Journal of Small Business and Enterprise - March, 2013 - CII

Growth DriverRevving Up For VerticalTake-OffWith global aircraft companies and OEMs turning to India for assured suppliesat competitive costs, niche SMEs operating in the aerospace industry are seeingunprecedented growth opportunitiesMSME Business March 20138Aircraft manufacturing companiesand large original equipmentmanufacturers (OEMs) areincreasingly turning to Indiansuppliers due to costconsiderations, especially in the wakeof an extended period of globaleconomic slowdown.Moreover, global firms producingcommercial aircraft have cut downdevelopment time using computeraideddesign and drafting (CADD),which allows them to design and test anentire aircraft, including the individualparts, by computer. The specificationsof these parts can be sent electronicallyto subcontractors around the worldincluding India who use them toproduce the parts.Emerging OpportunitiesIndian SME manufacturers linkedwith the global aerospace industryare poised to leverage these emergingmarket opportunities. They would alsobenefit from global aerospace suppliersentering into joint venture arrangementswith major Indian aerospace companies.In fact, many traditional first tieraerospace supplier responsibilities arebeing pushed down the supply chain tosecond and third tier suppliers. As thelarger firms move into aerospace systemintegration, lower-tier firms are calledupon to globalise themselves.Once established in India, many ofthe first tier firms require their supplychain partners to begin dealing directlywith Indian members of the supplychain. While extremely challenging forSME suppliers, these new relationshipsbring an added benefit, the opportunityfor additional sales with other aerospacecompanies doing business in India.The SMEs are also seeing a raftof opportunities springing from theexpansion of India's own aerospaceindustry, with all its segments includingcivil aviation, military aviation and spaceresearch showing remarkable growth.Renewed thrust on modernisation ofairports, communication, navigationand surveillance systems for aircraftmanagement and facilities formaintenance repairs and overhaul(MRO) of aircraft and subsystems arecreating new growth opportunities forthe SMEs operating in this industry.Ministry of Civil Aviation, Governmentof India, has estimated that the Indianaerospace industry needs investment of$200-$300 billion. A major proof-pointthat the industry has set sights on a veryhigh growth trajectory.India also represents a large andgrowing annual market for air defenceequipment with major procurementof military hardware and also forupgrading its surveillance, defence andstrike capabilities.The Defence Offset Policy has alsospurred Indian SME to address the globalaerospace value chain. Informationtechnology systems, simulators, andsuch advances are coming into defencein a big way.Also, the scope of offset policyguidelines has been expanded toinclude civil aerospace, internalsecurity and training. The list of eligibleoffset obligations will cover most aspects