1.

INDIA’S AEROSPACE
INDUSTRY

1.1 Overview
The Indian aerospace industry is one of the fastest-growing aerospace markets in the world
due to an increase in defence spending, growing commercial aviation market, rising
technological expertise and high levels of technical expertise and knowledge. The survey
indicates that the rapid growth of this industry has attracted major global aerospace
companies to India and has incentivised domestic aerospace players to increase and deepen
operations. All segments in the aerospace industry, including civil and defence aviation
and space, are showing a significant level of growth.

1.1.1 Civil Aviation

The Indian aviation industry is one of the fastest-growing aviation industries in the world
with private airlines accounting for over 75 percent of the domestic aviation market (as of
2006). The Indian aviation industry is generating a Compounded Annual Growth Rate (‘CAGR’) of 18
percent. Passengers carried by domestic airlines from January-February 2010 were 8,056,000 as compared to
6,761,000 in the corresponding period of 2009, representing a growth of 19.2 percent, according to a report
released by the Ministry of Civil Aviation.

The International Air Transport Association (‘IATA’) in its Financial Forecast (March
2010) indicates that airline markets rose strongly at the end of 2009 and early in 2010, with
growth remaining to be concentrated in the emerging markets of Asia, Latin America and
the Middle East. Airlines in the large developed markets of Europe and North America
face more sluggish growth. Given the sector’s more favourable performance, the IATA
reduced its estimate of 2009 net losses from USD 11 billion to USD 9.4 billion. More
significantly, the IATA now forecast smaller losses in 2010 of USD 2.8 billion, compared

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to its earlier forecast of USD 5.6 billion, with the largest improvements accruing to airlines
in Asia and Latin America.

1.1.2 Defence Aviation

India is expected to spend USD 100 billion in the next decade towards purchase of defence
equipment. India is believed to be the world’s second largest buyer of weaponry. It is
expected that defence spending, which is currently 2.1 percent of GDP, will substantially
increase as the nation’s robust economy continues to grow. That being said, India’s
Defence Minister AK Antony believes that India’s ultimate goal is self-reliance. Mr A.K.
Antony said, “We want to produce equipment for the armed forces internally,
domestically. We want to strengthen our defence industries in India. India needs a strong
defence industrial base.”

1.1.3 Space
The Indian Space Research Organisation (ISRO), was established in 1969, and has
emerged into one of the “Big Three” Asian space agencies, alongside China’s CNSA and
Japan’s JAXA. The ISRO is a significant partner in many international space projects.

1.2 India as a Manufacturing and MRO Destination

India has a strong aerospace industry supported by qualified engineering, science and IT
graduates, the availability of parts and components, robust manufacturing expertise,
production systems, leading academic institutions, a supportive R&D environment, etc.
Many aerospace companies are looking to India as a manufacturing and Maintenance and
repair Overhaul (MRO) destination.

1.2.1 India as a Manufacturing Destination

India is rapidly building capabilities to emerge as a preferred destination for manufacturing
of aerospace components. India has skills and competencies in areas that include
engineering, production, etc. These capabilities have been recognized and harnessed by

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foreign companies outsourcing manufacturing work to India. A potential opportunity exists
in demonstrating India’s expertise in the process beginning right from initial design and
ending with the final manufacture; this is where India’s real and sustainable advantage
exists. This is because systems and components require frequent design changes to suit the
performance requirements of different countries; India, with its huge pool of engineering
resources, provides the convenience of providing the required manufacturing services at
one location. India already has “Build to Specifications” capabilities in space and missile
systems.

There are several factors driving growth in manufacturing in India’s aerospace industry –

(i) Domestic Aircraft

Demand
The demand for aircrafts, especially in Asia, is expected to grow as the world economy recovers. According
to estimates by leading aircraft manufacturers, India will continue to be the fastest growing country in terms
of air travel for the next 20 years. Foreign aircraft manufacturers view India’s demand potential as an
opportunity to outsource manufacturing work, partly due to offset requirements, but mostly to derive cost
benefits.

(ii) Offset Requirements

The Government in its national defence offset policy requires a minimum 30 percent
plough back of foreign outflows from defence procurement into the Indian defence
industry. This policy enables foreign vendors to choose their Indian offset partner and
combined offsets could translate into an opportunity of USD 2 billion per annum for India.

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 (iii) Talent Pool
Global aerospace majors are facing a shortage of engineering talent. India has a large talent
pool of English-speaking engineering graduates; approximately 500,000 engineers
graduate each year.

In order to become a major manufacturer in the global aerospace supply chain, India needs
to address the following issues:

(iv) Access to Technology

Technology expertise is a critical challenge faced by the Indian companies. India needs to
keep pace with the increasingly high use of technology across the design lifecycle. Foreign
companies are reluctant to transfer cutting edge technologies with limited management
control in the Indian entity and in the past, have given licenses for older technologies.

(v) Raw Material

Development Capabilities
There has been a significant shift in the type of raw materials that are being used in
airframe structures. The composition of materials used in aircraft manufacturing is
migrating towards new advanced materials. The use of composite materials is rapidly
becoming a mainstay since they result in lower maintenance costs, make the aircraft lighter
and more fuel efficient. The demand for composites in the aerospace market is expected to
grow in future. Currently, almost all raw materials are being imported by Indian suppliers.

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 (vi) Access to Funding
The aerospace business is highly capital intensive. In the initial high growth phase, capital
needs to be injected rapidly and continuously to maintain the planned growth rate.
Additionally, working capital requirements, market development, brand building and
awareness require significant on-going investment and expenditure. Funding access can act
as an entry barrier into this space.

(vii) Certification Process

Getting international air worthiness certifications for processes and parts has been a
challenge for India-based suppliers. It is also a deterrent for OEMs to outsource some of
their components to India since the approval for parts made in India can sometimes take
too long and become cost inefficient (when their logistics costs are also considered).

1.2.2 India as a MRO

Destination
As a support service to the aviation industry, the opportunity to provide MRO activities
will grow with the industry. India’s MRO segment is estimated to grow at 10 percent and
reach USD 2.6 billion by 2020. Establishing MRO facilities in India will enable operators
to achieve faster turnaround times, savings in operating costs and a decline of foreign
exchange outflows. Robust MRO facilities will also attract work from overseas, which will
result in an overall lift to the economy. India can become an MRO h ub to the world by
leveraging the following:

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 (i) Manpower cost
arbitrage
MRO manpower costs in India are lower than the leading industrialized nations.
Respondents to the survey conducted by the aviation ministry indicated that MRO
manpower costs in India range from USD 30 to USD 35 per hour. This is almost 60
percent cheaper than in Western Europe or the US but not significantly dissimilar to wage
rates in China or Indonesia. There is also a shortage of talent in developed countries; these
workforces are ageing and the supply of high quality engineering talent is declining. India
has a robust supply of talent, available at relatively cheaper rates.

