Manufacturing of

Aerospace Components

Aerospace and Defence

Government of Gujarat
Contents

Project Concept 3
Market Potential 4
Growth Drivers 5
Gujarat Competitive Advantage 6
Project Information 8
- Location/ Size
- Raw Material/ Manpower
- Infrastructure Availability/ Connectivity
- Key Players/Machinery Suppliers
- Project outline
Project Financials 13
Approvals & Incentives 14

Page 2
Project Concept

Aerospace component manufacturing: overview

Aerospace component primarily includes aircraft engines and engine parts, as well as fuselage,
propeller and rotor, landing gear, electric and hydraulic control, and avionic systems.
Demand for aircraft parts is driven by new orders for commercial, military, and general aviation
aircraft, as well as Maintenance, Repair, and Overhaul (MRO) services.

Value chain of aerospace manufacturing

Aircraft assembly:
Superstructures
Design: Tier-2 suppliers: Body and final
assembly
Design infrastructure Electric power
and services which systems
includes computer
aided design and Flight controls
prototyping
Hydraulic systems
Research for and escape
aerodynamics, systems
engine and
communication Tier-1 suppliers:
system
Power plant and
Testing propulsion devices
infrastructure and
services Avionics
Flight testing Tier-3 Suppliers: Landing gear
assemblies
Castings and forging
Wing assemblies
Precision Machine
parts: tubes
Fasteners, bearings
and standard parts
Others including In most industrialized countries, the
wiring harness defence industry is a cooperation of
public and private industries with
Governments being the largest investors
Higher potential categories as well as customers.
Lower potential categories The commercial aerospace industry is
dominated by presence of private players
with lower presence of government
entities.

Source
http://www.cii.in/webcms/Upload/Aerospace%20Final%20Report.pdf
https://www.atkearney.in/documents/10192/293808/India_Aerospace.pdf/c3c347d7-e974-4c6f-92df-b90c6d26b4aa

Page 3
Market Potential

Global aerospace component market

During 2014-2022, the global aerospace component market is expected to register a growth of
~5% per year reaching US$331 billion from US$228 billion.
The US is the market leader in aerospace components. It contributed to 36% of global
aerospace components exports in 2014. France and Germany are the other competitive
countries, serving some of the major import markets like the UK, Spain and Ireland. China has
also witnessed a high growth rate in the aerospace component especially tier-1 and tier-2
components.
The market is driven by new aircraft demand especially in Asia-Pacific and Middle-East and
retirement of old aircraft in the US and European region.

Global aerospace component Country-wise aerospace exports

(US$ billion)

331
36%
43%
228

21%

2014 2022E The US France Others

100% = US$221 billion
Indian aerospace component market
Indian aerospace exports
The Indian aerospace industry is worth US$6.2 (in US$ billion)
billion and witnessed a strong growth since
2010. The market is expected to witness a 6.2
healthy rate till 2020 driven by exports of
aerospace components.
4.6
However, still the Indian aerospace industry is
at nascent stages with <1% of the global
aerospace industry share mostly manufacturing
tier-2 and tier-3 components. 2.3 2.2
The industry is dominated by public players but 1.67
the industry has witnessed a surge in the 1.03
number of private players. Recently, leading
private players such as Tata, Mahindra and
Reliance have entered into A&D manufacturing.
2010 2011 2012 2013 2014 2015
Source
http://commerce.nic.in/eidb/ecomq.asp
http://www.dsir.gov.in/reports/isr1/Aerospace/8_0.pdf
http://www.nagpurtoday.in/tata-motors-arm-plans-to-expand-nagpur-facility-in-mihan/09292342
http://www.firstresearch.com/Industry-Research/Aircraft-Engine-and-Parts-Manufacturing.html

Page 4
Growth Drivers

India is expected to have ~1,800 commercial aircraft, four times the

current aircraft fleet by 2035. The global commercial aircraft
Surge in new deliveries are likely to grow at a CAGR of 3.7% by 2025. Also, the
1
aircraft deliveries number of domestic airline operators is likely to double by 2020.

GoI has set an offset requirement of at least 30% for all defence
equipment. According to the offset policy, the foreign vendor is
Offset requirement obligated to invest at least 30% of the deal value in the Indian
2
by Government of defence industry which is likely to create a market opportunity worth
India (GoI)
US$50 billion. The offset policy can be discharged through setting up
military aerospace component facility in India or by procuring directly
from Indian part suppliers.

