Record Jet Orders Fuel Growth Opportunities for Indian Aerospace Suppliers in Parts Manufacturing
Indian aerospace suppliers are experiencing an unprecedented surge in jet orders from the country’s leading carriers, which is fueling the growth of domestic parts manufacturing and aircraft repairs. However, these suppliers argue that the government needs to provide greater support to foster production.
India has become a pivotal market for aerospace due to the escalating air traffic, a desire for alternative sourcing options to China, and recent substantial orders from Air India and IndiGo for a combined total of nearly 1,000 jets.
Indian Aerospace
During the Paris Airshow last week, small and medium-sized suppliers expressed their intention to seize this opportunity and boost sales of locally sourced parts. Shekhar Sardessai, the managing director at Kineco Group, a supplier based in the western state of Goa, highlighted India’s position as the largest purchaser of planes globally. He emphasized that the suppliers deserve a fair share of the immense market potential.
Sardessai’s company specializes in the production of engine and plane interior parts, and he firmly believes that it is time for Indian suppliers to benefit from the significant growth in the aviation industry.
According to consultancy firm Deloitte, despite French engine maker Safran’s plans to establish an engine repair and overhaul facility in India, approximately 90% of the country’s aircraft maintenance and repair operations are currently conducted outside its borders.
Deloitte predicts that the Indian repair and overhaul industry will experience significant growth, reaching $4 billion by 2031, compared to $1.7 billion in 2021.
Although India’s civil aviation ministry expects these orders to stimulate aerospace manufacturing within the country, a senior government official informed Reuters that local production cannot be mandated since the orders do not include requirements for domestic manufacturing, unlike defense contracts.
Alaric Diniz, a partner at Deloitte India, anticipates that certain segments of the commercial aviation supply chain will shift to India as aircraft and engine manufacturers seek to avoid the disruptions witnessed in recent years. While it is difficult to estimate the exact benefits for small suppliers, any form of subsidy or incentive would be advantageous.
AEROSPACE INCENTIVES
Some suppliers, such as Sardessai and Aravind Melligeri, the CEO of aerospace-parts producer Aequs, have suggested that India should establish a production-linked incentive scheme for the aerospace industry, similar to what it has implemented for other sectors.
Back in 2020, the Indian government, led by Prime Minister Narendra Modi, initiated a program aimed at promoting local manufacturing in 14 sectors, including automobiles, by allocating 1.97 trillion rupees ($24 billion) in incentives. This initiative has attracted investments from notable companies like Foxconn, a supplier to Apple, as well as automakers such as Suzuki Motor from Japan and Hyundai Motor from South Korea, who have pledged their financial support.
Even in the absence of incentives, India’s expanding aircraft fleet will necessitate increased maintenance services. Sachin Agarwal, the chairman of PTC Industries based in Uttar Pradesh, emphasized the need for repair facilities by asking, “With such a significant number of planes in India, who will take care of their repairs? Every supplier aims to be in proximity to their customers.”
PTC is capitalizing on the global demand for alternative sources of titanium, reducing dependence on Russian-made titanium and Chinese production. With this in mind, PTC has ambitious plans to boost its production levels. By the end of 2023, they aim to increase their titanium alloy production from 1,500 metric tons to an impressive 6,500 metric tons by 2025. Additionally, PTC is expanding its capacity for titanium and superalloy castings, with the goal of increasing it tenfold by 2025.
According to Agarwal, the objective behind these efforts is to establish a capability in India that was previously lacking. This strategic move by PTC aims to strengthen the supply chain and meet the growing demand for titanium and related products.
Sardessai Observation
In response to Safran’s announcement in 2022, Sardessai has observed a notable rise in supply inquiries. The prospect of increased engine sales in India is driving up the volume of repairs and maintenance. This surge in demand can prove advantageous for the local supply chain. Ankit Patel, director of Ankit Fasteners, a supplier of screws and bolts to General Electric, Airbus, and Boeing based in Bengaluru, southern India, acknowledges the potential benefits of this increased demand for the local supply chain.
Patel revealed that he is currently receiving requests from French suppliers who are interested in forming partnerships with him to tap into the Indian market. This marks a significant shift from the previous years when Patel himself had been actively seeking opportunities to establish a presence in Europe.
Melligeri, representing Aequs, emphasizes the importance of ensuring a sustained demand for Indian-manufactured parts and components even after the excitement of the Paris Airshow subsides. He expresses his concern about companies like his own making investments in expanding their production capabilities, only to witness fleeting interest in India.
“I want to ensure their commitment,” he stated, referring to the interest expressed by various entities in India.
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