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INDIAN AEROSPACE an OVERVIEW

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Title: INDIAN AEROSPACE an OVERVIEW


1
INDIAN AEROSPACE an OVERVIEW
  • 10 September 2012

2
Expect from this presentation
  • Country Profile
  • Indian Aerospace Sector
  • Projects and programmes
  • What is in it for you
  • How to get there

3
Country profile- India
4
Variety and vibrations galore.
5
Variety and vibrations galore.
6
Worlds largest democracy
  • Population 1.2b
  • GDP 1.85 Trillion
  • Service industry accounts for 57.2 of
    GDPIndustrial and agricultural sectors
    contribute 28.6 and 14.6 respectively.
  • Real Growth rate 6.5 (2012 est.)
  • Foreign Exchange Reserve 308b (7 Apr 2011)
  • PPP index 3.6
  • 1 Rs 70
  • Balance of trade5.6b(-)

The world's largest democracy and second most
populous country emerged as a major power in the
1990s. It is militarily strong, has major
cultural influence and a fast-growing and
powerful economy. - BBC
7
Inflation competing with growth rate
  • Growth rate Inflation ranking

Growth Rate
Inflation
8
Policies, schemes..
  • Foreign Direct Investment Regulations
  • In a recent AT Kearny study, India has displaced
    US to become second most-favoured destination for
    Foreign Direct Investment (FDI), after China. In
    many other surveys by UNCTAD, Bank of Japan and
    others, India ranks among top 5 destinations for
    FDI.
  • In India, the current limits to the FDI in
    aviation/aerospace fields are
  • Defense and Strategic Industries 26 and subject
    to License from Defense Ministry.
  • Manufacturing100 restriction for investing in
    Small Scale Industry24
  • Airport Infrastructure74(49 for major
    airports), 100 for Greenfield airports Ground
    Handling49
  • Domestic Airlines49but Foreign Airlines are
    not allowed to invest in Domestic Airlines
  • Repatriation of Profits from India procedures
    simplified
  • SEZ 100 income tax exemption for a block of
    five years50 tax exemptions for two years
    thereafter up to 50 of the Profits ploughed
    back for next 3 years under S.10-A of Income Tax
    Act
  • Offset Policy30-50 offset for gtUSD70m deal
  • Corporate Tax36.05 (Domestic Companies)43.78
    ( Foreign Companies)

9
Offset..
  • Offset Policy
  • Indias offset policy requires the sellers of
    Civil defence aerospace products to India to
    invest 30 to 50 percent of the deal value in
    India, if the deal crosses 70 million, by means
    of Investments ,setting up training facilities,
    sourcing aerospace defence components or
    sourcing of Engineering IT Services. The offset
    policy, formulated by the State, relating to
    defense procurements has also been extended to
    the purchases of state owned carriers like, Air
    India. 
  • DOFA (Defence Offset Facilitation Agency), a
    Government organization is tasked with
    facilitation of implementation of the Offset
    policy. STC (State Trading Corporation) monitors
    offset compliance for the civil sector. It is
    expected that civil offset monitoring process
    would be spelt out in the new Civil Aviation
    Policy to be released .

10
SEZ .
  • Special Economic Zones
  • SEZs are being created across the country for
    easing of trade. A business unit in an SEZ has to
    become net foreign exchange earner within 3
    years.
  •  
  • Key Benefits
  • Exemption from customs duty on import of capital
    goods, raw materials, consumables and spares
  • Exemption from Central Excise duty on procurement
    of capital goods, raw materials, consumables,
    spares, etc. from the domestic market
  • 100 income tax exemption on export income for
    SEZ units under Section 10AA of Income Tax Act
    for first five years50 tax exemptions for next
    five years thereafter, 50 of the ploughed back
    export profit for next 5 years.
  • Reimbursement of Central Sales Tax paid on
    domestic purchases.
  •  
  • SEZ in aviation/aerospace sector
  • So far, three SEZs have been approved SEZ by GMR
    Hyderabad International Limited in Hyderabad,
    another SEZ by Quest in Belgaum for aerospace and
    defence manufacturers and yet another by Andhra
    Pradesh Industrial Infrastructure Corporation
    Limited (APIIC) in Ranga Reddy District of Andhra
    Pradesh for Aerospace and Precision Engineering
    Industries
  • Additionally, in principle approvals have been
    given for three SEZs Aerospace SEZ, by KIADB in
    Karnataka, Taneja Aerospace and Aviation Limited,
    Hosur, Tamil Nadu (Airport/Aviation, including
    MRO) and Lepakshi Aerospace Park, Anantpur,
    Andhra Pradesh(Aerospace and Defence
    Cluster)more SEZs have been applied for and will
    be emerge on the scene soon.

