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AEROSPACE & DEFENCE SECTOR OVERVIEW

Statistics, news & updates: everything you need to know about the Aerospace and Defence Industry in India

Aerospace and Defence by Maier Vidorno Altios

Summary/Snapshot

Aerospace Industry

  • By 2035, India’s passenger growth forecast will be 442 million, employment opportunities 19.1 million jobs and contribution to the GDP will be $172 billion (according to International Air Transport Association IATA).
  • India had 91 international carriers out of which 5 are domestically owned. India has air connectivity with 59 countries through 344 routes.
  • Air traffic has been growing rapidly in the country as compared to the global average. One hundred more airports would be developed by 2024 to support the Udaan scheme. It is expected that the air fleet number shall go up from the present 600 to 1200 during this time.

Defence

  • The overall investment in Urban transformation increased by 627% between 2014-2021 (when compared to 2004-2014).​
  • $2.5 bn is being provided for PMAY- Urban [Pradhan Mantri Awaas Yojna (“Affordable Housing for All”)]. This will help lay the foundations for 1.56 million new houses and complete 1.8 million existing houses, creating additional 7.8 million jobs.​
Defence Graph - Maier Vidorno Altios India

Growth Drivers

  • 100% FDI in the defence industry; 49% is allowed under automatic route beyond 49% through the Government route.
  • India targets building greenfield and brownfield airports.
  • Opportunities for airport planning and development, sustainable airports, safety and security, body scanners, digital systems, etc.
  • Union Budget 2021-22 has proposed increased funding for Border Roads Organisation (BRO) to boost infrastructure in frontier defence areas.

Sub industries

  • General and business aviation aircraft
  • Maintenance Repair and Overhaul (MRO)
  • Navigation and air traffic management systems
  • Remotely piloted aircraft (RPA) and drones
  • Land systems
  • Maritime systems
  • Air Systems and Air Defense
  • Defense Electronics
  • Maintenance, Repair, and Operations (MRO)

Opportunities

  • Greater focus on infrastructure development such as the Open Sky Policy and the Airports Authority of India’s (AAI) drive for the modernization of airports and air navigation systems.
  • AAI has embarked upon the development and expansion of airports in the country for INR 20,000 Crore in the next 4-5 years.
  • India’s requirements on defence are catered largely by imports. The opening of the Defense sector for private sector participation will help foreign Original Equipment Manufacturers (OEMs) to enter into strategic partnerships with Indian companies. This will enable them to leverage the domestic markets as well as aim at global markets. Besides helping in building domestic capabilities, it will also bolster exports in the long term.

Challenges

  • The requests for metal parts by OEMs and Tier-1 suppliers have been met with delays from local shops that can’t meet increasing demand. Therefore, aerospace and defence OEMs must search for alternative suppliers and routes to meet customer demand.
  • The need for controlled emission rates during manufacturing processes and the demand for more efficient engines and propulsion equipment are factors that must be considered when manufacturing equipment for the aerospace and defence industry.
  • Aerospace and defence OEMs that understand the value of implementing digital transformation initiatives to optimize factory floor processes still struggle with extracting data from the shop floor and then putting it to use.

Key Investment Opportunities

Aerospace

  • Demand for MRO facilities is increasing in India due to consistent double-digit growth in the aviation sector.
  • Indian carriers are projected to increase their fleet size to 1,100 aircraft by 2027.
  • AAI has taken up developmental projects worth around INR 25,000 crores over the next five years for expansion and modification of existing terminals, new terminals, expansion or strengthening of existing runways, aprons, air navigation services, control towers, technical blocks, etc.

Defence

  • Supply chain sourcing opportunity

  • Modernization of armed forces

  • Infrastructure development

  • Research and Development

  • Defence product manufacturing – Indigenously designed, developed, and manufactured (IDDM) is the new method of capital procurement.

Recent Developments

  • The global recovery in air travel has been mirrored in India, and this is a sector that holds immense potential. By 2024, the domestic aviation market in India is expected to grow to $30 billion, making it the third largest globally.

  • The Indian Government set a target of increasing the number of airports across the country from 140 to 220 by 2025.
  • There is also a plan to create 33 new domestic cargo terminals and 15 new flight schools, and there is an increased focus on unmanned aircraft systems.
  • India’s total 2022 defence budget is $70 billion. 68% of the budgeted defence capital expenditure is earmarked for the procurement of domestically manufactured weapons and military platforms to strengthen the indigenous arms industry, an increase from 58 per cent last year.
  • India enjoys a unique status as a Major Defense Partner of the United States, opening opportunities to procure sensitive defence technologies. Indian companies are partnering with foreign firms to present jointly developed capabilities in line with “Make in India” requirements.

Key Players in India

National

  • Tata Advanced Systems Limited
  • Larsen & Toubro India- Defense and Aerospace 
  • Kalyani Strategic Systems Limited
  • Mahindra Aerospace
  • Hinduja Group – Ashok Leyland Defense
  • Adani Aero Defense Systems & Technologies Limited
  • Alpha Design Technologies Private Limited
  • Punj Lloyd

International

  • Lockheed Martin
  • Boeing
  • Northrop Grumman
  • Raytheon Company
  • BAE Systems
  • Leonardo
  • L3 Technologies
  • Thales
  • United Technologies
  • Leidos
AEROSPACE DEFENCE INDUSTRY - Maier Vidorno Altios India

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