(ii) Availability of talent

India has a large and able population of engineering graduates who are trained and have
suitable technical competence and experience. MRO companies are also in the early stages
of working with educational institutions to guide graduates towards aerospace and also
institute after-graduation employment programmes.

(iii) Locational advantages

Currently, there are no MROs within a five-hour fly zone of India. Indian MRO companies
can leverage India’s inherent geographic advantage of being between Europe and the Asia
Pacific region. Domestic carriers can benefit from having MRO facilities within India’s
borders since this reduces costs associated with sending aircraft to Dubai or Singapore.
International carriers, who have been increasing their flight routes to India, can have their
aircraft serviced in India, thereby leveraging cost arbitrage opportunities.

Given the growth of Indian aerospace, it is logical to build a MRO infrastructure to support
current and future growth in the sector. In addition, the growth of several low cost carriers

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in India has increased competitive pressure on the aircraft majors who would prefer to have
aircrafts serviced locally to reduce costs and on-ground time.

( iv) Graded Development

While there is tremendous potential for India to develop capabilities in all segments,
currently airframe is the prime candidate for offshoring to India, especially for airlines with
over 30 aircrafts, due to its labour intensive nature. As MRO players’ competencies grow,
line maintenance and component repairs will be the next segments to be offshored. Engine
overhaul is likely to be the last segment to be offshored to India after the Indian MRO
market has matured.

In order to become a major player in the MRO segment, India needs to address the following
issues:

• Tax & Regulatory Environment

Participants in India’s MRO industry believe that the tax regime needs to change in
order to enable India to positioning itself as an MRO hub to the world.

• Land Allotment Processes

A challenge for MRO players is the absence or shortage of land at India’s major
airports. The lack of clarity behind land allotment and its unpredictability are issues
that deter potential MRO players.

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 2. KARNATAKA
AEROSPACE INDUSTRY
Karnataka is becoming one of India’s most dynamic states! The State government is
positioning Karnataka as a major investment destination for a range of industries that
include IT, auto, steel and aerospace.

With the establishment of Hindustan Aeronautics Limited (HAL) in Bengaluru, Karnataka has
come to be regarded as a pioneer in the aerospace industry. The State is positioned as an aerospace
destination due to the activities of numerous aerospace companies and PSUs engaged in manufacturing,
design and development, and Maintenance, Repair and Overhaul (MRO).

The various hubs of expertise in Karnataka include:

 Aerospace zone : Belgaum

 Automobile zone : Ramanagara, Shimoga, Dharwad and Kolar

 Steel zone : Bellary, Koppal, Bagalkot, Haveri, Gadag and Raichur

 IT / BT zone : Mysore, Mangalore, Hubli-Dharwad, Belgaum, Shimoga.

2.1 Advantages
With the establishment of Hindustan Aeronautics Limited (HAL) in Bengaluru in 1940,
Karnataka has come to be regarded as a pioneer in the aerospace industry. The State is positioned as an
aerospace destination due to the activities of numerous aerospace companies and PSUs engaged in
manufacturing, design and development, and Maintenance, Repair and Overhaul (MRO). In addition, several
educational, scientific and technical educational institutions are fostering domain expertise in IT, engineering
and design skills that can be leveraged by aerospace majors.

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2.1.1 Presence of scientific and
technical institutes
The presence of scientific and academic institutions, such as the Indian Institute of Science
and Indian Institute of Management, enable the development of well qualified technical
experts who can be absorbed into aerospace majors’ operations. The city also boasts of
other prestigious colleges and research institutions.

2.1.2 Deep aerospace expertise

Most of the development of India’s aerospace sector has been concentrated in Bengaluru. The beginning of Karnataka’s
aerospace industry was heralded by the establishment of HAL in December 1940. Other important organisations include
–

 Indian Institute of Science and Council for Scientific Industrial Research that offers
opportunities in research and training for aeronautical graduates.

 The Government-funded Indian Space Research Organization is headquartered in

Bengaluru, and shares good synergies with other firms operating in aviation and aerospace sector.

 The Aeronautical Society of India formed a platform where engineers, industrialists

and professionals could work together for the industry.

Major aerospace organisations are located around Bengaluru, including HAL, National Aerospace
Laboratories (NAL), QuEST Global, Taneja Aerospace and Aviation Ltd, Dynamatic Aerospace, Air Works India
Engineering Pvt Ltd, The Society of Indian Aerospace Industries and Technologies, etc.

India’s flagship aircraft manufacturing and aviation research organizations are located in
Karnataka, including:

 Hindustan Aeronautics Limited (HAL)

 National Aeronautical Laboratory (NAL)

 Aeronautical Development Agency (ADA)

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2.1.3 IT expertise and skill sets
Since independence in 1947, Bengaluru has developed into one of India’s major economic hubs and is today
known as the Silicon Valley of India. Karnataka boasts the presence of major IT companies such as HCL, Infosys, Tata
Consultancy Services, Wipro, QuEST, etc. Karnataka-based professionals have developed deep IT domain experience.
Bengaluru is the world’s fourth-largest technology cluster.

2.1.4 Manufacturing expertise

Bengaluru serves as headquarters to several public manufacturing heavy industries such as HAL, NAL, Bharat Heavy
Electricals Limited (BHEL), Bharat Electronics Limited, Bharat Earth Movers Limited (BEML) and Hindustan Machine.

It also has a proximity to its vendor base as there are approximately 2,000 small and medium enterprises
focused on component manufacturing, tooling and testing equipment, and assembling. These companies meet the demand
of HAL, NAL and ISRO in addition to global aerospace firms.

2.1.5 Government support

 The State Government is investor-friendly and has simplified procedures and fast
tracked approvals through Single Window Mechanism.

 Companies can also receive assistance from Karnataka Udyog Mitra.

 The Government is building airstrips and helipads in almost all districts.

 Karnataka is one of the most progressive states in terms of the business

environment for international investors.

2.2 Issues to address

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Talent and manpower cost competitiveness, location-specific advantages and the presence
of specialist capabilities make Karnataka a global/regional hub for manufacturing and for
MRO activities. That being said, some challenges facing the State include -

 Bengaluru faces competition from other cities, such as Hyderabad, Chennai and
Nagpur, in the area of aerospace manufacturing. These cities are actively promoting
aerospace SEZs and are trying to attract foreign investment. Karnataka can
showcase multiple destinations within the State as hubs for activities in the
aerospace value chain, thereby assuming a larger share of potential business.
Karnataka has the advantage that it can project multiple cities (i.e., Bengaluru,
Mysore, Belgaum, etc.) as aerospace hubs.
 As in the rest of the country, infrastructure is a key challenge in Karnataka. While
infrastructure facilities have improved there is a need to do more and develop more
robust infrastructure - availability of land, quality power and water.