11
Indian Aerospace Sector
12
What Characterises Indian Aerospace sector
  • Seven decades old with very slow initial growth
    now growing _at_20
  • HAL, ISRO (Indian Space Research Organisation),
    DRDO and NAL are lead organizations.
  • Large Business houses in India (TATA, Mahindra,
    LT and Godrej), shy of aerospace so far, have
    entered the fray in last three years.
  • 185 organizations (including their branches) have
    AS9100 certification (OASIS database)
  • The giants of the aerospace industry like Boeing,
    Airbus, UTC, BAe Systems, Rolls-Royce, Safran,
    Honeywell, GE, Bell Textron etc have set up JVs
    or Technical Centres to support the hardware they
    are selling to India and to also tap into the
    large engineering pool for design and
    manufacturing of aircraft parts
  • Industry Associations and Clusters
  • SIATI Society of Indian Aerospace Technologies
    and Industries (www.siatiaero.com) of which all
    lead organizations (HAL, NAL, ISRO, DRDO), 300
    Indian SMEs and some overseas organisations with
    Indian presence, are members.
  • CII Confederation of Indian Industries
    (www.cii.in), a very active Indian Industry
    Association with an Aerospace/defence
    manufacturing sector, organizes important events
    like Aero India and numerous aerospace seminars
    and trade shows.
  • FICCI Federation of Indian Chamber of Commerce
    and Industry organizes India Aviation- a civil
    aviation show every alternate year at Hyderabad.

13
Aerospace aviation activity centres in India
14
All segments Manufacturing, Engineering Services
and Aviation are seeing rapid growth.
  • The current US 4b of Indian manufacturing
    activity is going to grow more than 8 times by
    2020
  • In the field of Engineering Services,
    NASSCOM(National Association of Software and
    Services Companies) predicts a level of US50b
    worth of off-shoring activity by 2020 from India,
    of which a significant portion will be aerospace
  • US120b is being invested in aviation by 2020
    (US 80b in civil aircraft acquisition US 30b
    in airport infrastructure upgradeUS10b in
    associated areas).

15
100 companies engaged inAerospace
manufacturing-defence civil
  • Manufacturing
  • 4 lead government owned organizations form the
    core
  • Hindustan Aeronautics Limited (HAL) - the premier
    Defense and Civil aircraft Manufacturer in India
    ranks 38th among the top 100 aerospace and
    Defence companies of the world.
  • Indian Space Research Organisation (ISRO) - a
    leading global player in Space Research,
    development and launch of Space Vehicles.
  • Defence Research and Development Organisation
    (DRDO)a consortium of more than 50 research
    laboratories with 32 related to Aerospace.
  • National Aerospace Laboratories (NAL) and C-CADD
    (Centre for Civil Aircraft Design and
    Development) Designers of HANSA and SARAS
    aircraft, with another 70 seat aircraft RTA-70 on
    the anvil, primarily focusing on civil
    aeronautics.
  • There are 300 support organizations some of
    them like Bharat Forge, CIM Tools, Dynamatics,
    Godrej, Maini, Quest, Titan, Triveni, Genser to
    name a few, growing rapidly to become more than
    just support organizations and are taking on
    orders directly from Global Tier-I's .
  • Large business houses like Tata Group, Mahindra
    Mahindra, LT are creating parallel force in
    Aerospace/Aviation with potential to become key
    global players through JVs like TATA-Sykorsky for
    building helicopter structures or acquisitions by
    Mahindra of Gippsland to enter into less than
    19-seater aircraft development and manufacturing
    segment.

