India Aircraft Industry
India’s aircraft industry compound annual growth rate (CAGR) is expected to be 8.9%, greater than the expected global CAGR of 5.6%. Much of this is because India is also set to become the world’s third-largest buyer of commercial passenger planes in the world, after the United States and China, with more than 1,000 aircraft currently on order. This translates into demand for 200–300 major maintenance checks annually.
The MRO industry comprises four segments: line maintenance, components, engines, and airframes. Of these, engine maintenance is likely to be the most lucrative segment, followed by airframes. Engines and airframes constitute close to 70% of the work by value. Regular engine maintenance is crucial for any aircraft, and with more aircraft globally, the industry has seen a significant increase in demand for engine maintenance services. Major global OEMs like Boeing and Pratt & Whitney have entered strategic partnerships with Indian companies for MRO activities.
Industry leaders are also optimistic about landing gear MRO growth for India. The aircraft landing gear is a crucial component, controlled by hydraulic or pneumatic systems and have a specific service life. Most landing gears are overhauled on a ten-year interval as mandated by the FAA.
The Indian government aims to develop 100 airports by 2024 (under the UDAN “Ude Desh ka Aam Naagrik”- Let the common citizens of the country fly scheme) and invest US$ 1.83 billion by 2026. This expected rise in new commercial aircraft deliveries and older fleets undergoing major maintenance involving landing gear replacements is likely to translate into opportunities for the landing gear MRO market in India.
The Indian government is also looking to ease doing business in the country. The Indian government has permitted 100% foreign direct investment in MRO via the automatic route to encourage multinational companies to invest in the MRO market by sourcing maintenance services in the country. The government has also liberalized the policy for borrowing and lending in foreign currency for MRO service providers. Furthermore, the government has prolonged the stay of foreign aircraft in India for the entire duration of MRO work or six months, whichever is shorter.
In the Indian Union Budget 2022, the Defense budget outlay is approximately $70 billion, an increase of 10% from the previous year. The government has also announced an R&D budget of approximately $280 million, of which 25% will be earmarked for private industry, startups, and academia, with the goal of building indigenous technical capability. With rising military outlays, the demand for defense MRO is also likely to increase.
Despite being one of the largest civil aviation markets globally, India has limited full-scale aircraft manufacturers and MRO players to cater to its growing demand. This gap in supply and demand coupled with favorable government policies present great opportunity for players in the MRO sector. Continued focus and progress can catapult India into a global hub for aircraft manufacturing and MRO activities.
Forthcoming Events:
Aerospace Trade Mission to India
Date: September 19-23, 2022
Venue: New Delhi and Hyderabad, India, along with optional stops in Bengaluru or Mumbai, India
Organized by the United States Department of Commerce, International Trade Administration (ITA)
For more information, contact the U.S. Commercial Service’s India Aerospace & Defense team:
• Raghavan Srinivasan, Commercial Officer, North India.
• Shamli Menon, Commercial Specialist, Aerospace and Defense Team Lead