 An issue facing the industry (particularly the MRO sector) is a shortage of land.
MRO units should be located close to airports. That said, the land acquisition
process is time-consuming. The Government has addressed this by proposing a
MRO near the international airport in Bengaluru.

2.3 Investments in Karnataka

 Global and domestic companies have been and continue to invest in Karnataka: In
March 2009, Boeing launched the Boeing Research & Technology-India centre to
carry out continued collaboration with Indian R&D organizations, including
government agencies and private sector R&D providers, universities and other
companies. Boeing has been working together with the Indian Institute of Science
and Wipro and HCL, as part of the Aerospace Network Research Consortium. This
is India’s first public-private aerospace research consortium.
 European Aeronautic Defence and Space Co (EADS), which owns aircraft
manufacturer Airbus, commenced research operations in Bengaluru in December

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 2009 with the opening of an innovation centre. EADS Innovation Works,
Bengaluru, is the third facility outside Europe and second in Asia after Singapore.
 Rolls-Royce and Hindustan Aeronautics Limited signed an agreement in March
2010 to create a manufacturing joint venture company in Bengaluru, India. The
new company, a 50:50 joint venture between Rolls-Royce and HAL, will
manufacture compressor shroud rings. Construction of a new purpose-built
production facility, incorporating the latest in modern manufacturing techniques,
will commence in 2010
 Honeywell inaugurated a Rs.253.09 crore ($50 million) research, development &
engineering facility at Orion, Outer Ring Road in Bengaluru in May 2009. The new
R&D facility will accommodate 3,000 people and have laboratory facilities,
simulators, and a training centre.

3. KARNATAKA’S
COMPETETIVENESS AS
AN INVESTMENT
DESTINATION FOR
AEROSPACE
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India received the largest number of R&D investments and the second-largest number of
manufacturing investments between 2000 and 2008, of which a major portion was awarded
to Karnataka. Current estimates of revenues from export of mechanical engineering design,
embedded systems/avionics and components manufacturing in the aerospace sector stand
at USD 1.5 billion.

3.1 Karnataka as an
Aerospace Hub for
Manufacturing
With the headquarters and laboratories of Hindustan Aeronautics Limited in Bengaluru,
Karnataka has been a pioneer in developing new aircrafts and helicopters for the Indian defence and domestic
civilian use. HAL has always been at the center of India’s aircraft manufacturing program. HAL’s joint
venture with Snecma, a global manufacturer of jet engines for commercial aircrafts, is based in Bengaluru
and aims to produce components for aircraft jet engines.

To further enhance Karnataka’s ability as a manufacturing base for aerospace companies

and to leverage its potential in the international market, the State government has planned
an aerospace SEZ at Devanahalli. Located close to the new Bengaluru International Airport, the
SEZ has already received commitments from major companies that include:

• Starragheckert Aerospace Components

• Systems Controls

• G.L. Polyurethane Company Private Ltd.

• Micron Engineers

• Priyaraj Electronics Limited

• Pacific Natura Biotech Private Limited

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The establishment of this SEZ will also help compliment the knowledge, skills and
technology transfer that will occur in the existing QuEST Global Precision Engineering
SEZ in Belgaum.

Karnataka provided a balanced ecosystem of manufacturing and services companies.

While many large firms like Bharat Earth Movers Limited, Robert-Bosch International and
Volvo India Limited operate from Bengaluru, other new companies are establishing operations in the
city’s outskirts, in key industrial belts surrounding Bengaluru and in north Karnataka.

The growth of other allied industries has helped the aviation manufacturing industry due to
increasing maturity of suppliers and economies of scale.

3.2 Karnataka as an
Aerospace Hub for MRO
Reports estimate that India will need over 900 commercial aircrafts over the next 20 years.
MRO operations are required to maintain the growing fleet of aircraft for Indian carriers.
The opening up of Indian skies and increasing recognition of the talent pool in India has
made the country into a very attractive destination for MRO services. India’s MRO
industry earns over USD 1 billion in revenues and has been growing at a tremendous pace.

Currently, some defence aircraft in India are being overhauled by HAL. The Indian MRO
industry faces tough competition from countries, like Singapore and Dubai. Despite this,
the MRO segment has been growing with new investments, many occurring in Bengaluru.
Selected initiatives by large MRO companies to enhance their footprint in Karnataka include:

 HAL proposed to set up an MRO unit with an initial investment of INR 120 crores
at the old Bengaluru airport owned by the company.

 National Aviation Company of India Limited (NACIL) signed an agreement with

Airbus and Bengaluru-based Jupiter Aerospace to form a MRO joint venture. The joint venture is
for MRO and life cycle support of commercial aircraft.

 Indian helicopter sales and support company Indocopters will open its third MRO
facility for Eurocopter rotorcraft in Bengaluru in the second quarter of 2010.

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  Air Works India Engineering Private Ltd plans to invest approximately USD 120
million over the next three years to establish a MRO center near Bengaluru.

3.3 Karnataka as an
Aerospace Hub for IT,
Design and Engineering
services
As the Silicon Valley of India, Bengaluru maintains the highest concentration of highly mature IT and
engineering services firms. Local software majors like QuEST, HCL, Infosys, Tata Consultancy Services and
Wipro have been serving clients in the global aviation and aerospace industry for many years. Global leaders
in aerospace have also established their technology and engineering services support centres in Bengaluru.
For example:

 Honeywell Technology Solutions is a research lab headquartered in Bengaluru and is

working on developing and testing flight management systems. The lab offers technical research and
development services to Honeywell business across the globe.

 Infosys Technologies Ltd, another major software firm, is a partner in forward

integration and helps build aircraft components and systems for customers, such as
Boeing and Airbus, through local vendors. In addition to delivering software and
engineering services for aerospace clients, the company is now part of the product
supply chain.

 Wipro Ltd is another large software firm that helps build electronic warfare
systems, radars, aviation electronics and flight simulators locally for US defence
contractors, such as Lockheed Martin and Northrop Grumman. The company also
maintains a tie-up with Britain’s largest defence manufacturer, BAE Systems, to
build sub-systems for aircraft engines that power business jets.

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  HCL Technologies is also a leading software firm with a good clientele in
engineering services for aviation and aerospace sector. The company is a strategic
partner for Boeing’s Dreamliner program and is a major player in the offshoring of
aerospace technological development services. The company has also augmented
its aviation and aerospace capability by its joint venture with Smith’s Aerospace
and by its acquisition of Axon Consulting which has strengths in aviation MRO.
This acquisition enabled the company to acquire business from Jet airways in India to manage their
MRO technologies.

