equipment needed in the airports to support the industry:
There is a requirement for all the equipment and systems for the Airports:
(The areas in bold are high priority items)
 Banking facilities
 Baggage handling equipment
 Check-in desk services
 Child / disabled / elderly handling services
 Cargo and logistics equipment
 Duty free shops
 Fog dispersal systems
 Ground support equipment and services
 Networking and communication systems
 Passenger handling
 Retail outlets
 Refuelers and refueling
 Rescue and emergency systems
35
The Indian Civil Aviation Industry
• Runway, Hangar, Apron Services
 Security and surveillance
 Service technology systems
 Ticketing Systems
The AAI operate most aspects of the airport and procure most of their equipment directly. This may be delegated to the State Governments for the
regional Airports. The AAI and private developers should be the first port of call when selling this equipment in India.
Air Traffic Management::
Training of Air Traffic Controllers – see ‘Training of Personnel’ section
Equipment:
 Air traffic control systems
 Navigational aids
 Night landing equipment
 GPS equipment
 The AAI are looking at plans for a satellite based Air Traffic Management System
 Radar systems
 Upgrading of aircraft navigational systems
Procurement and commissioning of all Communication, Navigation & Surveillance (CNS) facilities and support systems for air navigation is managed
by CNS Planning Department, part of the AAI.
Maintenance, Repair and Overhaul (MRO) and other Engineering Facilities:
The main areas that there are opportunities for UK companies are:
36
The Indian Civil Aviation Industry
 Services – Companies with the ability to undertake maintenance work. There are some big players entering the market but they will focus
on the main activities. All the support services and work still need to be sourced.
 I have also concluded that there are a number of companies getting involved in MRO with very little experience and capability, Airlines,
OEMs and investment companies. All should be approached, e.g. Paramount Airways and Embraer are looking for a third party to run their
MRO facility.
 Equipment used in MRO – jigs, tools and equipment.
 Spares, Line replaceable items for Aircraft flying in India
Specific Opportunities Identified:
 Hamco are looking for companies with experience in maintenance of:
 Wheels & brakes overhaul
 Heat exchanger cleaning
 Air conditioning system component servicing
 Life raft servicing
 Avionics test/ servicing
 Fire extinguishers
 Hydrostatic testing of oxygen
 Fire extinguisher bottles
 Periodic calibration of the tools and gauges.
 TAAL is looking for a JV to do MRO on ATRs and A320. They will provide hangar space and Indian know-how but no technical input.
 Jet Airways is looking for a company that can do media loading for Skyline systems which is compatible with Panasonic entertainment
systems
Training of Personnel:
Right across all the sectors of the Civil Aviation Industry there is a large gap in skilled and qualified staff:
37
The Indian Civil Aviation Industry
 Pilots – Services should be offered to Airlines and training schools
 Aircraft Licensed Engineers (AME) – Airlines and companies setting up MRO facilities e.g. GMR should be approached
 Air Traffic Controllers (ATC) – AAI currently undertake all training for ATCs but know they can not meet demand
 Cabin Crew and all the different skilled staff that are required on the ground to manage passengers, baggage, cargo in the terminals as well
as air side. Airlines, Cargo Operators and AAI should be approached
As with MRO there are a number of companies setting up training schools but who currently few or no qualified staff to undertake training and no
training equipment or material. Therefore the UK could provide:
 Training for Pilots, ATCs and AMEs
 Qualified lecturers in all areas
 Institutions to train and qualify lecturers in all areas
 Flight simulators
 Cabin simulators
 Maintenance simulators
 ATM simulators and equipment to train on
 Lower level training devices for pilots, ATCs and AMEs
 Equipment to train on:
 Training Aircraft
 Engineering tools and equipment used in MRO
 Training material
 Consultancy on international standards
NB: For any organisation to carry out education in India them must get approval from The All India Council for Technical Education, AICTE. This is not
easy, the Indian Government is very bureaucratic at the best of times but are wary about foreign involvement in the Indian education system. The best
route is to partner with or supply services to an approved Indian establishment.
38
The Indian Civil Aviation Industry
Specific Opportunities Identified:
 Max Aeropsace based in Hyderabad offer a range of services including manufacture of cabin simulators and training aids for airlines. The
standard of finish on their products may not be what we might expect in the UK but are acceptable to Indian customers and they seem to be
winning orders in India. This could be a good company to tie up with. A UK company might manufacture the more technical parts and
products of the simulator as part of a joint bid for work.
Latest news:
 The Indian Government is currently drawing up an aviation sector manpower plan for the next 20 years to face the human resource
challenges of the sector. A detailed study of the industry’s manpower requirements, including a road map for creating a pool of technical and
management professionals to cater to domestic and international demand, is expected to be completed by October this year. The
Confederation of Indian Industry is working closely with the Federation of Indian Airlines and will soon appoint a consultancy firm to undertake
this study.
