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Indian Commercial Aviation Suppliers Market to Grow Exponentially Print E-mail
Written by Anand   
Thursday, 07 May 2009
Mumbai: The commercial aviation suppliers market in India is set to grow exponentially at a compound annual growth rate (CAGR) of 16.1 percent from 2007 to 2014. Low manufacturing and labor costs are expected to boost outsourcing to India.

New analysis from Frost & Sullivan, Indian Commercial Aviation Supplier Market Outlook reveals that this market earned revenues of US$1,360.00 million in 2007 and is anticipated to reach US$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.

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.

"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."

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