SPOT LIGHT

Sridhara Ramachandran sri.r@indo-mim.com

Opportunities in the growing Indian Aerospace Engineering Industry

The aerospace industry in India is still in a nascent stage of growth even though aerospace majors from the West have been operating in India for close to a decade now. A number of articles have been written on the changes needed in the industrial approval policy and tax regulatory framework to enable growth. This article will skip these often-covered areas and focus on the opportunities in the manufacturing aspects of the industry.

There are many reasons for the prolonged development stage of the aerospace industry in India. These include lack of understanding of aerospace quality management systems, scarcity of mentors who can bring the best practices from the West to India, scarcity of readily-available talent pool at the operator level and lack of aerospace approved raw materials, machine shops and treatments houses. Like in any industry which is in the early stages of growth, the above-mentioned gaps offer abundant opportunities in aerospace. Raw Materials: In the aerospace industry, due to the lack of scale in most segments, raw materials have to be procured from distributors who source their supplies from aerospaceapproved mills. There are no mills in India that are certified for aerospace, and as

a result the Indian aerospace industry is dependent on US and European mills. The size of aerospace business in India in the last decade did not justify stocking locations within India for the distributors. As a result of this chicken-and-egg situation, the industry was not competitive when it came to prices of the finished products they could offer. This is beginning to change now with a few distributors building stocking locations in India. A significant catalyst for growth will arise when a mill in India focuses on aerospace and receives quality approvals from the majors. Materials Testing: The cost of importing raw materials is high. This is driven even higher when the materials require further testing to aerospace specifications at laboratories

located in developed countries. Similar to approvals for manufacturing processes, the Western majors approve laboratories that are focused on material testing. There are no privately-owned laboratories in India that have received approval from the likes of Pratt and Whitney. Quality Management Systems: In aerospace, a thorough understanding of quality requirements and a strict adherence and execution to aerospace quality management systems (QMS) determines success. Though aerospace itself originated from the automotive sector, the quality management systems are significantly different in many areas. Many companies fail as they view the QMS as a checkbox and policing entity instead of making it a part of the manufacturing DNA.

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Manufacturing: Within core manufacturing, there are many opportunities in medium to large sized precision machined components, metal fabrications, on-board electronics, manufacturing and machining of composite materials. As machine costs are roughly the same whether it is the US, Europe or India, the economics for manufacturing in India is justified only if the labour content in the value add is much higher than the machine content. When the engineering content in a package is high, Indian companies excel when compared to other Eastern or Far-Eastern competitors. Special Process or Treatments: A majority of aerospace components including structures require chemical treatments to meet the functional and aesthetic requirements called out in the specifications. Various forms of chemical processing, non-destructive testing, heat treatment, welding and plasma coating services are needed in the industry. Aerospace customers would prefer a

fully-finished component i.e., including treatments, to be supplied at their inbound docks. Again, understanding the stringent requirements and operating to quality standards in the special processes area is a challenge but therein lies the opportunity. Packaging: Packing requirements are stringent in aerospace. After all the value addition and attention to quality, the last leg of manufacturing is even more important. Packing materials approved by aerospace original equipment manufacturers are not easily available in India. Similar to raw materials for manufacturing, raw materials for packing often have to be imported from developed countries. Contributions of Indo-US MIM Tec in the Aerospace Industry: Indo-MIM, as we are referred to by our customers, is the world-leader in the metal injection molding (MIM) industry both by sales and installed capacity. We have successfully penetrated Industrial, Automotive, Sporting Goods, Commercial and Medical industries over the last fifteen years. After careful industry research and analysis, we set up the aerospace business unit a couple of years ago to offer precision machining and special processes to the aerospace industry. Quality Management Systems: Within six months of operations, we received AS 9100 revision B certification through Lloyds Register Quality Assurance Ltd. We were successfully upgraded from revision B to the more stringent revision C certification last year. In addition to AS certifications, we are also NADCAP approved for various special process services that we offer the industry.