 Airbus established an engineering centre in Bengaluru in October 2007. Almost 120 staff
are employed and Airbus hopes to increase its staff strength to 400 by 2012. Airbus plans to
outsource 40 percent of aircraft design to local companies. This engineering centre is the only one
outside Europe for Airbus. Additionally, Airbus outsources work to 20 Indian IT and engineering
service providers that include Infosys, Quest, HCL Technologies, etc. According to media reports,
Airbus plans to move 20 percent of its engineering design activities to low cost countries, most of it
to India.

 QuEST Global, the Bengaluru-based engineering company, entered into a 10-year strategic
relationship with Magellan Aerospace. In 2007, the firm set up the country’s first special processing
facility for aerospace manufacturing, delivered the first set of A-380 components to SABCA and
achieved Airbus AS 9100 certification. Quest is the first Indian private sector player qualified to
offer end-to-end solutions to EADS.

3.4 Karnataka as an
Aerospace Hub for R&D
and Simulation
India is an attractive destination for simulation and R&D due to its inherent advantages of
a large number of highly qualified low cost engineers and scientists. Earlier, simulation
and high-end research was the forte of Government-owned organizations like
DRDO,GTRE, ISRO and CSIR; all these organizations are based in Bengaluru. In the last

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decade the country has welcomed private foreign investment in R&D with government support and tax
incentives. Some leading aerospace companies have engaged with their counterparts in India to enhance their
aerospace simulation and R&D capabilities:

 Airbus Engineering Centre in Bengaluru is the company’s high-tech aircraft component

manufacturing facility that works on the development of tools to aircraft design and structural
analysis using software based simulation, among other things.

 CAE, a global leader in aviation simulation products and training services, made
Karnataka its base in India, and is operating from an owned facility near the new
Bengaluru international airport. The Airbus A320 and Boeing 737 Level D full-flight simulators in
the CAE facility are certified by India’s Directorate General of Civil Aviation.

 Boeing entered into agreements with Indian Institute of Science, WIPRO and HCL
to develop wireless and other network technologies for aerospace related
applications.

 Mahindra and Mahindra signed an agreement for the design and development of a
new general aviation aircraft with NAL, CSIR and the Government of India.

 The wind-tunnel testing center at NAL is the primary simulation testing facility for
aircraft engines in India.

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 Fig1: BIA LOGO

FIG 2: A MAP SHOWING THE EXACT LOCATION OF BIA

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 4. BENGALURU INTERNATIONAL AIRPORT LIMITED
(BIAL)

4.1 INTRODUCTION

The New Bengaluru (Bengaluru) International Airport, the first private Greenfield airport
of India, built on the city outskirts began operations on the night of 23 of May 2008. The
airport began construction in July 2005 and following endless government and airport
authority negotiations the project's first phase (conceived in 1993) got underway. The
terminal and airport went through some last-minute design changes in late 2005 to
accommodate an increase in the expected passenger traffic for the projected opening date
in 2008. Though it was expected to be inaugurated on 30 March 2008, but due to delays in
air traffic control (ATC) services, it started its operations only on the night of 23 May
2008, just before midnight.

Situated at a distance of 40 kms from the heart of the city the Bengaluru International
Airport is located at “Devanahalli”. It has replaced the existing HAL Bengaluru
International Airport and is definitely a step ahead in time. There are further expansion
plans that are proposed to keep pace with time and the growing requirements. The airport
aims at making air travel both convenient and comfortable to the traveller.

The next stage of work involves addition of runway and also other facilities like business
centers, a luxury hotel and shops. Facilities of increased number of aircraft stands and
support facilities is all part of the package. Plans are underway and are at various stages of
execution. The airport can cater to as many as 12 million passengers annually and is further
estimated to cater to over 18 million passengers annually. BIA is considered to be the
fourth busiest airport in India after Mumbai, Delhi and Chennai. BIA is spread over an area
of over 4,050 acres and confirms to international standards in every way. It is
modernization at its very best and offers a facility that is one of the best in the country.

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The airport a private collaboration venture paves way to a new trend. It is a symbol of
sustained and dedicated efforts that have borne fruit and marks the beginning for further
progress and development in the country as a whole.

4.2 CERTIFICATIONS

Bengaluru International Airport Limited (BIAL), is a public limited company, registered

under the Indian Companies Act. A private-public venture, the project realized so far and
the upcoming phases are being built and will be operated by the company for the next 30
years with an option to continue for another 30 years.

BIAL is committed to establishing this airport as one of India’s leading projects in terms of
quality and efficiency and set a benchmark for the future commercial development of
Indian airports. The airport is built and operated at best international standards. With new
routes being introduced at an increasing pace, Bengaluru is poised to become an important
aviation hub for the South of India. Winning the Routes Asia airport marketing award in
2009 reflected these sustained efforts of BIAL.

Certifications Received:

• In January 2010, Bengaluru International Airport received a platinum certification

from IATA for becoming the first airport in India to be 100% Bar Coded Boarding
Passes (BCBP) compliant. This is testimony to the fact that BIAL has and will
continue to pioneer best practices in the industry

• In early 2010, BIAL also received the ISO 14001:2004 certification, an official
recognition of the airport management’s constant efforts towards a greener airport
and city.

• In May 2010, BIAL received ISO 27001 certification for Information Security
Management System Standards. Bengaluru International Airport was
acknowledged for its operational excellence in April 2010 with the title of the Best
Emerging Airport – Indian Sub-continent by Emerging Markets Airports Awards
(EMAA) hosted by the acclaimed Airport Expo, Dubai.

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4.3 NEW HUB UNDER THE SILICON SKY

The new Bengaluru International Airport is envisioned to meet the growing aviation needs
of the city through the development of a passenger friendly and a financially sound airport.
Located east of the Bengaluru-Hyderabad national highway (NH7), the new airport is 40
kilometres North of Bengaluru’s central business district and 4 kilometres south of
Devanahalli. The site spans an area of approximately 4000 acres and will comprise all the
modern amenities a traveller is looking for in terms of convenience, comfort and
connectivity.

Since the airport opened in May 2008, the airport has welcomed the introduction of five
new international carriers into Bengaluru making new destinations directly accessible to air
travellers. These include Dragon Air, Tiger Airways, Oman Air, Air Mauritius and most
recently Kingfisher Airlines to London and Colombo. The metropolitan area of Bengaluru
has been one of the most neglected areas in India for international travel connections
despite the area's burgeoning technology prowess.

Bengaluru is known as the silicon valley of India and is already considered to be one of the
largest biotechnology hubs in the country. But now, with the international facilities in BIA,
we can surely hope for further success in Bengaluru’s both commercial areas and in the
tourist industry.