IT services such as design and development, verification and

validation, development of tools, reverse engineering and
Leveraging IT maintenance services are highly leveraged in A&D components
3
competitiveness manufacturing. India has a very well developed and cost-effective IT
industry which can be leveraged by A&D component manufacturing
firms.

India offers a cost advantage in manufacturing for both material and

labour cost. Compared to other aerospace manufacturing
Labour cost destinations such as Middle East and South-East Asia, the
4
advantage engineering labour cost offer a 20-30% cost advantage while the
manufacturing labour cost advantage is around 15-25%. These
advantages are even higher when compared with Europe and North
America.

Indian commercial aircraft fleet has an average age of ~5 years,

resulting in limited heavy maintenance requirements and therefore
Average age of the lower requirements for spare and other parts for MRO services. With
5
Indian fleet the increasing age of the in-service fleet, demand of MRO services
and spare parts for aircraft will increase.

Source
http://www.lucintel.com/lucintelbrief/aerospaceoffsetopportunityinindia.pdf

Page 5
Gujarat - Competitive
Advantage
Large air-traffic with planned new airports
There are 17 airports in Gujarat, 9 operating under
Airports Authority of India, 3 under Indian Air Force, 2
private airports and 3 airports under the state
government. Currently, Ahmedabad airport is the only
operational international airport in Gujarat.
The Government of Gujarat has planned to establish 11
new airports including an international airport at
Ahmedabad
Dholera.
The planned Dholera airport which is expected to
become operational by 2018, will be spread across Vadodara
1,430 hector in Navagam. The new airport is expected Rajkot
to handle 26,000 aircraft movement by 2018 which will Dholera
shoot up to 100,000 aircraft by 2040. Surat
Gujarat is also strategically located for MRO activities
as it is in proximity to the Mumbai and Delhi
international airports and the Delhi-Mumbai Industrial
Corridor (DMIC).

Gujarat offers an excellent technical educational infrastructure for the

aerospace industry

Gujarat has ~120 engineering degree Leading Aeronautical engineering colleges in

colleges with an approximate intake of Gujarat:
more than 60,000 students per year.
Indian Institute of Aeronautical Engineering &
The tally leads for Mechanical Technology
Engineering with 16,230 seats, followed
by Civil (9,950 seats), Electrical (9,839 Gujrat Institute of Aeronautical &
seats) and Computer Engineering (8,160 Telecommunication Engineering
seats). Gujarat Technological University - Ahmedabad

Ahmedabad Institute of Aeronautical

Degree colleges in Gujarat Engineering and Information Technology

Ahmedabad
5% Sardar Vallabhbhai Patel Institute of
15% Technology (S.V.I.T.) Valsad
Govt. Colleges Western India Institute of Aeronautics
Private Ahmedabad
School of Aeronautics, Dwaraka
Self-financed
80%

Source
Manufacturing Sector Profile, Vibrant Gujarat website, 7 October 2014
Gujarat Growth and Prosperity for All, Vibrant Gujarat website, 25 August 2014

Page 6
Gujarat - Competitive
Advantage
Other advantages

Ease of doing business

Only state which comply 100% with the environmental procedures. Gujarat fares
highly when it comes to setting up a business, allotment of land and obtaining a
construction permit.

Flourishing economy
Gujarat contributes 7.2% of the Nations GDP and shows leadership in many areas
of manufacturing and infrastructure sectors. Gujarats SDP (State Domestic Product)
at current price registered a growth of 11% during the year 2014-15.

Strategic location and better infrastructure

Located on the west coast of India, Gujarat is well connected to the major cities of
the world by air and sea routes. The state has 45 ports, 12 domestic airports and 1
international airport in addition to an extensive rail and road network.

Easy availability of raw materials

Many key industrial clusters such as foundry & forgings, steel pipes and tubes, steel
re-rolled products and fabricated metal products are located in close vicinity of
industrial hubs such as Dholera Special Investment Region (SIR).

Favourable labour policy

The Gujarat government has recently passed the Labour Laws Bill (December 2015),
to give an impetus to industrialization. The key reform includes a provision for out-of-
court settlement to speed up the process labour related dispute resolutions.

Better social infrastructure

Gujarat has one of the lowest cost of living amongst the Indian states and is
relatively less congested and less polluted, offering better standards of living to the
inhabitants and providing a better environment to work.