Website Addresses for Calls for tender :
www.airindia.co.in/aimmd/tenders.jsp – Air India
www.indian-airlines.nic.in/scripts/tenders.aspx – Indian Airlines
www.jetairways.com/Cultures/en-US/About+Us/Tenders – Jet Airways
www.civilaviation.nic.in/moca/tender.htm – Indian Ministry of Civil Aviation
www.aai.aero/ServletController?action=tenderslink – Airport Authorities India
39
The Indian Civil Aviation Industry
Indian Airlines: Exisitng Fleet and New Orders
Airline
Air Deccan
Air India &
AI Express
Air Sahara
Existing Fleet
No. Type
No. Type
21 Total
7 A320
14 ATR
96
4
62
30
Total
A320
A320
ATR ATR 72
2006-2014
2006-2014
2006-2009
47
9
2
4
19
13
72
22
23
27
Total
B737 (NG)
B777
B787
2006-2009
2007-2011
2008-2012
Total
B747-400
B747-300
B777-200
A310-300
B737-800
24
8
3
3
3
7
Total
B737-700
B737-800
B737-400
B737-300
Bombardier CRJ200
74
47
4
3
11
3
2
4
Total
A320
ATR42-320
A300
B737
A319
DO228
ATR42
Airline
New Orders
Delivery Year
Jet Airways
Kingfisher
1 Total
1 B737 (NG)
Indigo
2 Total
2 A320
43
19
4
20
Total
A319
A320
A321
Total
68 A320
30 A321
64
6
13
28
2
1
3
3
5
3
Total
B737-400
B737-700
B737-800
B737-900
B777-300ER
A330-200
A340-300
ATR72-500
ATR72-212A
11 Total
8 A320
3 A319
2006
Spicejet
Indian Airlines
Existing Fleet
No. Type
2006-2010
2007-2010
2006-2010
42
12
10
10
10
Total
A330
B737 (NG)
B777
B787-8
2006-2008
2006-2007
2007-2011
TBC
90
29
5
5
5
5
35
5
Total
A320
A321
A330
A350
A380
ATR ATR 72
A340-500
2006-2012
2007 (4 received)
2007-2008
2012-2014
2010-2013
2006-2010
2008
20 Total
9 B737 (NG)
10 B737-900ER
2006-2008
TBC
2 Total
2 A320
30 Total
30 A320
TBC
Paramount
5 Total
5 Embraer 170/175s
15 Total
10 EMBRAER 195 TBC
5 EMBRAER 175 TBC
Jagson
3 Total
3 Dornier-228
10 Total
10 A320 or A321
TOTAL
40
New Orders
Delivery Year
6 Total
6 B737-800
Go Air
2006-2012
2010-2014
No. Type
259
519
TBC
The Indian Civil Aviation Industry
References and Sources of Data:
India Civil Airlines: Fact Sheets by Andrew Dinsley, 1st Secretary UKTI. Available on the UKTI Website
Sector Report: Aerospace (Civil) India by Andrew Dinsley, 1st Secretary UKTI. Available on the UKTI Website
http://www.civilaviationweek.com/ind-news.html – summary of the major news headlines in the last 3 months – gives a good view of what is going on
in the industry
http://www.ficci.com/media-room/speeches-presentations/2007/speeches-2007.htm#feb8 – Presentations from Aero India 2007 Conference
http://news.indianaerodef.com/ - Touch Base with Indian A&D Industry
Genser Report – available from UKTI
Update to the Genser Report - – available from UKTI
Centre For Asia Pacific Aviation (CAPA) – www.centreforaviation.com
Individuals and Companies I have interviewed:
Aajay Mehra – Airbus, Managing Director South Asia
Sanjay Bahadur- Kingfisher Airlines, CCO
Srinivas Duvvuri – Bombardier, VP & Rep India
R K Singh- Ministry of Civil Aviation (1st report to Minister)
Sanjay Kumar – Indigo Airline, COO
Mike Armstrong - BAE Systems
Yves Guillaume - EADS India, CEO
Capt R Singh - Spice Jet, Tech. & Develop. Pilot
Shirish Keskar - Jet Airways, General Manager Tech. Services
Bharat Malkani - Max Aerospace and Aviation, Chairman
Air Deccan - Shaun Downey - Rolls Royce Rep
Stephan Billep- EADS, Head of India Liaison office
Amitabh Khosia - Federation of Indian Airlines, Executive Director
Mr K Gohain - Head of Director General for Civil Aviation (DGCA)
KV Kunhikrishnan – Augusta Westlands, General Manager India
Kapil Kaul – Centre of Asia Pacific Aviation, CEO (CAPA)
Brig. Manjeet Singh Rana, Thales, VP Sales & Marketing
Bijoy Kumar - Open Sky Magazine, Editor
Charles Carneiro - Bird Group, Head of Corp Marketing & Comms
Ravi Menon - Airworks India Engineering, Director
Marian Mailhes – ATR, Sales Director India
41
The Indian Public Sector Aerospace Industry
42
The Indian Public Sector Aerospace Industry
43
The Indian Public Sector Aerospace Industry
Introduction
In this report the focus is on the Indian Government and the public sector from an aerospace perspective. I will cover the main ministries and
departments, the armed forces and the government owned companies and research establishments.
Indian is the largest democracy in the World. It is a federal state with a central government and 29 states. The political system is stable and the main
parties are fairly progressive and are encouraging development and change in the country but there is still a great deal of bureaucracy and corruption
in the system.
Indian Armed Forces
The Indian Air Force (IAF) and the Indian Navy are the 4th largest in the World. Currently the Air Force has around 1400 aircraft in service. The Indian
Army with 2.5 million servicemen is the second largest in the World. Outside the West, India is the largest defence equipment customer and 12th
largest in the World. Appendices I, II, III give break downs of their fleets of aircraft and missiles. With many ageing aircraft, such as the MIG-21 India is
now looking to procure new fleets of aircraft. It is not only aircraft but much of the armed forces equipment is now seen as obsolete. Cobham have set
up an office in Bangalore to tap into this market.
