Aerospace Industry

  • Overview
  • Why Karnataka?
  • Policies & Initiatives
  • Investment Opportunities & Facilitation

The US$ 31 Billion Indian Aerospace Industry is on a new high
A high of surpassing the global growth figures of CAGR 4% to witness a CAGR 9% for the sector in 2013-14. This growth is propelled by an increase in both its defence budget and the demand for passenger aircraft and rotorcrafts globally.

A robust ecosystem of 2000 SME’s with a well-established value chain to deliver end to end solutions puts Karnataka on a distinct plane. The highly skilled workforce and top-notch Aerospace majors and research centres Like HAL, NAL, ISRO, ADA, DRDO, DARE etc. stand testimony to high-quality focus that has won the world over for Karnataka. Add to this, the Government of Karnataka’s first of its kind and the only niche sector policy set to develop Aerospace here. You are sure to find the global gateway for the Aerospace world.

Key drivers for growth in the segment:

The key driver for Indian Aerospace Sector is the defence segment occupying a lion’s share with 74%. Though globally the defence sector is negatively impacted by the budget cuts in the US, Capital allocation for modernization is a promising trend in Asia Pacific region. The A&D spends in India alone are expected to be around US$ 100 Billion till 2020 propelling hope to the future of the sector in India.

However, it’s the 10,000 additional passenger aircraft schedule-for-deliveries, in between 2014 to 2020 that adds wings to the sector. This global demand is a rise in opportunity for OEM’s and Tier 1 Suppliers to source from India which is expected to grow in the sourcing business by fourfold by 2020.

Karnataka is undisputedly placed at the helm of affairs to pilot the segment’s growth in India. Its core strength in Aerospace is etched in fine nuances for the sectors growth right from the presence of major domestic and international players across the value chain; from research to after sales adding depth to a comprehensive ecosystem.
The robustness of the environment for growth is further enhanced with the presence of IT Majors like HCL, Wipro, Tata Consultancy Services and Infosys who serve global clients in this segment. Similarly, Karnataka’s edge in heavy engineering and machine tool manufacturing is a definite advantage for high value manufacturing here.
However, its’ the close proximity to 2000 odd vendor base operating as a cluster serving across domestic, national and international clients with ready support services and potential to create MRO, ground handling and manufacture of ground support equipment that makes Karnataka a acknowledge leader.
In true spirit Karnataka too has led the country with a first and only dedicated policy for the sector across India to augment infrastructure, plan support systems and propel industries, complete with plans for a First Multi Skill Training Institute for Aerospace and Aviation.
The ecosystem is being driven by the Government with strategic offerings to collaborate and build world class infrastructure, drive talent, all this with a vision to make Karnataka the most favoured destination for Aerospace and Aviation sector

Track Record:

Aerospace sector aims for the skies in Karnataka. Its flight is evident from the scale of things achieved. Karnataka accounts for 75% of the expenditure for sourcing from India by global majors and Tier 1 suppliers and attracts 65% of Aerospace investments in the country.
The government has worked closely with the Private sector in developing a rich Aerospace ecosystem and it has an Aerospace Task Force constituted that advises them on all aspects of the sector growth and development.
The State Government has established a state of the art 1000 acre Aerospace Park with a 252-acre special Aerospace SEZ at Devanahalli near Kempegowda International Airport whereas it has also encouraged Aequs in setting up country’s First Private Aerospace and Precision Engineering SEZ in Belagavi and Mahindra’s Aerostructure plant at Kolar. Allotted 610 acres of Government land at Gubbi in Tumakuru District to HAL to establish the Light Utility Helicopter Facility in a bid to attract and build an Aerospace SME Cluster in Tumakuru.
Karnataka has been able to attract and hold the interest of Global Players like Rolls-Royce. A case in point is Rolls-Royce. Rolls-Royce has one of its largest engineering centres outside of UK with 1000 engineers in Karnataka. The association that began 60 years ago from licenced productions moved to world class manufacturing for its civil customers – to a JV and a managed centre. Now Rolls-Royce has expanded its capabilities in Bangalore and is to hire 500 more by 2017. Plus it is set to establish Engineering and Manufacturing base in India too.
It is the development of such rich ecosystem while working closely with the Private industries that prove its mettle for leading the Aerospace sector in India for the world.

The aerospace sector is a focused sector in Karnataka that’s garnering both attention and recognition world over. The focus is evident with the State Government announcing an exclusive policy for the sector – first ever in India. Aerospace sector in the state is eligible to avail fiscal incentives and concessions based on the extent of size and location of the enterprise. It also packs a punch for large, mega, ultra mega and super mega projects with special incentives while it aids the MSMEs with incentives to help them become competitive.
The state offers various policy measures to promote the indigenisation of the sector. This is enforced with Prioritisation of Buy Indian and Buy and Make Indian for capital acquisition. The state also allows for Simplification, Faster progress and Enhanced delegation of the financial powers for capital acquisitions.
It also has an offset policy of 30% mandatory for procurements excess of INR 3 billion in a bid to leverage capital acquisition and build the Indian defence industry.
The state has also opened up its FDI cap in defence production from 26% to 49% under automatic rule with beyond 49% left to the discretion of cabinet committee on a case to case basis.
The sector policy has a well-defined industrial licence regime, tax regime and foreign trade policy. In a thought through effort, the state has initiated a more practical black listing policy to keep options open for the three services to source equipment.
Department of Industries & Commerce
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