Strategy and development India

Opportunities in the military aviation market in India

Bhargavi Venugopal
Author

July 1, 2018
Published On

The opportunities in the military aviation market in India are manifold for French industries. India has been a longstanding client of French defense industries, and with the order of 36 Rafales, the Indian government continues its strategic partnership with France. One of the challenges for the French military aviation industry is to capitalize on this favorable context and India's government's intent to accelerate "make in India" initiatives. The Rafale contract obliges the manufacturer to provide 50% of the value in industrial offsets. In this framework, Dassault is investing with its Indian partner Reliance in a factory in Nagpur, Maharashtra, which is expected to deliver the first components of the Falcon 2000 business jet by the end of the year.

expandys opportunités marché aéronautique militaire inde

Franco-Indian partnerships and alliances

Franco-Indian industrial alliances and partnerships will contribute to strengthening the long-term presence of French industries in India. French companies have formed numerous partnerships with public entities such as :

Hindustan Aeronautics Limited (HAL), a major public group with a turnover of €2.2 billion.
Dassault Aviation and Reliance have decided to collaborate in the field of combat aviation, announcing a joint investment of €100 million. Dassault's investment with Reliance in Nagpur could potentially establish it as a hub for French aerospace in India.
Thales and Bharat Electronics Ltd have a joint venture in radar technology, while Thales has also partnered with Reliance to create a company capable of assembling and maintaining electronic warfare sensors.
Safran and HAL have a joint venture for the maintenance, repair, and overhaul (MRO) of aircraft engines, and Safran recently announced the establishment of a Safran Electrical & Power factory in Hyderabad. This factory will manufacture the first harnesses for the LEAP engine "made in India," in line with a mega-contract won with the Indian company SpiceJet.
MBDA and Larsen & Toubro have announced a joint venture in missile technology.

The Indian military aviation and defence ecosystem

The Indian ecosystem consists of state-owned aerospace companies (HAL, NAL, DRDO, and Bharat Electronics), Indian private companies (Mahindra, Tata, and Aequs), as well as international OEMs and tier 1 suppliers.

Nearly all major international competitors in the defense aviation sector are present in India, including companies from the US (Boeing, GE, Lockheed Martin), Russia (UAC - Sukhoi JSC), Israel (Elbit, Rafael), and the UK (BAE).
Key Indian defense industry players include HAL, NAL, Mahindra Aerospace, and Tata Advanced Systems.
Approximately 60% of the Indian Air Force's needs are imported, particularly for complex components.
Indian military aviation manufacturers are entirely government-owned, with a budget allocation of $8.6 billion in 2016.
Dassault Aviation has supplied five successive generations of combat aircraft to the Indian armed forces.
Thales and Safran are essential suppliers of electronics, avionics, and engines to various Indian aircraft.
Airbus is a historical supplier of light helicopters in India.
MBDA has equipped several generations of Indian combat aircraft.

Opportunities in the military aviation market

There are numerous opportunities for French companies in the Indian military aviation market. Over the next ten years, €60 billion is expected to be invested in this sector in India. Moreover, India's strong potential has led all international OEMs to establish factories in India, thereby involving their suppliers and the entire supply chain.

The Indian government aims to have 75 military airbases by 2025 (a 25% increase from 2016), and by 2030, the Indian Air Force (IAF) will receive all its current orders, totaling 840 aircraft.
The Offset Policy mandates that 50% of the contract value or production must be conducted locally in India, facilitating technology transfer and low-cost production.
A Memorandum of Understanding (MoU) has been signed between GIFAS and SIDM to promote cooperation in five areas: optimizing opportunities in their respective markets, developing training and R&D, working on industrial policy, and fostering a conducive environment for international trade.
France possesses advanced technology, making French companies ideal partners for bridging technological gaps and facilitating skills transfer. There are myriad opportunities for French industries in machining, composite manufacturing, electronics, production software, testing and control solutions, as India's industrial capabilities and skills are limited in all areas of military aviation.
Special Economic Zones (SEZs) also present opportunities for French industries seeking to invest in India, particularly in aerospace and defense. These industrial zones, dedicated to aerospace and defense, are emerging in states such as Telangana, Karnataka, Maharashtra, etc., aiming to attract investors in these strategic high-technology sectors.