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India for the Aerospace and Aviation Industry? Lack of a critical mass in distributors of aerospace grade raw material, no aerospace certified mills and scarcity of talent pool at the shop level are the weaker links in Indian Aerospace and Aviation industry. Major steps have been taken by IndoMIM to uplift the Aerospace Industry in India. When do you feel India will become eligible to compete with the global giants in Aerospace sector? We have to first walk before we run and we have to run enough and train intensively to compete in a marathon. Indian aerospace industry is at the early stages of walking. This does not mean the industry is not attractive to work in. It is a fantastic opportunity to be a part of shaping the aerospace future in India. To be ready to compete with the global giants in aerospace will take another 10 to 15 years. Tell us about your future plans as a manufacturer in Aerospace Industry in

India. Indo-MIM is already working with and getting the attention of a number of aerospace majors from India, US and Europe. Our focus in the short-term is on perfect execution in all the projects in progress. In the medium-term, our goal is to enter into key programs in aerospace that are being driven by the OEMs. With solid execution in our short-term and medium-term goals, we are confident we will be the supplier of choice for various long-running aerospace programs. We will continue to expand our capabilities in the manufacturing and special processes domains. How is the economic slowdown hitting the Aerospace Industry? What are the preventive measures taken by Indo-US MIM Tec to combat the current slowdown? We are not seeing a slow down. Aerospace industry in the West as well as in India is growing and will continue to grow over the next decade. Indo-MIMs objective is to contribute to the success of aerospace industry in India and the world.

Sridhara Sri Ramachandran Vice President & General Manager Aerospace Products Group Indo-US MIM Tec Pvt Ltd

What is the scenario of Aerospace Industry globally? The defense budgets are being cut in the US and Europe. At the same time, India and China are increasing their defense spending. Its a different story in commercial aviation. Commercial aviation all over the world has come back in full force since the slowdown in 2008. IATA has just revised upwards the 2013 profit forecast for commercial airlines throughout the world. Both commercial and defense aviation growth portends well for companies involved in aerospacerelated manufacturing. Which are the weaker links you feel in

Manufacturing: To eliminate the uncertainties and to simplify the supply chain, Indo-MIM has established the precision machining and treatments on one campus. Hence, it offers fully finished components to the aerospace industry through a one-stop shop solution. We have successfully delivered many work packages from the machine shop and treatments plants to aerospace customers in India, Europe and USA. In addition to machining and treatments,

we have introduced the advanced metal injection molding technology to the aerospace industry. Material and technology certifications for MIMs acceptance in aerospace are in progress. Special Processes: To address the one-stop shop strategy, we have invested significantly in the special process lines. We offer NDT, chemical processing, painting and surface enhancement technologies to the aerospace industry. The special processes shop is open to third-party work and is not captive to to Indo-MIMs aerospace machine shop. The NDT, chemical processing (chromic acid, sulphuric acid and conversion coating lines) and painting lines are NADCAP approved. We have also received the prestigious quality approvals from OEM aerospace major Pratt &

Whitney USA and from tier one companies including Meggitt PLC and Rafael (Israel). Indo-MIM is the first company in India to be approved by Pratt & Whitneys Materials Control Laboratory for NDT (FPI and MPI) and Chromic Acid Anodizing processes. To add to the above services and contributions, we have undertaken and delivered assembly services relevant to the work packages we are currently manufacturing at Indo-MIM. For the aerospace industry to be successful in India, it is necessary to develop an ecosystem of aerospace companies, with each member in the ecosystem having a significant critical mass of business. The Indian governments purchases in the defence sector have generated billions of dollars in offset obligations for aerospace companies in the Western hemisphere. But, the aerospace ecosystem in India is not yet ready to absorb the offset spending. The investors mindset in aerospace needs to be long-term and requires patience. Indo-MIM, through its operations, is doing its best to contribute to the success of aerospace industry in India.
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