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India presents growing opportunity for Canadas aerospace sector trade advocate

AddThis Sharing ButtonsShare to TwitterTwitterShare to FacebookFacebookShare to RedditRedditShare to 電子郵件Email by News Staff Posted Oct 14, 2012 8:00 am MDT India presents growing opportunity for Canada’s aerospace sector: trade advocate MONTREAL – Canada’s aerospace sector can create jobs at home by taking advantage of India’s modernization and recent moves to liberalize its foreign ownership restrictions, says the head of the Canada-India Business Council.The world’s most populated democracy has been growing in the shadows of fellow Asian giant China and other regional powers. But with India investing billions of dollars a year in infrastructure, the country is expected to jump to become a top five aerospace country by 2020.“I think there is a real opportunity for us,” council president Rana Sarkar said in an interview from Toronto.“They’re not going to go with one supplier, they’re going to go with a syndicate of suppliers and it’s for us to be in that mix is an important thing.”Canada’s aerospace and space sectors generate annual revenues of over $22 billion and employ about 80,000 Canadians in more than 400 firms across the country. Companies such as Bombardier (TSX:BBD.B) and CAE Inc. (TSX:CAE), along with engineering and construction firms are already pushing to take advantage of the growing demand for new aircraft, pilot training and airport construction.But more potential remains untapped.“In virtually every sector in the aviation business, this is sort of like the 1950s in North America. You’re starting to see just an arithmetic growth,” he said.The opportunity could total $1 trillion. And even though Canada’s share will be small, it’s still significant compared to where Canada’s sector has been historically, Sarkar said.Canadian exports to India increased by 29 per cent last year to nearly $2.6 billion, with aircraft and spacecraft being the fourth-largest category accounting for almost nine per cent of total exports. Overall bilateral trade totalled $5.1 billion but is targeted to reach $15 billion by 2015.Much of India’s potential comes from the massive airport construction underway that could upgrade 35 facilities and add 10 new airports in smaller cities. The number of airline passengers is expected to quadruple to 160 million per year by 2020.But India also has great demand for soft infrastructure such as training services, air traffic control and maintenance, as well as education.That’s where Canada can use its strengths, particularly in the country’s largest aero cluster in Montreal, he said.“We have an opportunity to help India with what they would consider a crisis need right now.”The head of the Aerospace Industries Association of Canada said the future competitiveness of the Canadian industry is dependent on its ability to maintain and grow its market share in both current and emerging markets.“As India continues to grow and expand its infrastructure and air travel capacity, Canadian interest in pursuing market and investment opportunities there will only increase,” said Jim Quick.“Not only does India represent a tremendous opportunity from a market development perspective, but it is also a very valuable partner for the execution of R&D activities which complement strong core Canadian capabilities in that respect.”The Indian government’s recent move to increase the foreign investment threshold to 49 per cent could strengthen Indian airlines by making it easier for them to forge alliances and allowing them to join strong outside networks.Still, it has retained a strong offset policy that requires foreign companies to make significant investments by partnering with local firms in exchange for selling into the country.Bombardier said it is looking at all kinds of avenues to take advantage of the huge opportunities that await in India.“It’s too early to say whether it’s about manufacturing products there but … we would not rule out looking into any of these regions and what kind of business relationships beyond selling we would be looking at,” Ben Boehm, vice-president of international business, said in an interview from Russia.Much like China, the expansion of airline services in India presents huge sales opportunities for both commercial and business aircraft.Bombardier forecasts 1,345 business jet deliveries over the next 20 years and that the Asia-Pacific region (including China) will take delivery of about 4,000 commercial aircraft with 20 to 149 seats.It has about 40 business jets operating in the country. Its largest commercial plane customer Spicejet flies seven Q400s but has ordered 15 turboprops and has options for an additional 15. Air India Regional operates four CRJ700 regional jets.So far, the Montreal-based manufacturer has yet to win an Indian order for the CSeries. Boehm said the plane could allow non-stop connections between smaller airports and destinations in Southeast Asia and the Middle East because it’s the only plane in the 100- to 150-seat category capable of travelling 3,000 nautical miles.India’s focus on low-cost carriers could make a 160-seat CSeries attractive to the country. But Boehm said it’s too soon to know whether any buyers would opt for a larger configuration, which would require airlines to make compromises such as reducing the number of toilets.“I think right now anybody that we are talking to in India is still in the early stages where we aren’t down to what their final configuration is.”Boehm said sales in India will be good for Bombardier’s suppliers such as landing gear makers Heroux-Devtek (TSX:HRX) and Goodrich, along with engine maker Pratt & Whitney.“It’s going to be important for all of us,” he said. “We need to become much more outward looking in terms of (what) the aerospace market and the real growth demand over the next 20 odd years is going to be in these types of emerging markets.”Shortages of trained aerospace workers in India limit the threat that work performed by Canadians could initially be transferred. But longer term, the country poses a competitive threat as companies such as state-owned Hindustan Aeronautics Limited look to eventually develop their own fighters and commercial aircraft. read more

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