Bangalore: With over 500 companies lined up for what will be India’s biggest air show, the focus at Aero India 2007 is very much on deals.
A lot of the talk will be centred on handicapping who might land the big prize—a government tender for 126 combat planes for the Indian Air Force, even though the actual winner won’t be known for many more months at the earliest.
But industry observers are focusing closely on another big prize: the business that Airbus Industrie and Boeing Corp. will start sending to India as part of an obligation imposed on the aircraft manufacturers by the government in return for deals to supply Air India and Indian with jets.
Last year, Boeing won a $7.2 billion (Rs35,000 crore), order to deliver 50 passenger planes for Air India. Airbus, which has typically dominated the skies here, also has a $2.2 billion (Rs10,000 crore) contract to supply 43 jets to Indian.
Because the government has mandated that at least 30% of the value of the planes being sold to both state carriers needs to be sourced from within the country, industry officials are expecting a Rs13,500 crore windfall for domestic manufacturers over the next 10 years.
A memorandum of understanding between the Union commerce ministry, Boeing and the Indian suppliers is expected to be signed next month to give a roadmap on how some of the so-called “offset” work will come to India over the next eight to10 years.
“The offsets will be a catalyst for India’s aerospace industry. This can grow as big as the software industry,” says Ashok K. Baweja, chairman of Hindustan Aeronautics Ltd, which is likely to manage the bulk of the offset orders from both Boeing and Airbus.
Boeing has already held preliminary talks with its existing suppliers outside India as well as Hyderabad-based Infotech Enterprises, Bangalore-based Cades Digitech and software companies such as Tata Consultancy Services, Infosys Technologies and Wipro over domestic sourcing. Boeing has previously announced a $100 million investment in Nagpur for a maintainence, repair and overhaul facility, which will undertake repair works for Boeing aircraft in the country.
Because of soaring demand for air travel, plans to upgrade Air Force capabilities and several new airports being built, this year’s Aero Expo has attracted at least 275 foreign companies, including all the major aerospace and defence majors. The US has sent its largest contingent to the show till date, some 30 firms. Another 35 air force chiefs of various countries are also on hand.
Exhibitors at the show range from aircraft engine makers and flight control systems manufactures to those hawking private jets and airport design. The exhibition space has also expanded by 50%.
“There’s a general euphoria about India and India Inc.,” said Dinesh Keskar, senior vice president for commercial sales at Boeing. “Enough buying has been done in the last few years but it’s not over.”
Boeing said it expects to bid for defence contracts in India worth up to $15 billion in the next 10 years, according to Mark Kronenberg, a company vice-president.
Anil Penna of AFP contributed to this report.