The Bengaluru International Airport is a step ahead in time and helps in positioning
Bengaluru higher on the world tourism map. It is one that would take the city and also
India a long way ahead in time.

4.3.1 FACILITIES AND INFRASTRUCTURE

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One of the main reasons for shifting the BIA from HAL to Devanahalli was because of the
increasing congestion due to domestic and cargo freighters which in turn was due to the
increasing developmental activities taking place in Bengaluru. So, the Master plan of BIA
mainly focuses on making it capable of handling large capacity airplanes and cargo, and
effectively managing a future passenger traffic capacity of 50 million.

(i) Terminal

The planning approach for the passenger terminal is to accommodate all passengers
handling and processing at one central location. Easy check-in, ease of movement to
departure gates, minimal queuing, as well as comfortable shopping and waiting areas, are
all key features of this huge terminal building.

( ii) Layout

The passenger terminal is a single, fully air-conditioned, two-level building capable of

accommodating international and domestic operations. The basement houses the retail
storage, rest areas and services. It covers 71,000 square meters.

The arrival and departure areas are separated vertically with a modern, simple, straight-
ahead flow system. The domestic and international departure lounges, and the majority of
the retail outlets are located on level 2 (first floor). The check-in facilities and baggage
reclaim are located on level 1 (ground floor). The terminal is designed for ease of operation
and minimum maintenance.

(i ii) Capacity

BIAL is capable of handling 11 million people per annum and the terminal building is
designed to accommodate 2733 passengers at peak hour. The design reflects the best

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industry practice and caters for 24-hour-operations, under all weather conditions. All
facilities provided are according to the IATA standards.

(i v) Connectivity

Lack of connectivity was one of the major disadvantages faced by passengers in the
beginning. It was due to the traffic build-up which increases the travel time. In an attempt
to reduce this problem, the Bengaluru Metropolitan Transport Corporation (BMTC) has
introduced special Volvo buses called "Vajra Vayu" and Suvarna Sarige / Parisara Vahini
Service to facilitate easy travel. Two city-based private travel operators - ‘Airlift’ and
Zoom Airport Express (ZAE) have also launched a commuting service to the airport.
BMTC has also selected Meru Cabs and SGL who offer their vehicles as an airport
dedicated service.

FIG 3 : BENGALURU INTERNATIONAL AIRPORT

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 FIG 4 : AIR TRAFFIC CONTROL WATCH TOWER

(v) Apron

The layout of the apron and terminal has been designed to reflect international standards.
The apron has provides sufficient space for taxiing, parking, loading and unloading of the
aircraft during the peak period as well as for all the support facilities that are required to
ensure that the aircraft are handled quickly and efficiently. The objective of the apron
design is to provide airside roads and equipment parking areas, towards ensuring that
ground support for aircraft is sufficient and efficient and secondly for ensuring that the
operations can be conducted safely.

( vi) Aviation equipment

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The new airport has been fitted with aeronautical equipment as per ICAO standards. They
include:

• Lighting

Matching runway lighting with runway edge lights, threshold, runway-end lights,
touchdown lights together with precision two-approach lighting systems has been installed
as per the norms. A taxiway lighting system for the partial parallel taxiway, the exit and
entrance taxiways and the connections to the apron have been implemented. Apron
floodlighting is provided to allow for efficient and safe handling of aircraft during night
operations. On the apron, a simple (non-electronic) docking system has also been installed.
An approach radar system is installed. This is located onsite as well as offsite.

• Air traffic control facilities

The Air Traffic Control (ATC) tower located on the landside is a 65-metre tall
construction. This height will provide a free line of sight from the control cabin to the
operational areas and the approaches. The control cabin is provided with communication
equipment, consoles, etc.

For air traffic control services which are not performed in the tower, (such as control area,
and approach control) an ATC complex (Technical Block) has been developed with a floor
area of approximately 2,000 square meters. The technical block encompasses ATC
briefing, anti-hijacking control room, MET department, electronics workshop, data
management system, library, training rooms and offices.

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FIG 5: BIAL SHAREHOLDERS

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 • Aircraft Movements

The aircraft movement in BIAL is around 27 flights per hour and there are 54 check-in
counters with 16 gates. There are 8 aero bridges this includes one double arm aero bridge
and 45 aircraft stand to support the air traffic entering the airport.

• Rescue and Fire fighting facilities

The rescue and fire fighting facilities are based on the dimensions of the aircraft using the
airport as adjusted for their frequency of operations. Airports are categorized for rescue
and fire fighting purpose by counting the aircraft movements in the busiest consecutive
three months of the year.

The airport is equipped to provide a level of protection corresponding with aerodrome

category IX. This category meets the fire fighting and rescue requirements for airports
where more than 700 movements of aircraft take place within the busiest consecutive three
months of the year.

4.3.2 ADMINISTRATION AND MAINTENANCE

(i) Project cost and Funding:

Private promoters hold a 74% stake in BIAL while the state holds the remaining 26%. The
project is being undertaken by a foreign consortium consisting of Siemens, Zurich Airport
and Larsen and Toubro. These three companies all hold equity in the project although at
the moment overall operations and financial control would still fall to the AAI. The
shareholding of the project works out as follows:

AAI: 13%

Karnataka Government: 13%

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Larsen and Tourbo: 17%

Unique Zurich Airport: 17%

Siemens Project Ventures: 40%

BIAL has a contract with the Siemens Industrial Solutions and Services Group (I&S) and
Siemens Ltd India for the job of equipping the airport in Bengaluru with technical systems.
The contract includes the supply, engineering and installation of airfield lighting, the IT
and communication systems, the baggage handling system as well as the power supply and
the building services automation system. The order is valued at approximately $75m.

This is the reason why BIA is still known to be a private airport rather than a government
airport because the ownership of the airport is still with BIAL. Government as of now does
not have any control on the airport; it actually failed to get the control from BIAL.

(i i) Cargo

Initially, the old Bengaluru airport started with only 3 domestic freighters carrying cargo to
and fro Bengaluru. They were Mumbai (IA 107), Delhi (IA 403) and Chennai (IA 109).
Around the year 1992, few international freighters like Lufthansa, Singapore, Kuwait,
British, Malaysian, Air France and Sri Lankan airlines started their service in Bengaluru.
The Lufthansa freighters mainly carried automobiles and textiles from Chikpet (Karnataka)
& Tirrupur (Tamil Nadu). It operated on a weekly once basis and carried both passengers
and cargo at the same time. The Singapore airline unlike Lufthansa was a larger freighter
and could carry more volume of cargo along with passengers. This was a daily freighter
and since it was only a 2 hour’s journey from here to Singapore, this was considered to be
much less time consuming and easy, hence this was preferred over the other freighters.
Though Air France also had big freighters, in fact bigger than that of Singapore airlines, it
was not operated very frequently because of its relatively longer travel time.