Source
Gujarat Growth and Prosperity for All, Vibrant Gujarat website, 25 August 2014
Manufacturing Sector Profile, Vibrant Gujarat website, 7 October 2014

Page 7
Project information

Location suggested: Dholera special investment region (SIR)

Dholera SIR in Ahmedabad district is an indicative location only to set up aerospace components
manufacturing plant. Alternatively, the plant can also be set up in any other suitable location in the
State.
Dholera is coast city in Gulf of Khambatt located on the Delhi Mumbai Industrial Corridor (DMIC).

Advantage Dholera

Government of Gujarat (GoG) is offering plots

measuring 8 sq. kms area to promote aerospace
and defense manufacturing in Dholera (large
area facilitates operating and testing of
aerospace and defense equipment).
Robust road, rail, port and air connectivity: Ahmedabad
International airport is proposed to come
Dholera SIR
up in Dholera
Close to Bhavnagar sea port (60 km) and
Pipavav sea port (200 km)
Proposed high speed metro line project
between Ahemdabad and Dholera SIR

Dholera SIR : Key highlights

Area 920 sq. kms

Land price INR 465/sq. yard ( ~INR 556/sq. meters)

Heavy Engineering, automobile and auto ancillary, defense, electronics,

Focus
pharmaceuticals, metals and metallurgical products, agro and food
industries
processing, IT and ITeS

Page 8
Project information

Sourcing of Raw Materials

Steel Ceramic
Aluminum Glass
Titanium Composite (layer of two or more materials with
Plastic
significantly different chemical properties)

Location
Location (Distance
Industry Industry (Distance from
from Dholera)
Dholera)

Kheda (91 km)

Foundry & Plastic and Sanand (97 kms)
Anand (94 km)
Forgings polymers Dahej (210 kms)
Surendranagar (88 km)

Vadodara (372 kms)

Steel Hazira (310 Km) Glass
Jhagadia (211kms)

Source:
Dholera making it big as defence manufacturing hub, Business line website, http://www.thehindubusinessline.com/news/national/dholera-making-
it-big-as-defence-manufacturing-hub/article8253626.ece, accessed 14 June 2016
Dholera International Airport, CAPA website, http://centreforaviation.com/profiles/newairports/dholera-international-airport, accessed 16 June 2016
About : Dholera SIR, http://dholerasir.com/, accessed 16 June 2016
HIGH SPEED METRO RAIL, http://www.investindholerasmartcity.com/dholera-metro-rail-project/
Port of Dholera (India)https://www.searates.com/port/dholera_in.htm
Gujarat plans Rs 1,000 crore Dholera airport project to take on world's best in Dubai, The economic times website,
http://articles.economictimes.indiatimes.com/2015-02-05/news/58838216_1_five-runways-dubai-airport-on-dubai, accessed
Land price http://www.magicbricks.com/property-for-sale/ALL-COMMERCIAL-real-estate-Dholera-Sir-in-Ahmedabad, accessed 16 June 2016
aluminum plant in gujarat, http://www.thehindubusinessline.com/economy/rs-15000-cr-alumina-project-to-come-up-near-mundra-
minister/article5231540.ece, accessed 17 june 2016

Page 9
Infrastructure Availability
Infrastructure Availability/Connectivity
Rail
Rail connection is being planned for
Dholera, while the nearest meter gauge
connection is Bhavnagar (34 km) and
the nearest broad gauge station is
Tarapur (103 km).
A metro rail is also being planned from
Gandhinagar to the Dholera SIR via
Ahmedabad.
Air
The Dholera SIR is surrounded by four
peripheral airports Ahmedabad,
Vadodara, Bhavnagar, and Rajkot.
Also, it is very near to the newly planned
Dholera international airport which is
expected to become operational by
2018.
Utility
Water
Gujarat Industrial Development
Corporation (GIDC) will provide water to
the proposed facility.
Gas
Gujarat State Petroleum Corporation (GSPC) is the gas supplier to the site through a well
established pipeline.
The company needs to directly apply for gas to GSPC.
Page 10
Road
National Highways: NH8 connects the
Dholera SIR with Ahmedabad, Bhavnagar
and Mumbai. The region also has a good
connectivity with NH-8A which connects it to
Anand and Vadodara.
As a part of Golden Quadrilateral, the 500
km Mumbai- Ahmedabad- Vadodara Express
way connects the region.
Port
A port site is proposed to be connected
by road with AhmedabadBhavnagar
highway at a distance of about 11
kilometres from the Dholera SIR. Almost
2,057 hectares of Government land was
allocated for the development of port
site.
Power
Electricity is supplied from an existing 132
KVA sub-station operated by Gujarat
Energy Transmission Corporation (GETCO)
located in the premises.
Key Players and
Suppliers
Key players - India
Company Sector

