Global aerospace firms turn to India amid Western supply chain crisis

Airbus, Collins Aerospace, Pratt & Whitney and Rolls-Royce are expanding parts sourcing from India, driving growth in the country's emerging aerospace sector and pushing local firms to elevate their games, industry insiders say.

Bengaluru-based Hical Technologies and JJG Aero are among the companies riding the wave. Hical, a supplier to Raytheon Technology and Boeing among others, aims to double revenue to 5-billion rupees (R1-trillion) from its aerospace division in three years, said joint MD Yashas Jaiveer Shashikiran.

JJG Aero, also in Bengaluru’s industrial hub, took 12 years to hit $2m (R37m) in revenue but soared to $20m (R369m) in the past six years, said CEO Anuj Jhunjhunwala.

The growth is part of an Asia-Pacific aerospace surge, with 2024 revenue projected to be 54% above 2019 levels, while North America and Europe remain 3% and 4% lower, according to Accenture Research.

“Earlier, we were chasing customers. Today they are equally interested in evaluating Indian machine shops,” Jhunjhunwala said, adding contracts were being signed more quickly and onboarding processes were being faster than before.

The companies produce parts for landing gear, wings, fuselage, electrical switches and motion control systems essential for flight safety and performance.

Leading Western plane and engine manufacturers, whose output has been constrained by strikes, production caps and parts and labour shortages since the pandemic, said they want to source more from India to meet rising demand for air travel.

“India is the best solution to supply chain challenges,” Huw Morgan, senior vice-president for aerospace procurement at Rolls-Royce, said at an industry event last week. “Our engine volumes are growing at around 20% and the traditional supply chains are  not able to support it. India is the best cost market.”

The British company plans to double sourcing from India within five years.

The country is among the biggest aircraft buyers in the world, yet accounts for only 1% of the global supply chain market, according to the recently formed Aerospace India Association (AIA).

“After Covid-19, the global aerospace industry has reached an inflection point. While the shift began in 2020, aerospace is a slow-moving industry. It takes time for changes to materialise,” said Aravind Melligeri of supplier Aequs.

India, the world's third-largest domestic aviation market by seats, is also among the fastest-growing, driving demand for maintenance services and parts.

Massive aircraft orders from IndiGo and Air India are fuelling growth across the aviation ecosystem, Air India CEO Campbell Wilson told Reuters.

Though Indian firms have long supplied the $180bn (R3.3-trillion) global aerospace industry, they are moving beyond basic manufacturing to higher value work such as design, engineering  and system integration.

Airbus in 2024 awarded its second aircraft door contract within a year to Indian suppliers.

“India is contributing more than €1bn [R19.3bn] in the overall Airbus supply chain and we expect to double that. Every commercial aircraft of Airbus today has some part or component made in India,” said Michel Narchi, head of international operations at Airbus.

India’s civil aviation ministry held a meeting last week with industry leaders about boosting component manufacturing, said AIA director-general Srinivasan Dwarakanath. The association represents Indian and global firms.

He said a key step towards real value addition would be the local sourcing of raw materials such as aluminium, steel and titanium, eventually leading to certification of designs made by Indian suppliers.

The AIA estimated India's aerospace industry will capture 10% of the global supply chain market within a decade, with the global market projected to reach $250bn (R4.6-trillion) annually by 2033.

Hical's Shashikiran said: “India also had the initial challenges of being physically farther away from the main markets of the US and Europe. Engineering approvals, qualification timings, raw material sourcing, it took some time to build the ecosystem, but India is all set.”

Reuters