All the IAF's aircraft are serviced by Hindustan Aeronautics Ltd. (HAL). The IAF have a requirement that HAL have the ability to service and repair all
components on their aircraft. It is not that clear if this is purely to have fully independent Armed Forces; to keep costs to a minimum or if it is a
mechanism to 'pull' technology in to India. Going on previous orders and looking forward, all large orders for new military aircraft will require much of
the manufacture of the aircraft to be undertaken in India, by HAL. BAe Systems are currently supporting HAL set up the assembly line for the Hawk
Advanced Trainer at their Aircraft Division in Bangalore. 42 of the 66 aircraft orders will be manufactured by HAL. India has also recently introduced
offset requirements into it defence procurement policy.
Offset
Offset requirements for both defence and civil acquisitions by the Government of Indian are very new. It is currently very difficult to get clarity on the
facts and figures, even DESO are unsure. This next section is a summary of what I believe is the status today:
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The Indian Public Sector Aerospace Industry
Defence offset requirement is on orders over $60 million. This has not been enforced on any order yet. The BAe Hawk order had no official offset
requirements. The offset figure that has been expected is about 30% the value of the contract. However the call for tender for 126 Multi Role Combat
Aircraft had an offset clause of 50%, in this case that would be $5 billion of work would need to be undertaken in India. Currently I think all the original
equipment manufacturers (OEMs) bidding would struggle to get this amount of work completed in India, especially if they do not wish to pass on too
much 'new technology' and not have serious issues with their vendors' IPRs. I think the 50% will eventually be reduced. On future calls for tender a
target percentage will be set and then negotiated on a case by case basis.
What work can used to fulfil offset obligations? On defence contracts this seems to be limited to licensed production and maintenance of the
purchased aircraft. Training of Indian staff to carry out this is probably included otherwise the aircraft could not be manufactured.
On civil purchases, ie airline aircraft sold to Air India/ Indian Airlines the requirements are even less well defined. The figure is probably about 30%.
The restrictions of the kind of work are much less stringent. As well as manufacture and maintenance, training of staff e.g. pilots is allowed. MRO is
another area that can be used by OEMs to fulfil their offset obligations. Both Boeing and Airbus are supporting MRO facilities to fulfil their obligations.
DOFU - Defence Offset Facilitation Agency has been set up under the Ministry of Defence. Its role is 'to facilitate implementation of the offset policy of
the Ministry of Defence. DOFA will assist potential vendors in interfacing with the Indian defence industry for identifying potential offset
products/projects as well as provide requisite data and information for this purpose'. At the moment all defence aerospace production work will go to
HAL. This is changing. One of DOFU's roles is to assess private Indian companies to determine if they are suitable to take on offset work. Currently
there are 14 companies approved but many more have applied. For these 'official' 1st tier suppliers it means they can now bid directly for offset work
rather than get any packages that HAL wish to offload to their supply chain. In reality HAL will still get the majority of the work but as most international
OEMs do not want to work with HAL this will change.
Public Sector Units (PSUs)
As you will see from the organisation chart on the opening page there are a number of Government owned and run organisations. In the UK these
would be the nationalised industries. The three main PSUs involved in aerospace manufacturing are:
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The Indian Public Sector Aerospace Industry
•Hindustan Aeronautics Limited, HAL
•Bharat Electronics Limited, BEL
•Indian Space Research Organisation, ISRO
Air India and Indian Airlines are also PSUs. Please see report on the Indian Civil Aviation Industry.
These government owned and run organisations are known to be very bureaucratic. Most would seem very old fashioned compared to a similar
establishment in the UK. They are very hierarchical and decisions take a long time to be made. HAL for example is often compared to BAe Systems
or Roll Royce 40 years ago. HAL still provide schools, hospitals and accommodation for staff. Employment of staff is seen as one of their performance
indicators. So profit and efficiency may not be seen as paramount. There is corruption in the system. During visits it is evident that the organisations
are looking for the advantage for themselves, the individual and the company. Partnering how we would see may not be a win-win relationship. There
is a drive to indigenise everything, whether it is to reduce cost or to learn more about new technology. Dealing with these PSUs there may well be
intellectual property rights issues for UK companies. HAL for example on the new Hawks want to know how to service all the LRUs. Some of the
original equipment suppliers are not willing to pass on the IPRs.
ISRO is the exception to this and has been very successful in the field of Space. Manufacturing their own satellites and launch vehicles and
undertaking their own satellite launch missions. EADS are working with ISRO to provide satellites and launch vehicles to international customers.
Hindustan Aeronautics Limited, HAL
HAL is a large company, 32000 employees based in 18 production centres and 9 R & D centres around India. Their turnover in 2006 was $ 1.6 billion.
Their major focus is on licensed manufacture and production of indigenously designed aircraft. When procuring large orders of new aircraft the Indian
Government ensures the majority of the order is manufactured in India. The production line for the new Hawk Trainer has just been set up.
They have R & D centres but this is more for support to manufacture and productionisation of products. The real research and design work is done by
some of the other government run organisations: NAL, DRDO, GTRE.
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The Indian Public Sector Aerospace Industry
HAL also undertake the maintenance and overhaul work for the Indian Armed Forces fleets of aircraft.
They break their activities down into 5 main areas. All have R&D and manufacturing element:
•Aircraft & Aerospace group
•Helicopter Group
•Engine Group
•Accessories & Avionics Group
•Materials & Services Group
HAL have capabilities to do all manufacturing processes required to manufacture and assemble a full Aircraft, structure (metallic and composites),
systems, aero-engines, avionics etc. It is, however, limited to 4 - 4.5 generation technology. This will be an issue with the new order of multi role
combat fighters.
To date they have manufactured 3500 Aircraft. 1/3 of which are indigenous designs, the rest are manufactured under license for international OEMs.
