Industry gains as Airbus inks $2.8 Bn contract with India

IDD Update

European aerospace giant, Airbus, signed its first major military contract in India. It will supply 56 planes of the C-295MW turbo-prop military transporter opening up opportunities for Indian as well as its existing  suppliers in Europe.  

The Airbus and the Indian Defence Ministry signed the contract worth $2.8 Billion ( approx Rs 21,000 crore) in New Delhi on September 24.

A formal announcement was made by the Ministry of Defence, ending years of wait for the European company to enter the lucrative Indian military equipment market that is now worth $ 18 billion annually.

A General Atomics Drone

Earlier in September the Cabinet Committee on Security led by Prime Minister Narendra Modi had approved the procurement of the planes. Having a capacity of 5-10 tonnes with contemporary technology that will replace the ageing Avro aircraft of the Indian Air Force. The aircraft has a rear ramp door for quick reaction and para-dropping of troops and cargo.

Sixteen aircraft will be delivered in flyaway condition from Airbus Defence and Space S,A., Spain within 48 months of signing of the contract.

The remaining forty aircraft will be manufactured within ten years in India by a consortium to be gilded by Airbus and Tata. The contours of this, the work share of the Indian Company will be announced separately. The Tata-Airbus is the first project of its kind in which a military aircraft will be manufactured in India by a private company.

All fifty six aircraft will be installed with indigenous Electronic Warfare Suite.

Signing of contract in New Delhi Sept 24

Industry opportunities

The project will give a boost to aerospace ecosystem in India aa several MSMEs spread over the country will be involved in manufacturing of parts of the aircraft. The programme will provide major boost to the `Atmanirbhar Bharat’ (self reliant)  mission of the Government as it offers a unique opportunity for the Indian private sector to enter into technology intensive and highly competitive aviation Industry. The project will augment domestic aviation manufacturing resulting in reduced import dependence and expected increase in exports.

A large number of detail parts, sub-assemblies and major component assemblies of aero structure are scheduled to be manufactured in India. The programme will act as a catalyst in employment generation in the aerospace ecosystem of the country and is expected to generate 600 highly skilled jobs directly, over 3000 indirect jobs and an additional 3000 medium skill employment opportunities with more than 42.5 lakh man hours of work within the aerospace and defence sector of India.

A file picture of Airbus C295 manufacturing facility

It will involve development of specialized infrastructure in form of hangars, buildings, aprons and taxiway.  During the process of manufacturing in India, it is expected that all the suppliers of TATA Consortium who will be involved in special processes will gain and maintain globally recognized National Aerospace and Defence Contractors Accreditation Program (NADCAP) accreditation.

Before completion of deliveries, ‘D’ Level servicing facility (MRO) for C-295MW aircraft are scheduled to be setup in India. It is expected that this facility will act as a regional MRO hub for various variants of C-295 aircraft. 

In addition, the OEM will also discharge its offset obligations through direct purchase of eligible products and Services from Indian Offset Partners giving further boost to economy.

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