Labor costs in India are relatively lower when compared to the western countries. India also enjoys a geographical advantage over other countries that enables it to cater to the demands of countries in South Asia as well as the Middle East. The offset policy of the Government can help India attract significant investment in the sector.
New analysis from Frost & Sullivan (financialservices.frost.com), Indian Commercial Aviation Supplier Market Outlook reveals that this market earned revenues of $1,360.00 million in 2007 and is anticipated to reach $3,888.60 million in 2014. The three segments covered in this research are component suppliers, design suppliers, and maintenance, repair, and overhaul (MRO). Component suppliers are projected to be the fastest-growing segment.
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"The recent opening of the market to private participation and India’s ability to attract foreign direct investment (FDI) has been the main driver in market expansion," says Frost & Sullivan Financial Analyst R. Madusudanan. "Indian participants can leverage on the advantages of lower labor costs and strategic location to make India an export hub."
A major restraint for market participants is the competition from the South East Asian and Middle Eastern countries. The inconsistent order flow and longer gestation period also act as deterrents. The lack of technical know-how is another challenge faced by the participants.
India should build sufficient excess capacity to cater to the demands of the South East Asian and Middle Eastern countries. Although the gestation period for the projects tends to be longer, the returns are usually high, in the band of between 15.0 to 20.0 percent.
"Local participants lack the technical expertise to execute complex tasks on their own," concludes Madusudanan. "Therefore, joint ventures with foreign participants will enable local firms to more effectively confront challenges, by ensuring the transfer of technology."
Indian Commercial Aviation Supplier Market Outlook is part of the Financial Benchmarking in the Aerospace & Defense Industry subscription, which also includes research services in the following markets: Global Financial Outlook – 2009 and Global Commercial Aviation Electrical Power Systems and Infrastructure Market and Infrastructure Market – Investment Analysis. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
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