They have manufactured 3700 engines, all under licensed manufacture and overhauled some 8000 aircraft and 27000 engines.
Below are listed the indigenous products HAL manufacture:
•ALH, Advanced Light helicopter (Dhruv) in production with HAL - 30 ordered by Indian Armed Forces
•Lancer - Light Attack Helicopter in production with HAL
•LCA, Light Combat Aircraft (Tejas) being developed by DRDO is in limited production
•Kaveri Engine, the engine developed for the LCA developed by GTRE. Still in test phase, test engines manufactured by HAL
•IJT, Intermediate Jet Trainer still in development, prototypes manufactured by HAL
•LTA, Light Transport Aircraft (Saras) a 14 seater commercial regional aircraft in development with by NAL. Once in full production this will be
done by HAL.
•Lakshya - pilotless drone produced by HAL
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The Indian Public Sector Aerospace Industry
Below are listed the products HAL manufacture under license:
•Jaguar Deep Penetration Strike Aircraft for BAE Systems
•Adour Mk-811 Engine (Jaguar Engine) for Roll Royce
•Hawk - new work for BAE Systems - production just started
•Adour Mk 871-07 Engine (Hawk Engine) for Rolls Royce - production just started
•Dornier DO 228, a light transport A/C for Dornier Luftfahrt, Germany
•Garrett TPE 331-5 Engine (DO 228 Engine) for Garrett Engine Division (Honeywell)
•Sukhoi - 30 Mk 1 for Russian Government - since 2004
•AL-31 FP Engine (SU-30 Mk 1 Engine) for Russian Government
•Chetak helicopter for Aerospatiale
•Cheetah helicopter for Aerospatiale
•Artouste 111 B Engine (Chetak, Cheetah Engine) for Turbomeca, France
They also do MRO for the state owned airlines: Air India and Indian Airlines and some large component manufacture for ISRO on their satellite launch
vehicles. HAL do licensed manufacture on a small number of export parts, such as the Airbus A320 passenger door and the Boeing 737 Cargo door
conversion kits. HAL also have a small JV with BAE Systems, BAe-HAL, for the development of software. HAL do work with international vendors,
e.g. Smiths, Now GE Aviation, APPH, Chelton, Messier Dowty, Honeywell, Lucas Aerospace and Goodrich.
HAL talk about moving up the supply chain and offloading the tier 3 & 4 work to the supply chain in India. Currently this is still only a small amount of
work going to the private sector. This will change as HAL gets more work and the private companies are allowed to compete directly with HAL for
offset work.
For more information see the website: www.hal-india.com
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The Indian Public Sector Aerospace Industry
Bharat Electronics Limited, BEL
Another large organisation with about 12500 employees. Their annual turnover in 2006 was approx. $ 900 million.
60% of their business is design and manufacture of electronic systems, hardware and software for the Aerospace and defence industries. They strive
to manufacture all the components in their products and will only outsource high volume parts. They undertake MRO of their avionics products.
Their target is to work with international OEMs and tier 1 suppliers. I would describe BEL as being 'very self centred'. They will try and maximise the a
partnership or relationship and get as much technology out of it as possible. May be an issue of IPRs again.
Below are listed some of their main products:
•The avionics on the Light Combat Aircraft
•Radar Systems
•Sonar
•Communication Systems
•Optics
•Electronic Warfare Systems
•Antenna
•Avionics
For more information see the website: www.bel-india.com
Indian Space Research Organisation, ISRO
ISRO is part of the Indian Government's Department of Space. It has approximately 20000 employees based in 17 facilities including three launch
sites and their headquarters in Bangalore. Its 2006 budget was $ 815 million which is very similar to Russia's space budget and only less than the US,
Europe, Japan and China. It is successful and India is counted amongst the six major space powers in the World. It seems to be the most forward
thinking aerospace PSUs. This is partially due to the Indian drive to demonstrate national capability and that ISRO have to compete against
international OEMs.
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The Indian Public Sector Aerospace Industry
Its uses its launch vehicles for Indian satellites and also now offers launch services to the lucrative international market. It currently launches satellites
using the Polar Satellite Launch Vehicle, PSLV and Geostationary Satellite Launch Vehicle, GSLV.
ISRO core capabilities cover the entire range of activities from research, design and manufacture of satellites and launch vehicles to launches and full
mission management.
Satellites
•The IRS (Indian Remote Sensing) satellite series,
•The INSAT (Indian National Satellite) series (in Geo-Stationary orbit)
•The GSAT series (launched using GSLV)
•METSAT 1 (launched by PSLV)
So far ISRO have built 45 satellites.
Current Launch Vehicles:
•Polar Satellite Launch Vehicle (PSLV) - a four-stage rocket with liquid and solid stages. The PSLV can place 1600 kg into polar sun
synchronous orbit. ISRO has had 2 PSLV launches this year
•Geosynchronous Satellite Launch Vehicle Mark I/II (GSLV-I/II) - a three-stage rocket with solid, liquid and cryo stages. The GSLV can place
2200 kg into geostationary transfer orbit. ISRO had the 4th successful launch of its GSLV-F04 in August 07 and placed an Indian INSAT-4CR
satellite in Geosynchronous Transfer Orbit.
Plans for Future Launch Vehicles:
•Geosynchronous Satellite Launch Vehicle Mark III (GSLV-III) - a three-stage rocket with solid, liquid and cryo stages. The GSLV will place
4000-6000 kg into geostationary transfer orbit.
