Like most of the country’s irrepressible economy, India’s aerospace activity has experienced rapid expansion that’s set to continue through the decade.
Still, current practices and regulations have impeded the sector’s ability to fulfill its enormous growth potential. However, transport and logistics firms assisting activity through its early growing pains will be ideally positioned to handle the deluge of new business as Indian aerospace rushes towards a dramatic takeoff.
Though estimates vary, India’s civil aviation sector is thought to be worth around US$16 billion annually. The country’s defense budget - the world’s fourth largest - has earmarked over US$15 billion in new military aircraft purchase in the next few years alone.
Though even those impressive figures are dwarfed by India’s overall US$1.87 trillion GDP, expansion of aviation activity outpaced the country’s overall growth rate of 7.2% between 2010 and 2014 – and is expected to rise as dramatically through 2020.
Manish Batra, SDV’s South Asia Regional Manager Aerospace & Defense (left on picture), says Indian airlines are planning to double the nation’s current fleet of around 350 planes to 600 or more by 2018. At least one recently launched airline is planning to increase its six current planes to up to 25 aircraft in 2016, and others are expanding their fleets rapidly.
SDV already works with local giants in the civil sector, as well as Indian affiliates of foreign groups. Those two camps are expected to work increasingly together as they team up to meet rising opportunities.
For example, SDV has recently struck a strategic alliance with the Tata Sons-Singapore Airlines’ joint venture Vistara, serving as its official customs broker and international forwarder for all their commercial supplies and aircraft spare parts.
Recent changes in Indian laws allowing foreign firms to increase direct stakes in local companies up to 49%. That larger ownership option is motivating international partners to pump an anticipated US$12.1 billion of direct investment into the sector by 2020. That, alongside similarly higher investing by Indian groups, will seek to increase activity to match passenger and freight demands that current capacity can’t satisfy.
But the legal revision on foreign capital is just one of several regulatory changes needed to remove barriers now hampering actors in India’s aerospace sector. Batra notes, for example, that operational rules differ between airports, cities and regions, and that even government-instituted regulations are not uniform across the country.
Complete electronic custom clearance eliminating manual checks can bring drastic change in clearance sector, which can further help to grow business at faster speed.
Experience and savvy can reduce time and money lost to such administration delay in India, but avoiding them entirely is often impossible.
“There are times when you must explain to big international importers why in some cases flying time is less than the clearance time,” Batra says. “They can’t believe that’s even possible, so you have to explain why it is, and how you’ll expedite that as much as possible.”
“We simply have to find ways to work around problems that clients don’t encounter in most other countries.”
Deep knowledge of administrative players and experience in getting around impediments are tools SDV uses to satisfy client requirements for speed and efficiency until remedial regulatory changes are made.
“Things are already improving as government officials realize restrictive rules and muddled regulations frustrate growth everyone wants,” Batra says. “But awaiting continued improvement, we simply have to find ways to work around problems that clients don’t encounter in most other countries.”
That dedication in hard times should pay dividends in future as India’s air activity surges into what some analysts predict will be profits by 2016.
“When you’ve provided valuable service and satisfied customers when things were difficult, surpassing that performance when things become easier is itself an easier task,” Batra says. “As activity in this sector doubles or more, we’ll be one of the few freight forwarders who can meet the new challenges using the experience we overcame the old ones with.”