Inaugurated by the Prime Minister Narendra Modi on February 13 with much fanfare, Aero India 2023 in Bengaluru India’s cyber space as well as aerospace capital so to say – the event has seen renewed interest by foreign Original Equipment Manufacturers (OEM) as well as Tier 1 to 3 suppliers in the Indian defence market.
This shift in a period of just under six months from October last year where Def Expo 2022 was held in Ahmedabad Gujarat with participation exclusively by Indian companies including foreign companies registered in India is not surprising.
Here are the seven reasons for return of foreign OEMs in strength-
Firstly capability building projections of the Indian Air Force – By any calculation requirement of the Indian Air Force in terms of capability and capacity building over the next two decades is huge, overmatched only by the US Air Force and the PLA Air Force in the future.
The IAF is already deficient of 15 fighter squadrons and to make up this deficit the government has adopted a mix of foreign cum indigenous route. Even in the indigenous route there is ample scope for participation by companies from outside upto 50 to 60 percent on cost basis.
The transport fleet both fixed wing and helicopter is also in for a renewal. The requirements of the Indian Army and the Navy are also huge with the Army Chief General M Pande indicating that it would have to induct 200 helicopters on the go. The Navy reportedly has a requirement of 100 carrier borne aircraft. These figures remain to be checked.
The UAV is another area ripe for technology and manufacturing support. Ancillary services such as MRO etc are also lucrative avenues.
Secondly when combined with civil aviation there is a huge pie waiting for the foreign OEMs which have a foot print in both domains such as Boeing and Airbus.
This was evident with Air India signing MOU with Boeing and Airbus for 470 aircraft - 250 aircraft, 210 single-aisle A320neos and 40 widebody A350s by Air Bus to Air India and 220 aircraft by Boeing. The occasion saw Prime Minister Narendra Modi having an interaction on telephone on February 14 with the Presidents of the United States Joe Biden and France Emmanuel Macron, such is the euphoria.
Thirdly there is a perception that Russian domination of the Indian defence aerospace sector may be declining or even coming to an end. Russia has been pushed out of the fixed wing transport sector and is losing hold in the rotary wing area as well. The low presence of Russian companies with only Rosoboronexport prominent at Aero India 2023 is a sign that defence companies in Moscow may be feeling the pinch of the US led sanctions.
However it is too early to predict a decline given the advantages that Russia has to offer to include cost, technology transfer and legacy but will depend on when the Ukraine War ends and a bounce back of Moscow thereafter.
Fourthly this is in line with declared intent of the United States and Europe to wean away India strategically from Russian stranglehold. Clearly the jury is out on this one too but the US Air Force has literally brought in Bengaluru all the front line aircraft from F 35 to Lancer demonstrating to India what is available and more from the strategic signaling point of view.
Sixthly, after the actively promoting Atma Nirbhar Bharat in Defence with Prime Minister Narendra Modi leading and Defence Minister Rajnath Singh in sync it was feared that India may be going in for exclusion of foreign companies.
But a corresponding review of the Defence Acquisition Procedure (DAP) 2023 has not been undertaken thus despite the so called Positive Indigenisation lists four of them published in the last two years – the market is open for foreign OEMs and others for upto 50 to 60 % participation on cost basis.
Seventhly despite the Ukraine War the global aerospace market but for UAVs and ground based air defence and missile system is not likely to prep up as aerial operations have remained limited. Thus, India represents a large market for foreign OEMs and the beeline is not surprising.
In conclusion the markers of the shifts identified above were evident at Aero India 2023 in Bengaluru from 13-15 February – the Business days of the show.
Yet it is also, “a been there, seen this before,” scenario as a huge interest was also evident for instance in shows in 2009 and 2011 as Indian MMRCA competition had been announced and was in full swing.
Hopefully this time around it will not be a fizzle.