Function

A cargo complex is essential to store, palletize and transfer cargo to and from the aircraft,
and to provide space for trucks to load and unload their goods. On the airside there is space

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provided for the loading and unloading of cargo, together with space for cargo handling
equipment to operate and be stored and maintained. There are also storage space
designated for storage of container equipment and pallets.

The airport's cargo village spreads over 11 acres of land and it began its operations in early
January 2009. It is expected to strengthen the commerce and trade in Bengaluru, ensuring
speedy clearances of import and export consignments from the cargo terminals at the
airport.

An investment of about $2.5m (INR120m) has been made towards the facility, which was
completed over a period of ten months. The facility will house 120 freight forwarders and
80 custom house agents. However as air cargo is expected to expand over the years, the
Master plan has earmarked large area for a cargo apron. The consortia that have developed
a state-of-art cargo handling facility for domestic as well as international cargo are SATS /
Air India and Bobba Group / Menzies Aviation. The cargo complex approximately
handles 300’000 Tons of cargo annually.

(i ii) Maintenance:

Maintenance facilities will be required for motor vehicle repair, electrical repair, painting
(runway/buildings) and mechanical repair. The maintenance facility buildings covers an
area of 2377 square meters, and include a fuel station, storage space for materials and spare
parts.

Trucks have been deployed to transport the cargo to and from the aircraft to the cargo
terminal. The security of the entire airport is taken care by the Border Area Security Force
(BOASF). Furthermore, Security measures with electronic devices have also been provided
to minimize theft or unlawful removal.

The security measures include 5 levels of screening system:

• Level 1: Automatic detection of explosives by Level 1 x-ray machines.

• Level 2: Operator scan of Level 1 pictures of the bags rejected by the Level 1
Automated X-ray machines.

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• Level 3: Detailed inspection of the bags rejected by the operator at Level 2, with
the help of highly sophisticated X-ray machines with 3D visibility.
• Level 4: Bags rejected at Level 3 will be subjected to testing by an Explosive Trace
Detection System.
• Level 5: Rejected bags will be examined in the presence of the passenger

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FIG 6: A SNIPPET ON AIRPORT CITY

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4.4 AIRPORT CITY

As a part of the overall master plan, BIAL has earmarked approximately two hundred and
fifteen (215) acres of land within the project site for the first phase of commercial real
estate development. BIAL’s vision is to develop this prime property called ‘airport city’ as
a destination in itself and create a premier business, retail and entertainment hub. This area
will be a well balanced mix of office parks, retail and entertainment and hospitality.

Avoiding the rush of the main city, the busy traveller and the executive have an easy
access to a welcoming hotel at the new Bengaluru Airport.

BIAL had selected the Oberoi Group to operate a first class international hotel of
competitive scale and standard under the Trident Hilton brand. This truly is the first
Airport hotel in India within walking distance from the terminal building. The selected
consortium consisting of Larsen & Toubro and the Oberoi Group are responsible for the
design, construction, financing and operation of hotel facilities at international standards.
The combined investment committed by L&T and The Oberoi Group is approximately
INR 250 crores.

The hotel will comprise of 321 rooms, large conference facilities, restaurants and a world
class spa and has been operational since November 1, 2008.

In future, the airport city will have more hotels complimenting one another, along with
destination retail, serviced apartments, office park, software campuses and a lot of free
public spaces, which will make it a truly global enclave.

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 TABLE 1: TOTAL PASSENGERS

SCENERIO 2010 2015 2020 2025

Optimistic 10,190,762 13,922,812 18,193,819 23,444,066
Most likely 8,540,579 11,369,184 14,536,743 16,441,082
Conservative 7,144,506 9,777,469 12,284,213 15,377,190

TABLE 2: TOTAL CARGO

SCENERIO 2010 2015 2020 2025

Optimistic 257,263 334,795 426,367 538,844
Most likely 234,017 299,303 375,118 469,179
Conservative 198,565 255,033 316,118 391,855

TABLE3: TOTAL MOVEMENTS

SCENERIO 2010 2015 2020 2025

Optimistic 125,221 158,100 191,487 228,967
Most likely 106,191 130,464 154,530 182,169
Conservative 87,885 112,057 130,467 152,211

TABLE 4: MOVEMENT AT PEAK HOUR

PEAK HOUR 2010 2015 2020 2025

MOVEMENT
Total 27 30 30 35
Arriving 16 15 16 18
Departing 19 20 20 20

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4.5 TRAFFIC FORECAST

Air traffic forecasts help create policy on airport capacity, foretell and give insight on
future capacity, help analyse the economic implications of policy alternatives, and serve as
reference for other government departments.

India's economic success in the recent few years has created significant demand for air
travel. Further, the Government of India’s policy to liberalize air traffic has encouraged a
number of international airlines to fly into Bengaluru and new airlines to fly in the
domestic sector.

With the passenger traffic at the HAL airport increasing from 2.3 million in 2001 to
approximately 5 million in 2005, BIAL updated its traffic forecast and developed planning
parameters.

4.6 LAUNCH OF THE CIVIL DEFENCE UNIT

Bengaluru International Airport Limited (BIAL) today held an event along with the
Directorate of Civil Defence, Karnataka to formally launch its own Civil Defence Unit,
named “Bengaluru International Airport Area; Division Number 22”. An overwhelming
number of over 300 employees from different organizations within the airport were
received. The Chief Guest for the event that included oath taking by 35 volunteers was
Director General of Police Dr. Jija Madhavan Harisingh, IPS.

This Unit has been deemed as the first airport led Civil Defence Unit in the country.
Volunteers of the Civil Defence Program have already embarked on training programs in
Disaster Management, Communication service, casualty service, Firefighting service,
Rescue service, community-patrolling as well as in mitigating accidents ensuring that they
are prepared in case of any eventualities, disasters or crisis. With support from the
Directorate of Civil Defence, Karnataka, the Civil Defence Division at the Bengaluru
International Airport area aims at saving lives while minimizing damage to the property
and keeping up the morale of the public in the event of an emergency.

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4.7 REVENUE FOR BIAL

BIAL has recorded an operating profit of Rs 211.5 crore in FY10. BIAL’s revenue comes
from 2 avenues-Aeronautical revenue and Non Aeronautical revenue.

4.7.1 Aeronautical Revenue

The aeronautical revenue comes from airlines, ground handling, passenger tax, aerobridge,
UDF... etc. It contributes about 80% of the airport revenue. Last year, in the month of
October there was a sudden fall in the aeronautical revenue of the airport because of the IT
recession. The shift of the airport along with this recession factor, affected the growth of
BIAL contemptibly.

