https://sputniknews.in/20241224/adani-aims-to-break-western-monopoly-in-indias-mro-sector-industry-sources-8592455.html
Adani Aims to Break Western Monopoly in India's MRO Sector: Industry Sources
Adani Aims to Break Western Monopoly in India's MRO Sector: Industry Sources
Sputnik India
Adani Defence Systems and Technologies Limited (ADSTL) has signed a $47 million pact to acquire 86 percent stakes in Air Works, the country's largest private sector Maintenance, Repair and Overhaul (MRO) company
2024-12-24T17:23+0530
2024-12-24T17:23+0530
2024-12-24T17:23+0530
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The acquisition of Air Works by Adani Defence is aimed at ending western monopoly of the Indian MRO market in the medium to long-term, industry sources have told Sputnik India.Estimates suggest that North America and Europe, home to Boeing and Airbus, control nearly 70% of the global MRO market, they noted. In contrast, India holds just around 1% of the market, with about 90% of its civilian and military aircraft MRO needs met through imports. The Asia-Pacific region, including China, Singapore, and the UAE among others, accounts for roughly 20% of the market share, they added.The Indian MRO market is projected to grow to $4 billion by 2031, higher than the global average.Currently, India has a huge reliance on US and western Europe for "comprehensive MRO solutions, informed private sector sources said."Although western companies have in recent years entered into joint ventures (JV) with Indian firms to develop nascent MRO operations in India, most of these joint ventures are focussed on areas with lower Intellectual Property (IP) rights control. The top-end of the MRO operations is still controlled by western firms," industry sources explained.Further, the sources stated that Air Works, in spite of being India's largest private sector MRO firm, has been lacking in capital needed to expand technical capabilities and regional footprint to take on global giants. Adani Defence will provide it with "much-needed capital infusion," they explained.According to Air Works' website, the company is engaged in providing MRO services to Airbus A320, Boeing B737-700/800/900 and P8I, Embraer ERJ-135, Tupolev Tu-142, Ilyushin II-76/78 and Mi-17V5 among other military and civilian planes.The Adani-Air Works JV is likely to retain the existing client base, the sources emphasised.According to Indian government-backed think tank NITI Aayog, Indian MROs face significant barriers to break into existing global value chains controlled by western giants. Other difficulties encountered include the implementation of offset clauses, credit availability and licensing requirements among others.“Our vision is to deliver a full-spectrum MRO offering — spanning line, base, component, and engine maintenance — to meet the needs of both commercial and defence aviation sectors. In a time when Aatmanirbharta [self-reliance] in defence is a national imperative, we stand fully committed to scaling domestic capabilities to serve both our armed forces and the broader aviation sector," the Rajvanshi emphasised.Jeet Adani, the Director of Adani Airports, said that the Indian aviation industry stood at a "transformative juncture", well on track to acquire over 1,500 aircraft in coming years.
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Adani Aims to Break Western Monopoly in India's MRO Sector: Industry Sources
Adani Defence Systems and Technologies Limited (ADSTL) has signed a $47 million pact to acquire 86 percent stakes in Air Works, the country's largest private sector Maintenance, Repair and Overhaul (MRO) company serving commercial and military aircraft.
The acquisition of Air Works by Adani Defence is aimed at ending western monopoly of the Indian MRO market in the medium to long-term, industry sources have told Sputnik India.
"The domestic MRO industry is severely lacking in terms of providing across-the-board comprehensive MRO solutions, which include heavy maintenance. With India poised to become the third biggest commercial aircraft market after the US and China in coming years as well as being a major defence aircraft market, it is only logical to have an across-the-board MRO facility in India itself," industry sources stated.
Estimates suggest that North America and Europe, home to Boeing and Airbus, control nearly 70% of the global MRO market, they noted. In contrast, India holds just around 1% of the market, with about 90% of its civilian and military aircraft MRO needs met through imports. The Asia-Pacific region, including China, Singapore, and the UAE among others, accounts for roughly 20% of the market share, they added.
The Indian MRO market is projected to grow to $4 billion by 2031, higher than the global average.
Currently, India has a huge reliance on US and western Europe for "comprehensive MRO solutions, informed private sector sources said.
"Although western companies have in recent years entered into joint ventures (JV) with Indian firms to develop nascent MRO operations in India, most of these joint ventures are focussed on areas with lower Intellectual Property (IP) rights control. The top-end of the MRO operations is still controlled by western firms," industry sources explained.
Adani Defence's acquisition of Air Works is a major step in addressing the "loophole," the sources stated. "Essentially, in the medium to long term, Adani is looking at breaking the North American and Western European monopoly in providing comprehensive MRO solutions, for which the aircraft have to be flown to overseas facilities."
Further, the sources stated that Air Works, in spite of being India's largest private sector MRO firm, has been lacking in capital needed to expand technical capabilities and regional footprint to take on global giants. Adani Defence will provide it with "much-needed capital infusion," they explained.
"The initial focus of Adani-Air Works would be on servicing civilian aircraft, while simultaneously ramping up the capabilities to provide solutions for Indian Air Force [IAF] and Indian Navy [IN] aircraft which are part of the current client base of Air Base," industry sources highlighted.
According to Air Works' website, the company is engaged in providing MRO services to Airbus A320, Boeing B737-700/800/900 and P8I, Embraer ERJ-135, Tupolev Tu-142, Ilyushin II-76/78 and Mi-17V5 among other military and civilian planes.
The Adani-Air Works JV is likely to retain the existing client base, the sources emphasised.
According to Indian government-backed think tank NITI Aayog, Indian MROs face significant barriers to break into existing global value chains controlled by western giants. Other difficulties encountered include the implementation of offset clauses, credit availability and licensing requirements among others.
Meanwhile, announcing the acquisition of majority stakes in Air Works, Adani Defence and Aerospace CEO Ashish Rajvanshi said in a statement that the deal represented a "pivotal step" in strengthening India's MRO capabilities and the country's sovereignty.
“Our vision is to deliver a full-spectrum MRO offering — spanning line, base, component, and engine maintenance — to meet the needs of
both commercial and defence aviation sectors. In a time when Aatmanirbharta [self-reliance] in defence is a national imperative, we stand fully committed to scaling domestic capabilities to serve both our armed forces and the broader aviation sector," the Rajvanshi emphasised.
Jeet Adani, the Director of Adani Airports, said that the Indian aviation industry stood at a "transformative juncture", well on track to acquire over 1,500 aircraft in coming years.
“This growth aligns seamlessly with the Government’s vision to connect every corner of our nation, creating unprecedented opportunities in aviation services. For us, creating a presence in the MRO sector is more than just a strategic step — it’s a commitment to building an integrated aviation services ecosystem that strengthens the backbone of India’s aviation infrastructure," Adani stated.