16
50 companies in Engineering Services
  • Engineering Services
  • Smaller Aerospace Engineering Services companies
    like Accord, BAeHAL, QUEST, CADES and GENSER have
    been catering to Engineering Services (incl.
    Software and Systems needs). More recently, most
    leading Indian IT Services companies like
    Infosys, Wipro, Mahindra-Satyam and TCS have got
    into in a big way into the aerospace engineering
    design services business.
  • Overseas companies like Airbus, Alten,Altran,
    Assystem,CAP GEMINI, Honeywell, GE and Safran
    have set up their own captive centres to cater to
    the growing Engineering Services needs from
    Indian Shores.

17
Airlines,MRO,Airports..
  • Aviation
  • The major full service carriers in India are
    Air India and Indian (merged) Jet Airways,
    Kingfisher Airlines
  • LCCs are Spicejet, Go Air, Indigo and LCC wings
    of Air India,Jet Airways Kingfisher.
  • Leading dedicated Cargo Airlines in India are
    Blue Dart and Deccan 360.
  • Pawan Hans is the major Rotary Wing Fleet
    Operator.
  • Key companies engaged in MRO services are Air
    India, Air Works, Indamer,Varman Aviation (for
    small piston and Turboprop engines)
  • Airport Authority of India supported by a few
    private companies like Menzies Aviation Bobba
    Joint Venture, PSM, Globe Ground look after
    airport services
  • There are 39 basic pilot training schools and 55
    basic aviation engineering training institutes.

18
Projects programmes
19
Civil aircraft prgrammes
  • Some of the indigenous/License civil aircraft
    programmes are 14-18 Seater SARAS 2 Seater
    HANSA 70-100 Seater Multi-role Transport
    Aircraft, Dornier 228NG

20
Defence Programmes
  • Fighter Jets and Missiles LCA (Light Combat
    Aircraft) and its power plant Kaveri, SU-30Lic.,
    JaguarLic. , MCA (Medium Combat Aircraft), NLCA(
    Naval LCA) MMRCA selected, under Agreement
    finalisation5th generation Fighter in
    collaboration with Russia AEW(Airborne Early
    Warning) Aircraft programme Brahmos Missiles
    Integrated Missile Development Programme
  • Helicopters ALH(Advanced Light Helicopter),
    Lancer,Chetan, 196 helicopters for army, LCH(made
    its inaugural flight on 23 May2010),LOH( Light
    Observation Helicopter)10T
  • UAVs Lakshya Nishant MALE( Medium Altitude
    Long Endurance)-UAV

21
Space.
  • 6th largest programme in the world which include
    Hypersonic Reusable Vehicles Solar Powered
    Satellites (SPS).It has Planetary Manned Missions
    on the anvil and goals like bringing down per Kg
    pay load cost of space transportation from
    25,000 to Less than 5000. Some of the signature
    products of ISRO are
  • Geosynchronous Satellite Launch Vehicle Mark III
    (GSLV-III) - a three-stage rocket with solid,
    liquid and cryo stages. The GSLV can 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.

22
Recent Aerospace Defence deals
  • 1.1 billion deal for India to buy addiitional 57
    Hawk advanced trainer jets.
  • During Oct 2010, India selected the GE 414 Engine
    to power the Tejas Mk II (LCA)Aircraft - Initial
    contract for 99 Engines worth 650 MUSD
  • During President Barack Obama's November 2010
    visit, a 4.1 billion sale of 10 C-17 transport
    aircraft was announced.
  • France and India moved closer to finalising a
    2.1 billion Mirage 2000 fighter aircraft upgrade
    deal during President Nicolas Sarkozy's visit,
  • India and Russia have agreed to jointly develop
    a fifth generation fighter aircraft during
    President Dmitry Medvedev's visit.
  • India has recently selected the Rafale Aircraft
    against its MMRCA RFQ for 126 Aircraft worth over
    USD 10 Billion
  • A repeat order for Six Boeing P8I Multi-mission
    Maritime Aircraft has been placed

23
MMRCA
  • Indias new medium multi-role combat aircraft
    will play an essential role in Indias
    transformation from a regional power to a global
    giant and the company- Dassault Aviation- awarded
    the contract to build the fighter will gain an
    important toe hold in a lucrative market.
  • The main issues in its selection has been
    Economics, Globalization, Technology Transfer,
    and Technical Superiority

