While reviewing the preparations for the 13th edition Aero India 2021 recently, Chief Minister B S Yediyurappa said “Karnataka has a prominent place in the Aerospace and Defence map of the country catering to nearly 25% of India's Aircraft and Spacecraft Industry.” Highlighting the fact that Karnataka’s was the first in India to release a dedicated aerospace policy, Yediyurappa said that the state also contributed nearly 65% of the country’s aerospace-related exports, besides accounting for 67% of the helicopter and aircraft manufacture for the armed forces. However, the state has a long way to go in achieving the goals set in the aerospace policy by providing an atmosphere conducive for growth. Under Yediyurappa’s able leadership, the government is committed to positioning Karnataka as the most vibrant aerospace hub in Asia and a globally-recognized aerospace destination by creating an environment ideal for the holistic growth of the sector.
Ever since the establishment of Hindustan Aeronautics Limited (HAL) in 1940, Karnataka has become the home to India’s aerospace industry heralding the aerospace activities in Bangalore. And the identity of India’s prime aerospace location has strengthened subsequently with the establishment of defence PSUs and R&D institutions like BEML, BHEL, GTRE, NAL, DRDO, ADA, ADE, ISRO, IISc etc. Over these decades the opportunities in the aerospace sector have increased manifold consequent to the booster policy pronouncements and changes in the FDI norms for investments in the sector supported by favourable changes in the Defence Procurement Procedure, Defense Offset Policy etc.
While reviewing the preparations for the 13th edition Aero India 2021 recently, Chief Minister B S Yediyurappa said “Karnataka has a prominent place in the Aerospace and Defence map of the country catering to nearly 25 percent of India's Aircraft and Spacecraft Industry. Being the first state to have a dedicated Aerospace Policy, Karnataka has contributed nearly 65% of the country’s aerospace-related exports, besides accounting for 67% of the helicopter and aircraft manufacture for the defence services.
Under the able leadership of Yediyurappa and through formulation of growth-booster industrial policies, Karnataka intends to take advantage of the promising scenario and strive to become the most popular aerospace hub in Asia over the next five years and as one of the top global aerospace and MRO destinations by 2023.
“Karnataka has been a pioneer in aerospace. A quarter of India’s aircraft and spacecraft industry is based in Karnataka. Being the home to the country's first private aerospace SEZ in Belagavi, a thousand acre Aerospace Park at Devanahalli, MRO at Kempegowda International Airport and a Defence Production Cluster near HAL Helicopter unit in Tumakuru district, Karnataka will create a favourable environment for investor with the multiple financial incentives announced under the New Industrial Policy. The government is also providing a USD 1.5 million subsidy to anchor industries and special incentives for MRO and Regional Civil Aviation facilities. The strong growth potential of the industry attracts global player in aerospace industry to invest in Karnataka,” said Yediyurappa.
Boeing’s Focus on Aerospace R&D
Putting off its plans to set up a manufacturing unit in Bengaluru, US aerospace giant Boeing has decided to convert its entire facility in Bengaluru for research and development. The state high level clearance committee (SHLCC) meeting chaired by Yediyurappa has approved Boeing’s request. Two year ago, the state government had approved Boeing’s plan to set up an engineering and product development facility on a 36-acre plot in the aerospace park near the international airport with an investment of about Rs.1,150 crore.
What makes Karnataka India’s Aerospace Hub?
Karnataka is considered the most-sought-after aerospace destination in India and the undisputed leader for aerospace-related manufacture and services due to the presence of numerous aerospace companies and DPSUs engaged in design, development, manufacturing. More than half of all the production units and R&D centers are located in Karnataka. A quarter of all the aircrafts and spacecraft made in India are produced in Karnataka and almost all global aerospace majors have presence in the state.
Karnataka has huge potential to emerge as an Aerospace Hub due to several strengths and advantages. The state has an ecosystem ensuring a relatively low-cost aerospace manufacturing and MRO activities compared to other destinations in Asia and Middle East. Presence of DPSUs and scientific and technical institutes along with research and development agencies give support to R&D activities and the state has skilled workforce in aerospace with more than 2000 SMEs that execute niche sub-contracting work for the DPSUs.
Moreover, Bengaluru is recognized as the Silicon Valley of India with a number of top companies in IT/ITES and electronics hardware, of which many are a part of the supply chain to the aerospace sector. The state has the maximum number of engineering graduates in the country, with majority of them employed in IT, design & engineering affirming advantageous position with reference to skill sets required to bolster aerospace activities.
Yediyurappa recently launched an affidavit based clearance (ABC) scheme as part of Karnataka’s ease of doing business (EoDB). The scheme will have 15 selected industry services from different departments, and manufacturing industries and other firms would be eligible for the affidavit-based clearance.
Thrust on MSMEs
MSMEs have huge potential to be the backbone of the global aerospace supply chain and Karnataka has been supporting MSMEs in the aerospace industry with the aim of making them globally competitive. To give preference in allotment of land in designated aerospace parks at least 30% to 40% of the land in Aerospace Park is being reserved for MSMEs. Enhanced incentives are being offered to MSMEs and they are financially supported for obtaining certification like AS-9100 series and NADCAP etc.
The government has been developing and implementing special programs to enhance the innovation capabilities of MSMEs in collaboration with industry and academia. Bangalore Aerospace Park features a state-of-the-art technology Innovation Centre which will act as a catalyst for MSMEs.
However, despite the strengths Karnataka enjoys, the aerospace industry faces various challenges both at institutional as well as at the operational level. Focusing on all resources to overcome these challenges and building on critical areas of opportunities can lead to sustained competitive advantage for the state in the long term.