•Reusable Launch Vehicle (RLV) - a small remote-piloted scramjet vehicle called AVATAR. The RLV will place small satellites into LEO and
can be reused for at least 100 launches reducing the cost of launching satellites.
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Future plans
•ISRO is planning an unmanned mission to the moon. This is expected to be launched mission in 2008
•ISRO will be launching various satellites for European and Russian space programs such as Agile and the GLONASS series of navigation
satellites.
•ISRO also plans to launch payloads SRE-1, RISAT-1, ASTROSAT, OCEANSAT series, INSAT series, CARTOSAT series, and GSAT series
over the next couple of years. The RLV-TD, a technology demonstrator of possible scramjet launch technology, will fly around 2008
In 2005 ISRO has signed a Memorandum of Agreement with EADS to develop and market small communications satellites. They have already won
contracts with Eutelsat and Avanti for telecommunications satellites. These are currently in manufacture in Bangalore. EADS also provide ISRO with
equipment for their satellites.
So far ISRO has not undertaken a manned space mission but are undertaking initial projects to develop the required technology. The target is to have
a manned mission by 2015.
For more information: www.isro.org
Research Establishments
These organisations differ from the PSUs as the main driver is research and development of Aerospace technology and products. They have no
interest in marketing and selling their products. They do work very closely with HAL and ISRO on development projects. National Aerospace
Laboratories designed, developed and are currently certifying Saras, a 14 seat turbo prop transport aircraft. This will be put into production by HAL
once certified.
There are 2 main R&D organisations:
•The Department of Research Defence Organisation, DRDO - part of the Ministry of Defence
•The Council of Science and Industrial Research, CSIR - part of the Ministry of Science and Technology
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The Indian Public Sector Aerospace Industry
DRDO
DRDO has 51 laboratories. A number of them undertake work on defence aerospace developments
The main aerospace laboratories are:
•ADA, Aeronautical Development Agency
•GTRE, Gas Turbine Research Establishment
ADA has led the development of the Light Combat Aircraft, LCA or Tejas. A supersonic, composite skinned aircraft. There are currently four prototype
aircraft. The programme is in its certification phase. IAF have ordered 28 and it is expected that this will grow to over 200 aircraft. Looking forward
they are looking to develop a naval version and a Medium Combat Aircraft which will be a 5th generation fighter.
GTRE is developing the Karveri engine for the LCA. Currently the prototype LCAs are flying with other engines. 1st flight of the Karveri engine in the
LCA is expected June 2008. The Karveri engine sits somewhere between the Hawk Adour engine and the Tornado engine in terms of technology.
GTRE are looking to start to develop their next generation engine and are looking for an international partner.
The DRDO Labs also get involved in the development of:
•Unmanned Air Vehicles: Nishant UAV, which is still in test and Lakshya UAV, now manufactured by HAL and in service with the Indian Armed
forces
•DRDO also assisted HAL with the HAL Dhruv helicopter and the HAL HJT-36.
•DRDO support HAL by providing the avionics for the Su-30 MKI program
•Providing support to HAL for the IAF's upgrade programs for its MiG-27 and Jaguar combat aircraft
•It also undertakes defence work such as radar, electronic warfare, sonar and missiles
CSIR/ NAL
CSIR has 38 laboratories. There is only one that does aerospace research:
•NAL - National Aerospace Laboratories
NAL main focus is a research and development on civil aerospace projects.
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The Indian Public Sector Aerospace Industry
Their major successes so far are:
•Designed and developed the 2 seater, composite skinned A/C - Hansa
•Designed and developed the 14 seater A/C - Saras - which is in flight trials currently. Flight control system developed with Honeywell.
•LCA - Design of the composite wing and flight controls
NAL also undertake research projects. Their main areas of strength are:
•Flying Controls
•Surface Treatments
•Composites
•Surface treatments
•Smart materials
•Ceramics
•Computational Fluid Dynamics
They have collaborations with several of the Indian research organisations and some international establishments. NAL are looking for collaborations
with international organisations: academic or industrial.
Looking forward NAL are planning three new projects:
•A stretched 6 seater Hansa
•A 19 seater Saras
•A new 70-90 seat Regional Aircraft
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The Indian Public Sector Aerospace Industry
Other Research Organisations
There are two universities in India who are active in aerospace:
•Indian Institute of Science (IISc), Department of Aerospace Engineering
•Indian Institutes of Technology (IIT)
IISc
IISc is seen as India's premier university. It focus is on research and postgraduate qualifications. The Department of Aerospace is based in Bangalore
Their current focus of research is:
•Composites
•CFD
•Propulsion
IISc undertakes work with ISRO, DRDO & NAL . They also have collaborations some international establishments including Boeing, Pratt & Whitney
IIT
There are 7 institutes in India. The IITs are well respected in academic fields for technology. The College of Engineering is based in Delhi. Their main
focus is education with about 15,500 undergraduate and 12,000 graduate students.
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The Indian Public Sector Aerospace Industry
Opportunities for UK Companies
Indian Armed Forces
All the procurement for equipment is done by The Department of Defence, part of The Indian Ministry of Defence. It is based in Delhi.
Calls for tender:
www.tenders.gov.in/innerpage.asp?choice=ta1 Government of India. Includes:
•Air Force
•Army
•DRDO
Procurement of aircraft spares, LRUs is under taken by HAL. Their requirements do change. Their call for tenders is updated regularly:
www.hal-india.com/tenders.asp
Offset
Offset is becoming one of the biggest reasons the UK Aerospace Industry will need to put work to India. This can be look either as a threat or
opportunity to UK companies. OEMs will look to put work into India in a number of routes. One of the most preferred routes will be through their
existing supply chain. The OEMs do not want to increase then number of companies they have to deal with directly, in fact most are trying to
rationalise their supply chains. UK companies who have an offshore element will have a edge over their competition when bidding for new work.