24
What is in it for you
25
Opportunities in manufacturing.
  • Indian aerospace manufacturing activity
    comprises Indigenous civil, defence and space
    programmes as well as participation in
    international programmes growing to annual
    turnovers of 15B by 2015 and 35B by 2020.
  • Overseas aerospace organizations wanting to meet
    2B offset commitment per annum through Indian
    aerospace companies ,are not finding enough
    Indian companies put together to be able to
    deliver more than 200m because of lack of
    readiness in terms of capability and capacity.

26
Opportunities in Engineering Services
  • NASSCOM predicts for India, a 25 market share
    in the explosive growth in Global Engineering
    Services market of 225B by 2020a significant
    portion would go to aerospace add to this
    Software and embedded system activities and it
    leads to an estimated annual turnover of 6B by
    2015 and 12B by 2020
  • Medium and Low Complexity Engineering Services
    is a strong capability area of Indian companies.
    Some of the ways of gaining access into this
    market are offer specialty skills and tools,
    strategic tie ups, risk sharing participation in
    Indian programmes, setting up captives in India
    to support Indian and global programmes etc.

27
Opportunities in aviation..
  • To cater to growing air transportation needs,
    over 100B is being invested by India in next ten
    years for aircraft acquisition and aviation
    infrastructure development. The market is
    projected to grow in all segments of aviation
    General Aviation, Airports and Airport Services,
    MRO, Leasing and Insurance, Training
  • Lack of infrastructure is a major constraint in
    the air transportation growth that the market is
    craving for. UK companies may be able to gain
    access to the infrastructure market through PPP
    (Public Private Partnership) models. General
    Aviation, Engineering Consulting and Leasing and
    Insurance are high potential areas to pursue.
  • Maintenance market including spares is currently
    estimated to be US 1350 million annually.
  • There is a huge gap in general aviation
    presently there are only 300 aircraft against a
    potential to have 10,000 aircraft by 2020, if
    there is a strong drive and campaign to actualize
    it ( as against 200,000 aircraft in US and 12,000
    aircraft in Australia)

28
10 year projectionsIndustrys sales spends
29
How to get there
30
  • Sell to India (directly or through OEM into the
    growing market)
  • Buy From India (reduce cost, free resources,
    avail of schemes like offset)
  • Sell From India (through captives, JVs to Indian
    and Global markets)

31
Fill into the capability gaps
  • Indian Capability Gaps - Manufacturing
  • Overseas aerospace organizations wanting to meet
    offset commitment of the order of USD 2b per
    annum are not finding enough aerospace companies
    put together, to be able to deliver more than
    USD200m because of lack of readiness in terms of
    capability and capacity.
  • The only organization which has relatively better
    capability and good infrastructure is HAL but
    its priorities are different Indian Defence and
    not doing offset projects.
  • Indian Private Companies in aerospace are either
    too small (hardly any exceeding a turnover of
    10m) or have very limited aerospace
    manufacturing.
  • Organisations outside of lead organisations, are
    in infancy for meeting the needs of special
    processes (Heat Treatment, Plating, and NDT),
    castings and forgings, sheet metal work and
    composite parts.
  • Indian manufacturing companies productivity is
    low because of use of sub optimum tooling,
    sub-optimum machine tools, low automation, lack
    of process standardization, lack of training
    etc. concepts of lean is gaining acceptance
    gradually.

32
Fill into the capability gaps
  • Indian Capability Gaps Manufacturing
  • Indian Aerospaces use of IT systems and
    resources is very low very few companies have
    ERP installed for managing manufacturing systems.
  • There is a trend towards gaining AS9100, NADCAP
    certifications and installing continuous quality
    improvement concepts like Six Sigma, Lean , ACE,
    Low Batch PPM and self-inspection but the gap is
    still wide as compared to global benchmarks.
    These remarks are based on experiences of many
    companies like GE, UTC, and Safran etc that have
    ventured early into Indian outsourcing.
  • One significant disadvantage that India faces in
    the context of aerospace manufacturing is
    availability of appropriate grade raw materials,
    whether it is metals like aluminum and titanium
    or plastics and composites. currently , almost
    all raw materials are being imported by Indian
    suppliers
  • There are no insurance companies in India, that
    cover Aviation Product Liability there are only
    some underwriters of overseas insurers many
    manufacturing and engineering services companies
    that need this coverage, find it difficult to get
    cost effective coverage.

