One hopes that the private industry will have a bigger role to play in aircraft projects in the years to come. This will lead to an expansion of aeronautical industrial base in the country and help make the Indian aviation sector efficient.

Aerospace manufacturing is a high technology and capital intensive industry. Its value chain is characterised by a long project life cycle spanning research and development (R&D), engineering design, manufacturing, assembly, maintenance, repair and overhaul. Intensive technology and safety requirements require significant investments in R&D and quality control. Traditionally, most aerospace original equipment manufacturers (OEM) value chain activities were conducted in the domestic market—engineering and R&D activities were almost exclusively done in the home market. Most manufacturing also took place in the home market with selected sourcing of complete components like aero engines from foreign suppliers. Similarly, maintenance, repair and overhaul (MRO) and service parts distribution facilities were also established in home market, with some secondary international service centres.

However, with the need to cut costs and deliver products faster; aerospace design, development and production globally continue to undergo significant changes. Firms producing commercial aircraft have reduced development time drastically through computer-aided design and drafting (CADD), which allows firms to design and test an entire aircraft, including the individual parts, by computer. Increasingly, firms bring together teams composed of customers, engineers and production workers to pool ideas and make decisions concerning the aircraft at every phase of product development.

OEMs are increasingly making use of the global supply chain. Today, OEMs are not only farming out a big chunk of machined and sheet metal parts production, but also expecting vendors to supply large aircraft sub-assemblies and even design expertise. While OEMs have been looking at leveraging manufacturing and service capabilities across various countries, some countries have made focused effort to scale up their capabilities.

When we look specifically at ‘aerospace ecosystem’—factors like the supply and quality of engineers, the supply and cost of blue collar workforce, the depth of the supply chain and the potential to reach critical mass—is important. However, infrastructure and government support are critical inputs for success. Different countries and governments had taken different approaches to develop their aerospace industry—some countries have begun to specialise more within a particular tier, and potentially around particular systems of types of technology. That means that industry clusters may develop around a system or type of technology, like aerostructures, engines, interiors, avionics, control systems or landing gear, and potentially also focus on a particular platform type.

On the other hand, some countries have adopted an integrated approach to the aerospace sector, encompassing comprehensive manufacturing to MRO services through collaboration agreements with global OEMs, to leverage the expertise necessary for a high-tech, end-to-end technology and manufacturing base.

When we look at India, we see most elements of the ‘ecosystem’ in place. Over the next decades, India undoubtedly has the potential to become a significant part of the global aerospace supply chain. It has been estimated that India offers cost advantages of between 15 and 25 per cent in manufacturing, depending on the type of component. Indian industry today has the technological capability to undertake complex manufacturing required for the sector—indeed there has been a remarkable growth of this sector, as a large number of private players have entered the sector. However, the small and medium enterprises (SMEs) face hurdles due to the high capital cost, low volumes and long gestation period of the projects.

Technology can be transferred to Indian industry through various channels: production linkages in the form of subcontracting arrangements; technical licensing agreements; the import of intermediate and capital goods; training; technical consultancies by consulting firms; or simply from the migration of workers.

There are a number of aeronautics organisations like the Hindustan Aeronautics Limited (HAL), National Aerospace Laboratories (NAL), Defence Research and Development Organisation (DRDO) laboratories, engineering colleges, etc in the country, and the sector is divided into defence and nondefence segments. With the entry of private companies, an institutional arrangement becomes necessary which could harness the knowledge residing in these various entities. Such an institution could map indigenous capabilities, identify knowledge gaps, direct resources efficiently to address critical technology gaps.

We need to establish an organisation at the central level that articulates our vision for aerospace manufacturing sector and then acts as a facilitator for investments, and coordinates various activities and initiatives towards that goal. The organisation should articulate whether India should take an integrated approach to aerospace manufacturing, or, should we look at our areas of strength and concentrate our efforts on certain systems or components? The organisation can act as a facilitator to investors for obtaining requisite permission and approvals like industrial licence, FIPB approval for foreign partnership, export clearances, etc.