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Major global aviation industry are eyeing the local market in India and landing. This development is creating an opportunity for Indian offshore majors and component makers.
Indian aerospace and IT majors saw a flood of activity as global majors scouted for outsourcing aerospace and defense products. Aviation analysts feel India is fast emerging as engineering and design services are outsourced to India. These include control system design, embedded development, high level aeronautical system design, simulation, testing devices, cockpit equipment support software, air traffic management systems, and composite structuring.
IT sector to share the benefits
Reaping the benefits of this offshore are some of the homegrown aerospace and IT majors - Hindustan Aeronautics (HAL), Larsen and Toubro (L&T), TCS, Wipro, Infosys and HCL. The Indian advantage is obvious to those re-evaluating their engineering and business processes. A recent report by Research & Consultancy Outsourcing Services (RNCOS) predicts that the Indian aerospace technology outsourcing market, which is currently at US$ 155 million, will reach US$ 1 billion by 2009. And by 2020, India's offshore engineering services market could go up US$ 3 billion, according to Booz Allen Hamilton analysis.
Taking on to the opportunity its not surprising to see that aerospace majors like Lockheed Martin, Boeing, Thales, Pratt & Whitney, Bombardier, Rolls Royce, among others, coming to India hoping for a piece of the billions of dollars in defence contracts India plans to spend in modernising its armed forces.
On civil aviation front, the excitement is quite clear as India's aviation industry is likely to buy aircraft worth US$ 75 billion in the next decade during which the number of aircraft would increase from the present level of 250 to 1,500. Though the defence sector is eyeing the US$ 10 billion contract for 126 fighter aircraft.
To ensure that Indian companies gain from the opportunity, the government has made it mandatory for aircraft manufacturers to source 30 per cent of the value of the aircraft from Indian vendors. Defence minister A K Anthony says, "We don't want to have a buyer-seller relationship. We will buy, but technology transfer must be there and we must be involved in designing, development and co-production."
India beneficiary
Action is hotting up. The US$ 30 billion Northrop Grumman Corp has joined hands with Satyam Computer Services to jointly provide high-end engineering services to the global aerospace and defence industry. HCL Technologies and Crane Aerospace & Electronics inked a deal under which HCL will provide engineering services to support Crane's product lines in cabin, landing systems, sensing and utility systems and fluid management across several aircraft programmes. HCL Technologies is already working on the flight test system of the Dreamliner aircraft from Boeing.
On its part, the US aircraft maker roped in HAL as partner for joint exploration of business opportunities in India's defence sector. The European major in aerospace, defence and related services, EADS, signed an agreement with HAL for long-term co-operation. Gregor V Kursell of EADS says, "We won't like to call it outsourcing, but attracting good brains to be able to deliver high quality products." The company will soon open a technology centre in Bangalore for engineering services, software and technical publications. "We have also been working closely with Wipro and TCS," he adds.
Lockheed Martin and Boeing Integrated Defense System (IDS) are in talks with TCS for possible design outsourcing options. Boeing is also all set to ink a deal this March with Indian suppliers for sourcing of aircraft equipment. Among others, Quest, an engineering services provider announced a joint venture with Canadian Magellan Aerospace; Bangalore-based CADES, a product design and development solutions provider for the aerospace and defence sector, tied up with CeBeNetwork Holding, a strategic supplier for Airbus for offshore engineering services work; Taneja Aerospace & Aviation tied up with Sabbena Technics TAT Group to form a joint venture to develop an independent MRO facility in Tamil Nadu.
After signing an agreement with Indian to set up an engineering maintenance facility in New Delhi, French technology major Safran is now looking at investing 50 million euros in a 'smart card' manufacturing centre here. Thales, an international electronics and systems group, signed an agreement with Rudradev Aviation to supply training equipment for Airbus and Boeing aircraft in a contract valued at approximately US$ 60 million.
This training equipment will be installed in the new Rudradev Aviation training centre currently under construction in Chennai. Indeed, India's aerospace and IT majors are engineering newer aircraft to make them fly.
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