Analysis: India's aerospace suppliers see upside in parts-making from record jet orders

Ptc Industries

28/06/2023 05:01

By Allison Lampert and Aditi Shah
       PARIS/DELHI, June 28 (Reuters) - Indian aerospace
suppliers see record jet orders by the country's top two
carriers boosting domestic parts manufacturing and aircraft
repairs, but argue the government must do more to support
production.
    Rising traffic, a search for alternative sourcing to China
and orders this month from Air India and IndiGo for nearly 1,000
jets combined have made India a key market for aerospace.  
    Now, small and medium suppliers want to capitalize on that
to drive more sales of locally sourced parts, they told Reuters
on the sidelines of the Paris Airshow last week.  
    "Today we are going to be the largest purchaser of planes in
the world," said Shekhar Sardessai, managing director at Kineco
Group, a supplier in the western state of Goa, referring to
India. 
    "We deserve a piece of that pie," added Sardessai, whose
company makes engine and plane interior parts.
    While French engine maker Safran  SAF.PA  has plans for an
engine repair and overhaul facility in India, about 90% of the
country's aircraft maintenance and repair activity occurs
outside its borders, according to consultancy Deloitte.
    The Indian repair and overhaul industry is expected to grow
to $4 billion by 2031, up from $1.7 billion in 2021, Deloitte
said.
    India's civil aviation ministry expects the orders to boost
aerospace manufacturing in the country, but it cannot mandate
local production since the orders do not have requirements for
local production like defense deals, a senior government
official told Reuters. 
    Deloitte India partner Alaric Diniz expects parts of the
commercial aviation supply chain to move to India as plane and
engine makers look to avoid disruptions seen in recent years.
While he could not estimate how much small suppliers will
benefit, any subsidy or incentive could be helpful.
    
    AEROSPACE INCENTIVES 
    Some suppliers like Sardessai and Aravind Melligeri, CEO of
aerospace-parts producer Aequs, said India should create a
production-linked incentive scheme for aerospace as it has done
with other sectors. 
    In 2020, Indian Prime Minister Narendra Modi's government
launched a program to encourage companies in 14 sectors
including autos to manufacture locally by earmarking 1.97
trillion rupees ($24 billion) in incentives.
    It has drawn investment from the likes of Foxconn  2317.TW ,
which supplies to iPhone maker Apple  AAPL.O , and automakers
including Japan's Suzuki Motor  7269.T  and South Korea's
Hyundai Motor  005380.KS  have committed to put in money. 
    Even without incentives, India's growing fleet of aircraft
will require more maintenance services. 
    "If you will have that many planes in India who repairs
them?" said Sachin Agarwal, chairman of PTC Industries
 PCIN.NS , based in the state of Uttar Pradesh. "Every supplier
wants to be closer to the customer."    
    PTC is already taking advantage of global supply-chain
demand for alternate sources to Russian-made titanium and
Chinese production.   
    It expects to increase production from 1,500 metric tons of
titanium alloy at the end of 2023 to 6,500 metric tons in 2025.
PTC is separately expanding capacity of titanium and superalloy
castings tenfold by 2025. 
    "The objective is to set up the capability in India which
was missing," Agarwal said.
    Since Safran's 2022 announcement, Sardessai has seen an
increase in supply enquiries.
    The fact that more engines are going to be sold in India
drives up the volume of repairs and maintenance which can
benefit the local supply chain, said Ankit Patel, director of
Ankit Fasteners, which supplies screws and bolts to General
Electric  GE.N , Airbus  AIR.PA  and Boeing  BA.N  from
Bengaluru in southern India. 
    Patel said French suppliers now want to partner with him to
gain access to India, a reversal from the years he pursued
inroads in Europe.
   Melligeri of Aequs wants to be sure demand for Indian-made
parts and components will persist once of the buzz of the Paris
Airshow fades, after companies like his invest in new capacity. 
    "I don't want them to come and go," he said, referring to
interest in India. 
 ($1 = 81.9830 Indian rupees)

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
ANALYSIS-Record plane orders raise the stakes in India's
aviation boom     urn:newsml:reuters.com:*:nL4N38B2OX
New orders and supply chain progress as Paris Airshow grapples
with pandemic aftermath     urn:newsml:reuters.com:*:nL8N38E3AF
FACTBOX-Aviation emissions targets in focus at Paris Airshow   
 urn:newsml:reuters.com:*:nL8N3873WX
ANALYSIS-Smaller aerospace suppliers scramble for titanium,
workers in shadow of travel boom     urn:newsml:reuters.com:*:nL1N38D11T
'Progress' in supply chain as jet orders rack up at Paris air
show      urn:newsml:reuters.com:*:nL8N38D1TH
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Allison Lampert in Paris and Aditi Shah in Delhi
Editing by Ben Klayman and Matthew Lewis)
 ((Allison.Lampert@thomsonreuters.com; 514-796-4212; Reuters
Messaging: allison.lampert.reuters.com@reuters.net))