Hindustan Aeronautics (HAL) Airframe subassemblies and product support

Bharat Forge Component and forging of aerospace components

Astra Microwave RF and Microwave components

Dynamatic Technologies Hydraulics and Aerospace component manufacturing

Larsen and Toubro (L&T) Engineering Goods

Titan Industries Precision equipment manufacturing for aerospace industry

TAL Manufacturing Solutions Ltd. Aero-structures and other spare parts for aircraft
Taneja Aerospace & Aviation
Aero-structures and aircraft parts
Limited
QuEST Mechanical systems and structures for A&D industry

Mahindra Aerospace Aero-structure components and aircraft development services

Godrej Aerospace Aerospace manufacturing

Key suppliers (machinery) - India

Company Location Type of machinery

J & J Engineering Works Bangalore Aircraft models

Avi-Oil India (P) Ltd. New Delhi Aviation oils and lubricants

Avdel India Pvt. Ltd Mumbai Tools for forging and machining

Unique Instruments & Mfrs. Pvt. Ltd Bangalore Ground support equipment
Raghav Aerospace Manufacturing
Hyderabad Precision aerospace components
Technologies Pvt Ltd
Essae Teraoka Limited Goa Weighing scale

Instrulab Pvt. Ltd. Chennai Cock-pit instruments

Communications Ltd Hyderabad Avionics items

Source
Advanced Manufacturing Technologies Virtual Innovation Showcase Target Indian Companies April/May 2016
http://www.hal-india.com/Common/Uploads/DMS/Vendor_directory_Aircraft.pdf

Page 11
Project Outline

Process flow and key technologies for aerospace component

manufacturing
In the first step, the aerospace component is
Part Design designed, typically using software based system
such as Computer Aided Design (CAD).

It is the process of deciding the manufacturing

Concurrent engineering process through rapid tooling, rapid prototype,
rapid testing and other techniques.

A high precision machining facility comprised of

Precision machining Computer Numeric Control (CNC) milling, lathe,
Electrical Discharge Machining (EDM) and
grinding machines provides shape to the part.

In this process the machined part or component

Secondary Processing is taken through a wide-range of secondary
processes such as heat treatment.

The testing department performs non-destructive

Testing and inspection testing processes such as pressure, leak and
vacuum testing in accordance with specifications.

Quality process/contract review Each component is reviewed for material,

process, marking and shipping requirements.

In the mechanical assembly process, the

Mechanical assembly technicians perform a wide range of component
assembling to produce the end product.

Precision machining process flow

Turning Drilling Cutting Carburizing Quenching

Finishing Honing Grinding Tempering

Source
https://www.diva-portal.org/smash/get/diva2:718386/FULLTEXT01.pdf
http://www.customaerospacecomponents.com/manufacturing-process.html#precisionmachining

Page 12
Project Financials

Project cost
The total project cost of setting up a aerospace manufacturing plant for aero structure
components and assemblies is ~INR 2.5 billion.
The facility will manufacture composites, aero structures, machining, welding, assemblies, aero
tooling, ground support equipment and ground handling equipment.

Project specifications Details

Land requirements for the facility 30 acre
Number of precision machined metallic parts produced annually 32,000
Number of aerospace beams per year 450
Approximate cost required for setting up a plant INR2.5 billion

Man-power requirement Pay-back period

Manufacturing, assembly and 240-250 Annual revenue of TAL INR 460 million
project staff Manufacturing Ltd.
Design staff 8-10
Material handling staff 7-10 Average Growth rate ~10%
Quality staff 40-50
Business development staff 5-10 Average EBIT margin 15%

Support function 8-10

Total payback period ~15 years
Customer support 6-10
Total 314-350

Note:
The growth rate and Earnings Before Interest & Tax (EBIT) margin are taken from the
industry average
The total project cost and other estimates are based on the benchmark of the TAL
Manufacturing Solutions Ltd. airborne components and assembly plant located in Nagpur.
The facility is currently involved in manufacturing of floor beam for the Boeing 787 aircraft and
other aerospace components. In addition to aero structures and assemblies, the facility will also
support precision aero engine welded components, aero tooling and ground support equipment
in the future.
Source
http://www.tatamotors.com/investors/financials/pdf/2.%20TAL%20Manufacturing%20Solutions%20Limited.pdf
http://www.tal.co.in/wp-content/uploads/2016/01/corporate-presentation.pdf
http://www.tal.co.in/wp-content/uploads/2016/01/Modern-Manufacturing-India.pdf

Page 13
Approvals & Incentives

Gujarat Industrial Policy 2015

Government of Gujarat has announced an ambitious Industrial Policy, in January 2015, with the
objective of creating a healthy and conducive climate for conducting business and augmenting the
industrial development of the state.

