Indian aerospace in a Catch-22 situation: Aequs

During the pandemic, the focus of many aerospace companies shifted to survival. While the industry sees constant cyclic turbulence, the pandemic induced a type of slowdown that nobody had experienced before. However, growth is inevitable. While international travel is estimated to recover fully by 2025, the domestic travel market is performing well. This trend has resulted in a spike in demand for single-aisle aircraft. The industry has seen the need for these aircraft increase by about 30-35 per cent, from 100 units per month (pre-Covid) to about 135 a month. The demand for smaller aircraft is likely to be higher in the future.

While the pandemic had a disastrous impact on every industry, the aerospace industry was dealt the most brutal blow. Aequs saw demand fall to as low as 70 per cent from the peak. However, we adjusted early to the situation as we had the foresight to understand that the pandemic was here to stay and would be a long drawn-out affair. We transformed to a new operating model, upgraded and set up new protocols, and put elegant lines of production to meet the immediate and ever-evolving demands. We upskilled our workforce and prioritised direct contact with our clients to discover newer opportunities. In a nutshell, we understood that continuous adaptation to the needs of this dynamic industry will help us achieve our goals in a ‘new normal.’ Our focus and drive to build conducive ecosystems that meet businesses’ needs globally were rewarded.

As of this moment, there is not enough production capacity to meet this demand. It is like a Catch-22 for the supply chain. One cannot predict for how long this surge will remain. So, we see some hesitancy in the industry to add capacity for short-haul aircraft. This demand could be a temporary side-effect of the pandemic, and long-term investment without adequate visibility could be a risk. A more significant issue is that the sector, particularly in India, lacks mentorship, R&D, and investments in big numbers to meet the surge in demand. While there has been tremendous support from the government to promote manufacturing, increased encouragement is needed to ensure manufacturers are confident enough to set up manufacturing facilities that will cater to the demand.

The short-haul market possesses a vast unrealised potential that can drive the economy. However, the nation must increase domestic connectivity to support it. In India, there are 500 key districts. But air connectivity is mainly restricted to State capitals. When airstrips are commissioned, they are usually expensive to maintain. There is a case for encouraging privately-owned sub-regional airstrips in and around all districts to create domestic flight options and boost connectivity. This will lead to significant growth in the economy.

Aequs is the only Indian aerospace manufacturer to deliver a seamless end-to-end manufacturing value stream to global OEMs. Since inception, that has been our aim, long before “ecosystem” became the buzzword of choice. As the country marches towards being “Atmanirbhar”, these ecosystems will be a driving force. They have helped create a flexible and adaptable system to changing needs. Further, the ecosystems have enhanced competitiveness. The manufacturing sector in India faces three significant problems – labour, infrastructure and scalability. We are focused on addressing all of them through these ecosystems. By building our facilities in the country’s hinterland, North Karnataka, to be precise, we have created employment opportunities for thousands of people and improved the infrastructure and communities of these areas.

Building on the success of our aerospace ecosystem, we are moving forward and replicating the model for other sectors. Aequs sets up two similar clusters or ecosystems for toy manufacturing and consumer durable goods. The Koppal Toy Cluster (KTC), India’s first toy manufacturing cluster, is close to commissioning. This cluster will attract an investment of over ₹4,000 crore and will create 25,000-plus direct jobs, primarily for women in North Karnataka. Likewise, the Hubballi Durable Goods Cluster (HDC) will be operational later this year, providing an end-to-end manufacturing platform. The opportunity is immense, and we are also open to extending the model to other sectors. There is tremendous interest from the industry and governments in what we are doing.