Indian aviation gets foothold in supply chain

India is emerging as a surprise source for aircraft manufacture parts for landing gear, fuselage, electric switches and motion control switches. This is the trend that became visible from the Aero India show that had ended in Bengaluru in south India last week. Many of the global majors like Airbus, Rolls Royce, Collins Aerospace and Pratt and Whitney are now sourcing parts from India to build a supply chain for making planes.

There is a complementarity in the phenomenon. India is the third largest civil aviation sector in terms of seats in the world, and its airlines like Indigo and Air India have placed orders for hundreds of planes. But the delivery of these planes will depend on the supply chain of parts, which Indian companies are in a position to provide. Bengaluru-based aeronautics parts manufacturers like Hical Technologies and JJG Aero are taking advantage of the business opportunity. Hical supplies parts of Boeing and Raytheon Technology. It aims to double its profits to US$57.57 million in three years, according to Yashas Jaiveer Shashikiran, joint managing director.

JJG Aero’s CEO Anuj Jhunjhunwala said that it took 12 years for the company to get to the US$2 million mark, but it took half that time – six years – to make US$20 million. He said, “Earlier, we were chasing customers. Now they are equally interested in evaluating Indian machine shops.”

Plane and engine manufacturers have hit a shortage of parts because of workers’ strikes, production gaps, parts and labour shortages. “India is the best solution to supply chain challenges,” said How Morgan, senior vice president for aerospace procurement at Rolls Royce. He said, “Our engines volumes are growing at around 20 per cent and the traditional supply chains are not able to support it India is...the best cost market.”

It is now acknowledged that though India had a share of US$180 billion in the aerospace industry, it is now moving up the value chain leading to design, engineering and system integration. Said Airbus’s head of international operations Michel Narchi, “India is contributing more than 1 billion euros currently in the overall in the Airbus supply chain and we expect to double that. Every commercial aircraft of Airbus today has some part or component that is made in India.”

India has been waiting for this window of opportunity to get a foothold in the global manufacturing segment. India enjoys the advantage of cost because it lies outside the advanced economies’ market of Europe and North America. The West will find it economical to source its materials from India.

India has also the advantage of an educated skilled workforce. The aerospace industry is a high worth segment though it remains a small one. But the fact that India finds a place in it would mean that other doors will open as well.

It would be too early to say that India has arrived on the global stage of manufacturing. There is indeed quite a long path to cover. But it is the breakthrough, an opportunity that was needed and it seems that it has happened in the form of the demand for aerospace parts. Airbus had set up a unit in India for maintenance work, and its representatives had then said that it was cheaper in India than in Europe.

So, the trend of shifting work centres seems set to happen. If India manages to make its presence felt in aeronautics, then it can be said that it has made its way through an invisible barrier. India is also much focused on Artificial Intelligence (AI), and AI is becoming an integral part of manufacturing. So, after Japan, South Korea, China, India will become a global hub in a key sector of manufacturing.