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Tuesday, April 1, 2008

Eye On India: Market Potential Adds Manufacturing Clout

That India is a big lure for helicopter makers was reaffirmed by strategic deals struck this year by key rotorcraft players.

In February, Sikorsky Aircraft signed a memo of understanding with a unit of India’s Tata Group on the production of cabins for the S-92.

That was followed in short order by Eurocopter’s move to expand its manufacturing capability in India in league with a key long-time supplier, Mach Aero.

Those moves come as industry, finance, and government officials in India are urging that country to move quickly to take advantage of its markets to build its indigenous rotorcraft design and production capabilities.

"India represents an expansive rotorcraft market with enormous potential and opportunity."

Sikorsky is teaming up with the Tata Advanced Systems, a wholly owned subsidiary of the Tata Group, to manufacture S-92 cabins in India. Tata Advanced Systems focuses on "providing integrated defense and aerospace solutions," according to the company.

The partnership would diversify Sikorsky’s S-92 team. Mitsubishi Heavy Industries, an original member of that team since 1995, has been responsible for producing the main cabin. The diversification is intended to help Sikorsky take advantage of India’s burgeoning offshore oil and gas exploration market, as well as demand there for corporate and air-taxi services.

"India represents an expansive rotorcraft market with enormous potential and opportunity," said Sikorsky President Jeff Pino in announcing the agreement with Tata. "While we are only in the most preliminary of stages, I am most excited at the possibility of working with" the Tata Group "and tapping into India’s skilled aerospace industry and capability."

The Tata Group is among India’s oldest and largest conglomerates. It employs more than 300,000 people in 98 companies operating on six continents, and had revenues of $28.8 billion in 2006-07 and a market capitalization of $72.8 billion as of Jan. 10, 2008.

Tata issued a statement saying the S-92 manufacturing facility would offer Sikorsky productivity gains "while bringing new manufacturing technology to India. It is an important part of our larger strategy for this sector."

In addition to the S-92 manufacturing facility, Sikorsky plans to set up a sales and service support center in India by the end of the year. The company projects annual demand for helicopters in India will rise to 100 within three years.

Eurocopter strategic memo of understanding with Mach Aero of France is aimed at helping the latter set up a manufacturing facility in India. That facility would be "another step towards our long-term commitment of introducing the latest technological advancements with regards to helicopters in the Indian market," said Eurocopter’s executive vice president of global supply chain, Bert Stegkemper.

Establishing a Mach Aero facility would enhance India’s precision manufacturing capabilities and the competitiveness of its aviation companies worldwide.

Mach Aero has been a key supplier to Eurocopter for several years. It provides precision parts for the Ecureuil/Fennec family, NH90 military transport, and the Tiger attack helicopters. Eurocopter is pursuing sales of the AS550C3 Fennec for the Indian army’s light utility helicopter requirement. It had beat out Bell last year for that 197-aircraft contract, but that award was thrown out and India is re-bidding the work. Bell is offering a version of its Model 407.

Since the cancellation of that award, India has indicated it will increase the size of its intended order of light utility helicopters when it reissues a request for bids. The Indian air force may add its requirement for 115 of those aircraft to the army’s requirement.

It is the need to replace the army’s aging fleets of Chetaks and Cheetahs (versions of Eurocopter’s Alouette 3 and Lama, respectively) and bolster the vertical-lift capabilities of the navy and air force that is spurring calls for develop greater indigenous rotorcraft capabilities in India.

Army officials told a recent helicopter forum in New Delhi said that service’s helicopter fleet, which stands at 250 now, will need to double by 2020.

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