Government initiatives essential to fend low-cost Latin nations from hijacking defence offsets: Frost & Sullivan

Growing domestic demand for civil as well as military aircraft coupled with the defense offsets is fuelling the growth of the Indian aircraft manufacturing and services industry.

Beating back spirited competition from Latin America, India remains an attractive low-cost manufacturing destination with a huge engineering talent pool and proven IT capabilities. However, the domestic industry must continue to be on its toes to remain the manufacturing hub of choice.

New analysis from Frost & Sullivan (http://www.aerospace.frost.com), Strategic Analysis of Indian Aircraft Component Manufacturing and Services Industry, finds that the industry earned revenues of $2.09 billion in 2010 and estimates this to grow at a compound annual growth rate of more than 16 per cent to reach $4.56 billion in 2015.

The Indian industry's lack of MRO companies with globally recognised certifications and inadequate expertise in providing end-to-end solutions could narrow the gap between the Indian industry and some of the low labor-cost Latin American countries, primarily Mexico and Chile.

"North American aerospace companies prefer to set up their low-cost base in South America due to the lower wages, initiatives by a proactive government, bilateral aviation safety agreements with the United States, increasing talent pool, and geographical vicinity," says Frost & Sullivan research associate Aditya Desai.

Desai adds, "India is hoping to retain its edge in the global market by leveraging its Defense Procurement Offset Policy, which is expected to bring in manufacturing orders from global defense firms."