Quantum of incentives
The incentives under this policy will be available to all the Talukas listed in Government Resolution
dated 25/7/2016 except municipal corporation areas.
% of eligible fixed
Category of % of Net VAT % of Net VAT to be
capital investment Incentive period
Project Location reimbursement to paid to
entitled for (no. of years)
(Taluka) the unit Government
Incentive
1 100 90 10 10
2 80 80 20 10
3 70 70 30 10
Net VAT incentives
Net VAT incentive will be reimbursed to the industrial undertaking in one financial year will not
exceed one-tenth of the total amount of eligible incentive.
Classification of the Project Amount (in INR crore)
Ultra Mega Industrial Unit 500
Mega lndustrial Unit 400
Large Industrial Unit 150
Micro, Small or Medium Industrial Unit 50

Incentives under Gujarat A&D manufacturing policy - 2016

Government of Gujarat is in the process declaring an incentive scheme for Aerospace and defence
manufacturing in the State.

Incentives from Government of India (GoI)

Manufacturing and R&D activity is allowed 100% FDI on automatic route

Area where aero-manufacturing takes place will be notified as SEZ after following due process.
Fiscal and monetary incentives and fast-track clearances to global OEMs and their ancillary
suppliers
In case cost of made-in-India aircraft and components work out to be higher than those supplied
from their original sources, the government will consider an incentive package to nullify cost
differential
Sources: http://www.dsir.gov.in/reports/isr1/Aerospace/8_5.pdf

Page 14 Source
http://www.dsir.gov.in/reports/isr1/Aerospace/8_5.pdf
Approvals and
Incentives
Indicative List of Approvals
Approvals/clearance required
Incorporation of company
Registration/Industrial license
Allotment of land
No objection certificate (NOC) under
air and water pollution control acts
Approval of construction and country
planning
Use and storage of explosives
Finance
Registration under state sales tax act
and Central and State excise act
Code number for export and import
Department to be approached and consulted
Registrar of companies
Secretariat if industrial assistance (SIA) for large and
medium scale industries
State industrial development corporation
State pollution control board
Town and country planning
Municipal and local authorities
Chief inspector of factories
Pollution control board
Electricity board
Chief controller of explosives
For loans higher than INR 1.5 crore, all India financial
institutions like Industrial Development Bank of India(IDBI),
Industrial Credit and Investment Corporation of India(ICICI),
Industrial Finance Corporation of India(IFCI) etc.
Sales tax department
Central and state excise department
Regional office of director general of foreign trade

Environmental clearance Ministry of environment, forest and climate change after

Facilitation for setting up project
Hazardous waste import and export
approval
Exiting business
conducting environment impact assessment (EIA) for any
project
Industries Commissioner will facilitate for state clearances
required to set up project.
Ministry of environment, forest and climate change
Ministry of corporate affairs

GoG has introduced single window facilitation portal for investors with undermentioned benefits:
Centralized system to monitor applications
User friendly and simplified application process for investors
System for authorities and investors to check the status of applications
Increased departmental ownership
The unit shall be facilitated through Investor Facilitation Portal for obtaining all the
necessary state approvals/ clearances - https://www.ifpgujarat.gov.in
Page 15
 Industries & Mines Department
www.imd-gujarat.gov.in

Gujarat Industrial Development Corporation

www.gidc.gov.in

Office of Industries Commissioner

www.ic.gujarat.gov.in

Industrial Extension Bureau

www.indextb.com

This project profile is based on preliminary study to facilitate prospective entrepreneurs to assess a prima facie scope.
It is, however, advisable to get a detailed feasibility study prepared before taking a final investment decision.

Office of The Industries Commissionerate

Block No. 1, 2nd Floor, Udyog Bhavan,
Gandhinagar 382 010. Gujarat
Ph.: 23252683/23252617
Email ID: iccord@gujarat.gov.in