33
Fill into capability gaps
  • Indian Capability Gaps Design,Engineering
    Services,RD
  • India plans to develop a 70 seater aircraft but
    despite its success in military aircraft design,
    it lacks technology, infrastructure and
    experience to roll out a multi-role civil
    aircraft within a reasonable timeframe.
  • NAL has successfully designed and certified a two
    seat fully composite trainer aircraft HANSA, but
    it has been facing hurdles in completing the
    development and certification of 14 seat SARAS
    aircraft.
  • India, so far, has had limited success with
    aero-engine design. KAVERI engine for the LCA
    (Light Combat Aircraft) has been under
    development since 1989. GTRE ( Gas Turbine
    Research and Development Establishment),which is
    the development agency for military power plants
    has now decided to progress the programme under
    Joint Venture (JV) partnership with one of the
    selected engine houses i.e. either NPO Saturn,
    Russia or SNECMA, France. The initial project
    cost of 90m is expected to go to 600m by 2012,
    when it is expected to get completed.
  • India does not have a mature supplier base to
    support rapid design and development of
    aircrafts.
  • India now has several capable engineering
    services companies like TCS, Mahindra Satyam,
    Infotech, BAeHAL, Infosys, and Quest however,
    capabilities are segmented and there is absence
    of an experienced integrator.
  • India has no experience of certification by FAA
    or EASA for offering products globally.

34
Fill into the capability gaps
  • Indian Capability Gaps Aviation
  • All full service airlines are in red- mainly due
    to High fuel costs and taxes/duties on spares
    only LCCs (Low Cost Carriers) and Cargo Airlines
    are making profits in the highly cost sensitive
    Indian air travel market.
  • MRO capability and capacity in India is too
    meager to support the surge in civil aviation
    currently, there are no MROs within a five-hour
    fly zone of India. Most private carriers send
    aircrafts overseas for C and D-checks.
  • The Airport Infrastructure is grossly inadequate
    to support even the current demand, let alone the
    surge that is expected in the next five years.
  • ATC congestion and fragmented CNS systems is not
    ready for seamless integration with Future Air
    Navigation Systems (FANS).
  • Absence of bilateral agreement between DGCA and
    other regulatory authorities
  • During winters foggy/ poor visibility conditions
    flight schedules get affected due to limited CAT
    III landing facilities as well as lack of crew
    training. Indian Airport Infrastructure summary
    is placed at Appendix IV.
  • Over 400 small and medium airports are not
    functional.
  • There is hardly any Design organization having
    Certification like FAR Part 21JA, who could
    authorize engineering changes in Aircraft or
    authorize FAA or EASA approved STC (Supplemental
    Type Certification)/SB (Service Bulletins)
    implementations.

35
ManufacturingPotential partners customers
36
ManufacturingPotential partners customers
37
Design Engineering services.Potential
partners customers
38
Aviation.potential partners customers
39
Links to click.
  • Important Links
  • National Portal of India http//india.gov.in/
  • DOFAhttp//mod.nic.in/DOFA.htm
  • Civil Aviation http//civilaviation.nic.in/
  • SIATIhttp//www.siatiaero.com
  • AAIhttp//www.aai.aero/
  • DGCAhttp//dgca.nic.in/
  • ATC Guild http//www.atcguild.com/
  • HAL http//www.hal-india.com
  • Incorporation of Company http//dca.nic.in
  • Investing in India www.investmentcommission.in/po
    licies_and_laws.htm
  • Ministry of Defence Defence Procurement
    Policy http//mod.nic.in/dpm/DPP2011.pdf
  • Indira Gandhi Rashtriya Udan Academy
    www.civilaviation.nic.in/igrua
  •  

40
Thank you
  • Arunakar MISHRA
  • MDCEO,Genser Aerospace
  • Arunakar.mishra_at_genser.com
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