HAL
I would not recommend for any UK SME to deal with HAL. Only if there is a very large gain to be had (and I'm not sure there is).
If you intend to try, I would not come to India specifically to sell to HAL.
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The Indian Public Sector Aerospace Industry
I suggest 'piggyback' on OEM products, e.g. Hawk, Jaguar, New Multi Role Combat Fighter and all their parts and components. Several of the
equipment manufacturers on Hawk are planning to set up in India shortly
If marketing directly to HAL I would keep a 'watching' brief on them. Go see them at the International Airshows you attend. If you are in India for other
reasons go and visit them. If a company were to set up in India then open regular lines of communication with them.
They do require components/ parts, technology. Their requirements change. HAL maintain and overhaul a number of older aircraft. For some such as
the Jaguar they are having trouble sourcing legacy/ obsolete parts.
See their tenders for parts and work at: www.hal-india.com/tenders.asp
BEL
I would adopt a very similar approach as with HAL.
Are only interested in work for themselves i.e. international companies off-shoring to them. They will only offload high volume parts and that will be to
Indian companies. They do source components from overseas if they are not available in India. Component sourcing is done international through 2
offices in New York and Singapore. Note of caution: Ensure there is a very clear agreement about IRP if supplying components to BEL.
ISRO
ISRO do source components and technology for the international market.
Calls for tender: www.isro.org/tender.htm
DRDO
GTRE are looking to start to develop their next generation of engine and are looking for an international partner.
Calls for tender: www.drdo.org/stender/index/php
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The Indian Public Sector Aerospace Industry
NAL
NAL would be keen to collaborate with an international company or an academic institution to undertake work in any of their areas of strength. They
are not looking for subcontracted research.
They would be interested in looking at technologies which would help their development of a regional jet aircraft e.g. the design of large wing structure
IISc
IISc are interested in research collaborations with international companies and academic institutions. They can bring good technical capability and
facilities to research work for a UK organisation. The other benefit is cost of staff and facilities.
Further Information:
ww.nic.in - Indian Government
ww.mod.nic.in - Indian Ministry of Defence
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The Indian Public Sector Aerospace Industry
Appendix I: Indian Air Force Fleet of Aircraft & Missiles:
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The Indian Public Sector Aerospace Industry
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The Indian Public Sector Aerospace Industry
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The Indian Public Sector Aerospace Industry
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The Indian Public Sector Aerospace Industry
Appendix II: Indian Navy Fleet of Aircraft:
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The Indian Public Sector Aerospace Industry
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Appendix III: Indian Army Fleet of Aircraft and Missiles:
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Composite Manufacture
Composites Manufacture
Composite manufacture is still in its infancy in Indian. There are currently only 3 companies who can manufacture composite parts:
Tata Advance Materials (Bangalore) - The largest and most competent, composites manufacturer in India. Part of the Tata Group. They manufacture
build to print composite parts and sub assemblies. Have only being undertaking aerospace components since 2003. Are AS9100 approved. The
facility is very new and looks very western. Have plans and space to expand and will be looking for equipment. Their experience includes satellite
solar panes; over 1000 different parts for the HAL Advance light helicopter, engine parts for Pratt & Whitney; seat panels.
Digiproteck/ Kineco (Bangalore & Goa) - A consortium of 4 companies: 2 Indian and 2 European. They offer composite design and manufacture. The
real composite design knowledge is in the European companies. The manufacturing company is Kineco based in Goa in India. Although they do not
only specialise in aerospace they have some good experience and have just won a large order form HAL - build to print of parts for the Advance Light
Helicopter. They also manufacture communication satellite dishes and antenna. Have done some manufacture of composite racks for Eurocopter and
other CFRP manufacture on non-aerospace products.
Larsen & Toubro (Mumbai) - A large multi national company focusing on engineering and construction. Their turnover on defence products was $ 1
billion. They currently produce a number of complete defence systems, such as mobile missile launch vehicles and missiles. They design and
manufacture composite structures for these and other products. They see themselves as an integrator of work packages to India and only want to
work with OEMs and tier 1 companies.
Two other Companies are looking to start composite manufacture:
Bharat Forge Ltd (Pune) - The second largest forging company in the World. Their primary focus is forgings for the automotive industry. Are investing
$75 million in a new advanced engineering centre where they look to focus on aerospace, marine, rail and power. They are planning to offer
composite manufacture as well as design services, forgings, machining and special treatments. Are currently planning their composite plant are
expect to open it mid 2009. They are looking for advice on set up of the facility, which may lead to orders for equipment.
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Composite Manufacture
Mahindra & Mahindra Ltd (Bangalore/ Mumbai)- Another large company annual T/O $4.2 billion. Are looking to enter into the aerospace industry
offering design services, metallic part manufacture and composite manufacture. Plan to start offering aerospace design services in 2008. The
composite manufacture facility will take much longer to set up. Have good backing from the larger group.
Opportunities for UK Companies In Composite Manufacture
Off-shoring of composite manufacture. I am not aware if UK companies are looking to offshore composite manufacture work currently or is the
process still too much of a unique selling point of the UK company? If UK companies are interested, I would only suggest using Tata Advanced
Materials and Kineco. The reasons and routes are very similar to those for metallic part manufacture and I would refer to those reports for reasons
and routes into market. UK companies will be pushed by their customers to offshore work due to cost benefit and to fulfil offset obligations. Because
the manufacture of composites is labour intensive there will be advantages of putting work to these companies as long as the quality can be met. This
could also be an opportunity for UK companies to increase their capacity without investing in new facilities in the UK.
