Aequs Aerospace Chairman and CEO Aravind Melligeri.
Aerospace manufacturing provider Aequs Aerospace plans to establish an engine MRO in the Belagavi region of southern India. Chairman and CEO Aravind Melligeri spoke with Aviation Week Network about the company’s plans for the new MRO facility and what will be needed to boost India’s MRO ecosystem.
Aequs recently signed a memorandum of understanding with Magellan Aerospace to develop a business plan for engine MRO in India. Aequs is mostly associated with component manufacturing, so what propelled you to focus on the engine MRO segment?
Our move into the MRO segment will not come as a surprise if one looks at Aequs’ aerospace journey. We have consistently added new capabilities and capacities since setting up the first unit at the Belagavi Aerospace Cluster (BAC) for surface treatment in partnership with Magellan 15 years ago. We have added new capabilities for machining, forging and aerostructure assemblies to complete the creation of an ecosystem of integrated and co-located manufacturing capabilities in one campus. The BAC, which is India’s first precision manufacturing special economic zone, also houses third party manufacturing units that comprise part of the ecosystem. It is a natural progression where we see synergies with Magellan to tap the immense potential in India.
What will the new facility entail, and will you also look at other MRO segments in the future?
While we are finalizing the business plan, I can say it will be located at the BAC and that we are looking at a full-fledged engine MRO that will have an engine testbed with the ability to rebuild the complete engine, including component repairs.
As a part of this venture, we will also be able to support engine component MRO leveraging the already existing aerospace manufacturing ecosystem.
What does the logistics development in and around Belagavi look like? Would transportation of engines from cities such as Delhi and Mumbai be challenging for operators?
One of the clinchers for setting up the aerospace cluster at Belagavi was its connectivity with the ports and airports apart from the easy availability of skilled workforce and an existing engineering ecosystem. Notwithstanding the initial hiccups for people to travel from Bengaluru and other cities, where cargo logistics was concerned, it was as convenient as any other location. Today, it is much better with increased connectivity. Talking of engine transportation, either by road or air, there would be no issues considering the logistics industry is much more capable today in handling heavy haul and oversized cargo. In fact, by virtue of being in the aerospace components manufacturing business, Aequs is quite used to it, and we do not see any challenges.
AIESL is currently the only engine MRO in India to offer comprehensive services, and soon Safran’s Leap MRO facility will be up and running. However, there is a huge gap in the Indian market for engine MRO. Do you think the Aequs-Magellan MRO facility will be able to bridge this gap to some extent?
There is certainly a large gap in the engine refurbishment and overhaul market in India. Overall, the MRO services available in India currently are not commensurate with the projected growth in the country’s fleet strength in the coming years. Indian carriers are likely to have an order book of 2,000 aircraft with the OEMs up to 2025. According to one estimate, the civil MRO market size in India is projected to double from $1.7 billion last year to $4 billion by 2031.
Currently, overseas MROs meet 80-85% of the demand from India. In addition, the defense MRO demand is projected to be of the order of another $3 billion. The engine MRO market accounts for 50-60% of the overall market, which in India is currently underserved. Even though the domestic market is an obvious choice, it is not that we cannot look at the overseas market at the same time. Globally speaking, the engine MRO market is expected to grow to $54 billion by 2027 from the current $40 billion. While we are not looking to fill this entire gap in India, there is space for several more engine MROs in the country.
How would you describe the current state of India’s MRO industry, and what can the government do to encourage new MRO business ventures?
The MRO sector has drawn considerable attention from the government recently, be it the MRO policy, which was announced in 2021, or the provisions in the recent union budget. From a directional perspective, these are the right moves. The rationalization of the goods and services tax to a uniform 5% on aircraft components from the earlier rates of 5%, 12%, 18% and 28% is a welcome step and will provide the much-needed fillip to the MRO sector. Along with this, the budget proposal to extend the period for re-export of components brought into the country for repairs from six months to one year and those under warranty from three years to five years will also go a long way in helping MROs service customers better. While the market potential itself is encouragement enough for the industry to look at expanding, the policy initiatives are an added benefit.
Having said that, it would still be better if the government could conceive a holistic ‘ecosystem’ view of the entire industry in the country by aggregating the various stand-alone policies into one comprehensive aerospace manufacturing policy.