User development fee (UDF), is charged globally to passengers primarily to generate

aeronautical revenue for the sustenance, maintenance, operation, management and
development of the airports. The UDFs levied on domestic and international passengers are
used for providing passenger amenities and services. The Ministry of Civil has increased
the UDF and it is Rs.675 plus taxes for domestic and Rs.955 plus taxes for international
passengers, as per the concession agreement the BIAL signed with the central government.
Independent regulatory authorities monitor and determine the user fee.

4.7.2 Non-Aeronautical Revenue

The main part of the non-aeronautical revenue involves, developing the 515 acre real estate
near the airport with a thrust on commercial usage such as building a maintenance, repair
and overhaul facility, cargo & logistics Centre, airport city, hotel and conference Centre.
BIAL earns about 34% of its revenues from non-aeronautical services such as retail and
food & beverages. BIA also receives a rent from those airlines and other private flight
owners, who have got their personal offices in BIA for example, the owner of kingfisher
airlines, Mr. Vijay Mallya has been given a personal office at BIA for which he pays the
rental charges as demanded by the BIA. This rent again adds on to the non-aeronautical
revenue of the airport.

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Once the airport city project kicks off, it will take away BIAL's focus from aviation
business to overall development of the airport city that will generate more than 50% of its
revenues. The shift in the revenue mix of the airport would alter it to hybrid model, which
would see cross-subsidization of passenger charges by non-passenger earnings

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 FIG 7: A SNIPPET ON EXPANSION PLANS OF BIA

4.8 BIAL UNVEILS TERMINAL 1 EXPANSION PLAN

The expansion of the existing T1 (Terminal 1) has been designed to enhance the
operational performance in order to handle the increase of passenger traffic between now

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and 2015. The traffic is estimated to increase from the current 10.6 million passengers
annually to approximately 17 million passengers. The expansion is scheduled to be
completed in 18 months from the commencement of its construction at an estimated cost of
Rs. 1000 crores.

The enhanced T1 will be spread over an area of approximately 1,34,000 square meters.
Designed by HOK, along with several leading international architects, planners, urban
designers, landscape architects & engineering consultants the expanded T1 sports an
enhanced and modern design elevation. It also forms a dramatic canopy to the main
entrance, offering passengers and public a giant covered area, protected from the weather.
The undulating wave form provides the Terminal with greater physical presence.

Unveiling the T1 expansion design, Mr Sanjay Reddy, Managing Director, BIAL added
“The expansion of the existing terminal marks a significant milestone for Bengaluru
International Airport. The radiant interiors and breath-taking exteriors will be designed to
mirror the rich culture of Karnataka and the vibrant colours of the Garden City”

5. KARANTAKA STATE GOVERNMENT POLICY

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5.1 Karnataka Udyog Mitra (KUM)
KUM was set up more than a decade ago and it works as a single point contact for all
investors ,from receiving a proposal to ensuring its implementation, KUM is actively
working with the investors at all stages.

The State Level Single Window Clearance Committee and the State High Level Clearance
Committee (for investments greater than INR 50 crore) have been working to clear proposals
in a speedy manner.

5.2 Air Connectivity

 At present, the State has two international airports At Bengaluru and Mangalore.
Bengaluru international Airport Limited was the1st private airport in the country
and has capacity to handle 3000 passengers per hour
 There are also two domestic airports catering to northern part of the state at Hubli
and Belgaum. The present airport at Mysore is under upgradation and will be soon
open for commercial traffic.
 The government has:-
• Started developing airports at Hassan, Shimoga, Bellary, Bijapur and
Gulbarga.

• Started upgrading existing airports at Hubli, Belgaum and Mangalore.

• Started adding 12 airstrips in the state.

• Opened Karwar and Bidar Defence Airports for civil traffic.

5.3 Skilled Manpower

 With experience for more than six decades, the State has built considerable human
capital resources that are available to companies engaged in the aerospace sector.
Research, development and engineering design capabilities are well-developed in the
State through the presence of internationally-renowned institutions, such as the
Bengaluru-based organizations, HAL, DRDO, ISRO, NAL, IISC.
 Global manufacturers are comfortable outsourcing India, particularly Karnataka,
because of the presence of electronic and technical skills and fluency in the English
language. Under the Government of India’s Skill Development Initiative, the

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 Modular Employable Skills Scheme has been initiated in Karnataka. In 2009-2010,
340 modules were developed in 32 professions for training of unorganized labourers,
with priority given to automobile, construction of building, hospitality and
electronic fields.

5.4 Tax Framework

India has federal organization of tax administration under which the Central
Government levies taxes on income, custom duties, central excise and service tax.
The State Government levies taxes, such as VAT, sales tax, works contract tax, etc.

5.4.1 Corporate Income Tax

 Foreign companies can have business presence in India either through
Project/Branch Office (foreign company) or by forming a subsidiary/joint venture
company (domestic company).

 The effective tax rate is 42.23 percent (including surcharge & education cess (S&C))
for foreign companies and 33.22 percent (including S&C) for domestic companies.

 Companies are liable to Minimum Alternate Tax (MAT) at 18 percent (plus S&C)
on book parts, when tax liability under normal Income tax provision is lower. MAT
credit is allowed against tax liability in subsequent 10 years under normal income tax
provisions.

 Domestic company is liable to pay Dividend Distribution Tax (DDT) at 16.61

percent (including S&C) on dividend. However, dividend income is exempt in the
hands of shareholders.

 Accelerated depreciation of 40 percent is available for Aeroplanes-Aero engines.

5.4.2 General

 International transactions with associated companies need to be at arm’s length

price and subject to transfer pricing regulations.

 Tax payer can approach high-powered Authority for Advance ruling to determine
income tax aspects of any proposed or current transactions.

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  India has entered into comprehensive treaties for avoidance of double taxation with
more than 75 countries and limited agreements with over 15 countries. Tax
implications under the domestic laws could be mitigated by resorting to tax treaty.

5.4.3 Direct Tax Code

 The Central Government has released the draft Direct Taxes Code which will replace
the Income-tax Act, 1961. The Code aiming to simplify the existing income tax law,
is designed to provide stability in the tax regime based on well-accepted principles
of taxation and best international practices.
 Some of the key changes proposals of the Code are:
• Reduction of the corporate tax rate to 25 percent.

• Transition of Minimum Alternate Tax from book profits to value of gross

assets
• Removing the distinction between long-term capital gains and short-term
capital gains.
• Introduction of branch profits tax for foreign companies.

• Introduction of general anti-avoidance measures.

• Advance pricing arrangement for Transfer Pricing

• Introduction of thin capitalization rules.

