'SMEs lag behind in aviation component manufacturing'

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Namrata Kath Hazarika | 14 Jan, 2013
The Indian small and medium enterprise (SME) sector's participation and role in the field of aviation and aerospace component manufacturing is far behind its global counterparts, according to industry players.

There are about 25 to 30 SMEs who have taken the business for manufacturing aviation and aerospace component seriously. "It is a long term investment for them. It is highly capital intensive industry. I definitely believe there can be many more of them," said Country Head of UTC Aerospace Systems, Chris Rao.

"This is a reason why Indian aviation and aerospace component industry is far behind in terms of growth in comparison with the global growth rate. It is a USD 930 billion industry globally and Indiaâs share is not even half the percentage. We want India to at least catch up to 10 percent of the global growth in the near future," he added.

When asked what kind of challenges these SMEs are facing in manufacturing aerospace and aviation components, he said that SME sector's participation in the component level manufacturing is poor.

"If you want the aerospace industry to be successful, role of these Tier 3 and Tier 4 firms (SMEs who are doing component level manufacturing) is very crucial. Tier 1 is basically who own and assemble systems. But the key is the component level manufacturing has to be nurtured and grown," Rao said.

UTC Aerospace Systems sources aviation and aerospace parts from SMEs and then supply them to big players like Boeing and Airbus.

"We have hand-held suppliers to support us in our sourcing efforts in India. What we are focusing on our machine components, ship metal components, electronic assemblies, composites, etc. We have been able to localize our spending to about 20 percent. Also, we have to introduced aviation to the smaller manufacturers and handhold them through the certification process," Rao said.

"India has a high dependence on imports, which needs to be look at," he said adding that huge potential for low cost innovation will benefit India a lot. "This has to be put in place properly, he viewed.

According to General Manager of Infotech Enterprises Limited, D R S V Varma, the biggest challenge for SMEs is funding. "The basic thing is the funding. The gestation period in the aviation industry is very high. You invest something now but the return on investment will take lot of time. And, SMEs will not have that kind of cash flow for handling this," he said.

Moreover, the industry itself has to gear up with the right kind of technical competencies, which is lacking. More training institutes are required for skilling people in this industry where government's role is very important, he told SME Times.

Raw materials should available in quantum for growth of this sector. This is a big hindrance and for that both industry and government should work jointly to increase the availability of raw materials, Varma added further.

The aviation and aerospace component industry is likely to grow 8 folds by 2020 from the an estimated USD 4 billion at present.