Wednesday, October 4, 2023

Karnataka – The Aerospace Hub Of India

By Girish Linganna

Girish Linganna, Aerospace & Defence analyst & Director ADD Engineering Components (India) Pvt Ltd

The aerospace industry is a field of immense importance for India’s strategic and economic interests. It is characterised by high growth potential, due to India being one of the fastest expanding markets in the world. This is attributable to growing technological expertise, a rise in defence aerospace spending, and a booming commercial aviation market.

Karnataka is regarded as the hub of the aeronautics industry in India. It is home to various defence research and development (R&D) and public sector institutions (PSUs). The state’s government is positioning Karnataka as a major investment destination for multiple industries, including IT, auto, steel, and aerospace.

Entrenched Aerospace Legacy

Even before India gained independence, Karnataka was treading the path of aeronautical innovation. The establishment of Hindustan Aeronautics Limited (HAL) in the state in 1940 was a watershed moment for the aerospace industry. Karnataka has been a pioneer in developing aircraft and helicopters for defence and civilian use ever since.

In 1960, National Aerospace Laboratories (NAL), a leading aerospace firm established by the Council of Scientific and Industrial Research (CSIR), was moved to Bengaluru.

The Aeronautical Development Agency (ADA), formed in 1984, also remains headquartered in Bengaluru. Managed by India’s Ministry of Defence (MoD), it is responsible for designing and developing the country’s Light Combat Aircraft (LCA) programme.

The advantages of ADA’s research and development efforts are manifested with help from commercial partnerships with industry giants like Airbus, Boeing, Dassault Systemes, Parametric Technology Corporation (PTC), etc.

Karnataka today continues to tread the path of development in aerospace. In 2013, it became the first Indian state to declare an aerospace policy. Under its latest Aerospace and Defence policy, the state will develop five A&D hubs in Belagavi, Bengaluru, Chamarajanagar, Mysuru, and Tumkur.

Alluring State For The Industry

In addition to its unparalleled legacy, several other factors make Karnataka an attractive aerospace hub.

The state houses a large number of important PSUs involved in the aerospace industry. These include ADA, NAL, Bharat Heavy Electricals Limited (BHEL), Gas Turbine Research Establishment (GTRE), Bharat Earth Movers Limited (BEML), Indian Space Research Organisation (ISRO), Aeronautical Development Establishment (ADE), etc. Companies are also setting up operations in key industrial belts on the outskirts and in north Karnataka. Overall, the state provides exceptional proximity to the vendor base. It also offers deep aerospace expertise with a network of 2000 Small and Medium Enterprises (SMEs) that do niche subcontracting work for the PSUs.

Karnataka boasts of information technology (IT), design and engineering expertise, too. As India’s Silicon Valley, the state’s capital provides a high density of mature IT and engineering services firms. Local software giants like HCL, Infosys, and Wipro have served global aviation and aerospace industry clients for decades. Global industry leaders have also set up their technology and engineering services support centres in Bengaluru.

Presence of scientific and technical institutes, combined with a large number of engineering graduates that comprise the human resource pool, give the state an edge in the field. These benefits make Karnataka an attractive destination for simulation and R&D, especially since simulation and high-end research are the forte of government organisations in Bengaluru. Leading aerospace firms have also engaged with their Indian counterparts to enhance aforementioned capabilities. For instance, Honeywell has two R&D centres in Bengaluru.

The state’s MRO segment has also been growing, with large MRO firms enhancing their presence in Karnataka. Local aerospace players in the state are entering into joint ventures with overseas players, setting up captive R&D and manufacturing centres, supplying components, landing gear, IT design and outsourcing services, etc., to global aerospace majors. Special Economic Zones (SEZs) are also increasing.

In addition to manufacturing expertise, opportunities for affiliated services like ground handling, excellent telecommunications networks, etc., government support is a crucial element. Karnataka has an investor-friendly government, simplified procedures, a single-window clearance mechanism for fast-track business approvals, and land and financial incentives packages.

The government has also allocated land for an Aerospace Park close to Kempegowda International airport. It has earmarked 1000 acres of land (of which 252 acres are for SEZs) for Phase 1 of this Hi-tech A&D park. Important industries like Boeing, Magellan Aerospace, Wipro Enterprises, etc. are involved. Safran-HAL has invested 5,000 crores here in Phase 1. An additional 1094.69 acres of land has been allocated to Phase 2 (Haralur – Muddenahalli). 150.87 acres of this land has been earmarked for A&D. The land acquisition for Phase 3 is in process.

Investments Pouring In Karnataka

A favourable aerospace landscape and supportive policies have pulled in heavy investments in Karnataka.

CAE, a global leader in aviation simulation products and training services, made Karnataka its base in India and operates from an owned facility near the new Bangalore international airport. The Airbus A320 and Boeing 737 Level D full-flight simulators in the CAE facility are certified by India’s Directorate General of Civil Aviation.

In 2009, Boeing launched the Boeing Research & Technology-India centre to continue its collaboration with indigenous R&D organisations, including universities, government agencies, private sector R&D providers, etc. That same year, European Aeronautic Defence and Space Co (EADS), which owns Airbus, began research operations in Bengaluru with the opening of an innovation centre. This centre is engaging with the Indian Institutes of Technology around the country to design simulators and develop software. Honeywell inaugurated an Rs. 253.09 crores research, development & engineering facility in Bangalore that year, while Rolls-Royce and HAL signed an agreement in 2010 to create a manufacturing joint venture company in Bengaluru.

More recently, 34 aerospace and defence firms signed an agreement with the government to invest Rs. 2.4 crores in setting up their facilities in the state. Last month, HAL and the French company Safran Helicopter Engines signed a deal to form a joint venture firm- Safran-HAL Aircraft Engines- in Bengaluru. The capital city now houses 25 per cent of India’s aircraft and spacecraft industries. They produce 67 percent of planes and helicopters for the country’s defence services.

Vision For The Future

Global aerospace sales are expected to reach $2 trillion over the next two decades. The Asia-Pacific region is set to be the fastest-growing aerospace region, with the fleet size of narrow-body aircraft estimated to double its 2021 figure by 2031.

The impressive domestic demand for air travel and large defence requirements in India have led the major aerospace players to conclude that India is an important future market.

India’s Offset policy, which prescribes 30% of all deals above Rs. 300 crores to be reinvested into the country, obliges aerospace partners to set up subsidiaries, enter into joint ventures or outsource some work to the Indian aviation industry. Offsets can thus play the role of a catalyst in the development of aerospace MRO and manufacturing activity by providing an added incentive to global aerospace majors and their suppliers who are already seeing sense in putting up a strong presence in India.

With its myriad resources- all aptly suited to this field- Karnataka is the ideal location for firms wanting to cater to this booming industry while fulfilling offset obligations. The state can endeavour to gain global notice for program management, engineering, maintenance, material and information systems support and offer overhaul services to rotary and all fixed-wing aircraft.

Girish Linganna is an Aerospace and Defence Analyst & Director ADD Engineering Components (India) Pvt Ltd. Views expressed are personal and do not reflect the official position or policy of Indian Aerospace & Defence

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