5.4.4 Indirect Tax Implications for Defence Sector

(i) Customs Duties

Effective customs duty rate on import of goods is 26.85 percent based on peak rate of
customs duty. Exemption from customs duty is available for majority of goods imported in
relation to defence subject to fulfilment of prescribed conditions.

(ii) Excise Duty

Effective excise duty rate is 10.3 percent (inclusive of education cess) on manufacturing
activity. Exemption from excise duty is available for goods manufactured for supply to
specified defence projects. Further, goods supplied against international competitive bidding
(ICB) are also exempt from excise duty subject to fulfilment of prescribed conditions.

(iii) Value Added Tax (VAT) / Central Sales Tax (CST)

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While inter-State sale of goods is subject to levy of CST, intra-State sale of goods are
subject to levy of VAT. The CST rate is 2 percent if the prescribed statutory form is issued
by the purchaser, whereas if no forms are provided, the VAT rate applicable in the
originating State of the Seller will be applicable. For most goods, VAT rate in Karnataka is
either 5 percent or 13.5 percent, depending on the nature of goods.

TABLE 5: RATES OF TAX COMPARISION

STATE TAX PERCENT ENTRY TAX RATE

KARNATKA 5/13.5 Product specific rate-ranging

from 1-5%

TAMIL NADU 5/13.5 NA

ANDHRA PRADESH 4/14.5 NA

MAHARASTRA 5/12.5 Product specific rate ranging

from 4-30%

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5.4.5 Goods and Services Tax (GST)

The Central Government proposes to simplify the various indirect tax levies through the
introduction of the Goods and Services Tax (GST) with effect from April 1, 2011. Some of
the key features of the proposed GST are:

 In the discussion papers released, the Government has indicated that GST shall have
two components, one levied by Centre and the other levied by States.

 The input tax credit for the central GST and the state GST would operate in parallel
and would be available for utilization only against the output payment of Central
GST and State GST respectively.
 Both Central and State GST would be levied on import of goods and services into
the country

5.4.6 Foreign Direct Investment Policy

(i) Civil Aviation and Airports

 FDI up to 49 percent is permitted for scheduled air transport services/ domestic

scheduled passenger airlines under the automatic route. NRI investment is
permitted up to 100 percent under the automatic route. However, no direct or
indirect equity participation by foreign airlines is allowed.

 For non-scheduled air transport services/non-scheduled airlines, chartered airlines

and cargo airlines, FDI up to 74 percent. NRI investment is permitted up to 100
percent under the automatic route.

 100 percent FDI permitted under the automatic route for Maintenance and Repair
Organisations (MRO), flying training institutes and technical training institutions.

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  FDI up to 74 and NRI investment up to 100 percent under the automatic route is
permitted for ground handling services subject to sectoral regulations and security
clearances.

 FDI up to 100 percent is permitted under the automatic route for helicopter services
/ sea plane services.

 100 percent FDI under the automatic route is permitted in setting up of Greenfield
airport projects.

(ii) Defence

 100 percent domestic investment is permitted in manufacturing defence equipment,

subject to industrial licensing by the Department of Industrial Policy and Promotion
(DIPP)

 FDI, including NRI investment, in this sector is permitted up to 26 percent subject

to prior approval of the Government and compliance with the security and licensing
requirements and guidelines issued by the DIPP.

 The guidelines for production of arms and ammunitions include stipulations that
the management of the Applicant Company/ partnership should be in Indian hands
i.e. two-thirds of the Board as well as the Chief Executive must be resident Indians.
Further, there is a three year lock- in period for transfer of equity from one foreign
investor to another foreign investor.

5.5 SPECIAL ECONOMIC ZONE AS A POLICY FRAMEWORK FOR

AEROSPACE MANUFACTURING IN KARNTAKA

 India’s SEZ Act provides excellent tax incentives to both developers and units
that are located in the Special Economic Zones. The SEZ Act provides scale
benefits to both promoters and investors, enabling India to become a preferred
destination for outsourcing manufacturing. The most significant aspect of the

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 policy is that there is no export obligation. Moreover, there is no such
requirement for the developer. Original Equipment Manufacturers (OEMs) can
develop a defence SEZ and invite its suppliers to set up units in it.

 In accordance with the above policy, the Karnataka government has proposed
to set up an aerospace SEZ, near Bengaluru International Airport at Devanahalli
with one thousand acres to be devoted to expansion of aerospace activity,
particularly MRO outsourcing. QuEST Global has already oriented its SEZ for
Precision Engineering to become India’s first aerospace SEZ in Belgaum in
November 2009.

V ISION FOR THE FUTURE (CONCLUSION)

Despite the setback that commercial airlines faced during the global recession, aerospace
remains one of the most important and dynamic sectors in the world. Now with economic
recovery in sight - and especially with India growing ever larger on the aerospace map - it
is high time the country gets cracking on this front. The Indian aerospace sector is growing
at 10 per cent per annum, but this is far below its potential.

Karnataka’s inherent strengths in providing a balanced ecosystem for manufacturing and

services companies and the current existence of a large density of aerospace institutions
and new companies establishing operations in the city’s outskirts, in key industrial belts
surrounding Bengaluru and in north Karnataka, combine to make Karnataka a very
attractive destination for the Aerospace and Defence industry and now with the new
Bengaluru international airport also operating, Bengaluru is considered to be the best
suited to have a dedicated industrial park for aerospace designing, engineering,
manufacturing, assembling and testing. BIAL has certainly been one of the reasons for
such rapid development of the Karnataka aerospace industry. It has paved the way for

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more airlines to enter Bengaluru and also contributed to the growing industry by providing
more land for shipments.

Hindustan Aeronautics Limited (HAL) has over 60 years’ experience in design,

development, manufacturing and maintenance of advanced Aircrafts, helicopters and
associated aero engines, aircraft systems, equipment and avionics. The deep-seated
foundation for Aerospace in Karnataka already exists in the form of suppliers, large and
small, who supply to major players like HAL, DRDO and ISRO. These Public Sector Units
with their cutting edge technology are not just making their mark in Global Aerospace
arena, but are also nurturing the eco-system of our State.

BIAL's impressive business strategy is evident from the fact that BIAL managed to get
away safe without raising too many questions even though it started its operations during
the recession hit period. BIAL’s innovative business strategies coupled with the immense
talent and skill of HAL surely promises to make Karnataka, the aerospace hub of not just
India but the aerospace hub of Asia.

B IBLIOGRAPHY

Websites
 www.google.com
 www.wikipedia.com
 www.bengaluruairport.com
 www.karnataka.com

Other Sources :
• Pdf document from HAL, regarding their recent developments and researches.

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 • Newspaper articles revealing details about the new terminals and infrastructure.

• Interview of Custom Clearance Officer .

Support Organizations:

Price waterhouse Coopers

 www.pwc.com/india

Pictures:
 www.flickr.com

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