There is currently room for an UK company to set up a facility in India and take advantage of the labour rates. This could either be a captive or a JV
with an Indian partner.
With the plans to start up or aggressive plans to expand all these companies will need equipment: Tata Advance Materials - Are looking to invest $50
M to $80M to expand their set up. Are looking for equipment:
6 x Autoclaves
NDT equipment
Lab/test equipment
CNC equipment
Composite processing equipment
Also looking for experience:
Composite Technical Consultants and Composite experienced staff
Bharat Forge Ltd is looking for advice on set up of the facility, which may lead to orders for equipment.
Digiproteck/ Kineco - are looking for an industrial partner in research into moulded holes in composite structure
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Avionics Design & Manufacture
Avionics - Design and Manufacture
This section will focus on companies who have avionics design and manufacturing capabilities. Companies who only offer engineering services in
avionics are covered in my report on ' The Indian Engineering Services Sector', which was part of my second monthly report.
In comparison to engineering services or manufacturing of metallic parts the avionics industry in India is fairly small. The general view I get from the
industry is that there are three very large companies: HAL, BEL and Larsen & Toubro (L&T) whose annual turnover in avionics is measured in
hundreds of millions of dollars and have very wide range of capabilities. A small number of medium size companies such as Samtel Display Systems
and Astra Microwave Products Ltd, whose turnover is in the tens of millions of dollars and have a fairly focused product range. A few small companies
such as Sigma Microsystems Ltd, Comavia Systems Technologies and Pet Aviation whose turnovers do not currently exceed $1M and also have a
focussed product range.
From the sample of companies I have seen it is clear that outside the top 8 to 10 companies the capabilities to drop off very quickly. Of the 8
companies I have seen I would not currently recommend UK companies to work with Pet Aviation. In my limited time I am aware that there are other
companies who I haven not been able to see that may well have good capability.
The are two hubs of avionics in India: Bangalore and Hyderabad:
•Bangalore has two of the largest companies, BEL & L&T and some smaller companies
•Hyderabad is where HAL's avionics manufacturing facility is based. There are also a number of companies who support ISRO's
requirements. A number of the aerospace companies have grouped together under the title of ASIA and intend to offer avionics and other
manufacturing services through this cluster. A good point of contact for avionics companies in Hyderabad.
For a brief description of HAL's and BEL's capabilities and opportunities for UK companies please refer to the PSU section earlier in this report.
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Avionics Design & Manufacture
L & T (Bangalore) - Are a large multi-national company. Their focus is on construction and engineering. L&T are focussing on working with
international OEMs and tier 1 suppliers. Their aim is to be an integrator of work to India for these international companies. Are looking to capitalise on
offset requirements. Their annual turnover on defence electronics and avionics in 2006 was about $300 million. They are ISO9001 and AS9100
approved. They have full capability from R&D through to manufacture and test of their products. Currently the majority of their experience is in
defence for land based and naval applications. They have developed avionics for the ECS, fuel management systems and multi-function displays for
the Light Combat Aircraft.
Samtel Display Systems (Delhi) - 150 employees and 2006 annum an turnover of $ 50 million. Have end to end capability from R&D to manufacture
and testing of their products. Their focus is on displays for an array of applications including aerospace. Have good international experience and a
range of overseas customers. They are a company with a good solid background who have good experience and have moved into the higher end
type technology from a very solid based in high volume, industrial, domestic applications. Expect to be AS9100 by the end of 2007. The product range
includes Colour picture tubes for Aerospace; Rugged LCDs for Military, naval and Aero applications; Multi function displays and are developing
products for Head Up Displays, HuDs and Head Mounted Displays, HuMs. They signed a JV with Thales at Paris 07 and have a JV with HAL. Their
cockpit displays are used in a number of the HAL manufactured A/C. They provide colour cockpit displays for Airbus A320 family through Thales and
4" CRT to Rockwell Collins for F15/F16/F18. Have procured a German company with high-end display capability.
Astra Microwave Products Ltd (Hyderbad) - 580 employees and annual turnover in 2006 of $27 million. The main area of focus is microwave related
components and products. Once again have a full range from R&D to test. They seem a very capable company. Only negative is that they have not
undertaken any work for overseas companies yet. Are ISO9001 approved. Work split: 60% defence, 25% Space, 15% telecoms. They produce
products for the following applications: Radar; Telemetry; Electronic Warfare; Space; MMIC; Antenna; Spiral Antenna; Telecom Antenna;
Telecommunications/ V-Sat; Repeater Systems;
Mobile Jammers.
Comavia Systems Technologies Ltd (Bangalore) - Design, test and manufacture of test equipment (integration rigs, laptops, PDAs) to test avionics
LRU on A/C before flight. Have 35 technical staff and a 2006 annual turnover of $ 1 million. Are looking to expand the company. All Indian defence
aerospace experience. Young company looking to grow in a sensible time scale. Seem to have good competency. No quality standards yet but
working towards ISO9001.
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Avionics Design & Manufacture
Sigma Microsystems Ltd (Hyderabad) - Embedded Systems solutions, electronic sub systems - design, manufacture and test. A small company with
75 employees and a $1 million turnover in 2006. When I visited they were in the midst of furnishing a new facility. Facility seemed untidy but they
seemed to have good capabilities. Are ISO 9001 approved. They have no experience working with overseas customers. Majority of work is for
defence aerospace & missiles:
Their products include: Solid state flight data recorder; INCOM Controller; Auxiliary display unit for submarines; Servo control unit; Test systems; A
range of embedded products and solutions.
Opportunities for UK Companies in Avionics
Supply components/ products to the Indian companies where they cannot be sourced in India. Applies to all the India companies. UK companies do
need to be aware of IPR issues
Off-shoring work - Either to take advantage of the lower cost base or because of the offset requirements from OEMs. Astra Microwave Products
claimed that they can do a work at 1/3 of the cost in the west.
L&T are only looking to work with the OEMs and Tier 1 companies.
Samtel are looking for a JV with a foreign company in the field of Aerospace to move into another field of avionics in the next 2 years. Looking to
increase their range of products and develop more high-end optical products and HmDs
Astra Microwave Products - Are looking for some technologies and sourcing of components. UK companies could use Astra Microwave Products as a
source of components for products and subcontracting of manuf and testing
Comavia Systems Technologies - Do buy in components for products, currently use components supplied by an Australian and a Germany Company
Looking for information/ consultancy on 'Digibus'. Would be interested in some kind of tie up with UK company but not buy out.
Sigma Microsystems Ltd: UK companies could provide components not available in India
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Show & Conferences
Conferences/ Shows
2 main points:
•There are a large number of conferences and show relating to the aerospace and aviation industry in India. There are so many that they
dilute the quality of the shows. Currently the only show I would recommend visiting is Aero India, which is held in Bangalore biannually. The
next Aero India will be February 2009.
•The other main point to note is if a UK company is going to India to see Indian companies do not plan the visit around a show. Go to India
and visit the companies, talk to their directors and technical teams and make sure you see their facilities.
Many of the better Indian companies attend the International Airshows. Mainly Dubai, Hong Kong and Singapore. There will tend to be more of the
engineering services companies at these events than the manufacturing companies.
There seem to be 4 main organisations that run shows:
•Confederation of Indian Industries, CII, headquartered in Delhi
•Federation of Indian Chambers of Commerce and Industry, FICCI, headquartered in Delhi
•Defense Exhibitions Organisation, DEO, part of the Ministry of Defence
•Exhibitions India Group, EI, headquartered in Delhi
CII and FICCI are both similar to the chambers of commerce. They do much more than run shows. They are a good source of information.
On the following page is a listing of some of the shows and who runs them.
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Show & Conferences
A Table listing the main Aerospace and Civil Aviation Events in India
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Consultants & Agents
Consultants
There are a number of sources of information in India. In most of the reports I have published I have included further sources of information. There are
some organisations that can also provide useful information:
Centre of Asia Pacific Aviation CAPA, based in Delhi. A high level consultant focussing on the Civil Aviation Industry
Bird Group, based in Delhi. A company that focuses on the Civil Aviation Industry
Genser, based in Bangalore. Is a small consultancy. UKTI uses their services. Focus is on the Aerospace Industry
There are other consultants but have not come across any more in my time in India.
There are some organisations that can provide useful information on India companies:
Confederation of Indian Industries, CII, headquartered in Delhi. Covers all Industries but seems to have a good understanding of the Indian
Aerospace Industry
Federation of Indian Chambers of Commerce and Industry, FICCI, headquartered in Delhi. Covers all Industries. In aerospace its focus is on civil
aviation.
Society of Indian Aerospace Technologies and Industries, SIATI, based in Bangalore. Is a bit of a HAL old boys network, but will have some good
contacts.
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Consultants & Agents
Agents or Representatives
I have met a number of 'agents ' in India. So many companies are starting up with 'virtual' capabilities, i.e. they represent an number of other
companies. A number seem to be there for their own benefit. In defence agents are not meant to get involved but some do seem to do the 'ground
work' for companies.
My recommendation is, where possible, deal with the Indian companies directly. If that is not possible, tie up with an Indian company in the same field
but not competitive products. They will already have relationships with many of the Indian customers.
Genser who are a consultant also do some representation for international companies.
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Special Economic Zones
Special Economic Zones, SEZs
The India Government's SEZ policy is 'intended to be an engine for economic growth supported by quality infrastructure complemented by an
attractive fiscal package, both at the Centre and the State level, with the minimum possible regulations' This policy was announced in April 2000. The
policy has just been updated. The latest policy is aimed at improving:
• Generation of additional economic activity
•Promotion of exports of goods and services
•Promotion of investment from domestic and foreign sources
•Creation of employment opportunities
•Development of infrastructure facilities
In reality this means that a company setting up in an SEZ gets a number of fiscal advantages:
•Do not pay import duty on raw materials, capital goods, consumables and spares
•Do not pay service-added tax (VAT)
•100% income tax relief for the first five years, 50% relief for the next two years
There are some criteria that must be met:
•70% of the business must be for export
•All equipment and plant must be bought in new
•50% of profits must be invested back into the company for a set period
To promote industry infrastructure the SEZs are being designated as industry specific. Today there are two approved aerospace SEZs:
•A business area beside Hyderabad International Airport
•Belgaum - A secondary city in North Karnataka - Quest are setting up a manufacturing centre
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Special Economic Zones
This does not stop either aerospace companies setting up in non-aerospace assigned SEZs or non-aerospace related companies setting up in an
aerospace SEZ.
There are other types of economic zones that are also available:
•Software technology Parks of India, STPI - These may be where engineering service companies will set up. They get an income tax holiday
until 2009, which may be extended further
•Export Oriented Units, EOUs - Very similar benefits to SEZs but the company does not have to be located in an SEZ
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