First Indian Aerospace SEZ
29 Dec, 2009 · 3032
Radhakrishna Rao highlights the important features of India's first aerospace SEZ
On the face of it, Hattaragi village in Belgaum district of northern Karnataka region, is an unlikely location for a high tech aerospace hub. Yet, Horatti, situated at a distance of little over 30 kilometres from Belgaum city, on Golden Quadrilateral Highway, has had the distinction of getting India’s first aerospace Special Economic Zone (SEZ) promoted by the Bangalore based QuEST Global , a leading provider of diversified engineering services and precision manufacturing, with a growing presence in the global aerospace market. This aerospace SEZ spread over an area of 300 acres and set up with an initial investment of Rs1,500 million marks a big leap forward for the Indian aerospace sector. Presence of more than 100 foundries within the approachable radius of this location and availability of skilled manpower nudged QuEST Global to zero in on Hattaragi for its SEZ. The SEZ boasts of facilities for providing approved aerospace treatments that are not readily available in the country.
Clearly and apparently, this aerospace SEZ described as first of its kind ecosystem offering design to build services—right from concept design to the finished product, in the same location, clearly shows that the Indian aerospace sector could thrive beyond Bangalore. As pointed out by Aravind Melligeri, co founder and chairman of QuEST Global, as long as one delivers high quality finished products and services well on time, location is of little consequence to the business operations. He is also clear that Bangalore alone can sustain aerospace enterprise and contribute to its growth is a distorted perception.
The QuEST aerospace SEZ will execute a five year contract awarded by Swedish defence and aerospace major Saab for the supply of machined and sheet metal parts for the cargo door of Boeing-787 Dreamliner aircraft. As it is, Quest is already supplying shackles for the landing gear of some of the Boeing commercial aircraft. Through its partner, Magellan Aerospace, Quest is also in the supply chain of Airbus aircraft. Sources in QuEST Global said that Saab contract is likely to be stretched beyond five year. “This engagement gives us immense pleasure as QuEST Global is among the first Indian suppliers that Saab was associated with and has plans for scaling up in future. The operations being based at SEZ would also allow our customer to enjoy the financial benefit of being a part of the aerospace supply chain ecosystem, the first of its kind in India,” observed Melligeri.
Incidentally, Gripen fighter aircraft of Saab is one of the six contenders in the race to bag the mega Indian defence order for the supply of 126 medium, multi-role combat aircraft (MMRCA). India’s state owned Air India (AI) and private sector carrier Jet Airways have placed order for Boeing-787 Dreamliner, considered a commercial aircraft that is both fuel efficient and easy to maintain. The first of the this aircraft is expected to be received by AI sometime in 2011.
According to Melligeri, QuEST Global SEZ would provide an ecosystem for OEMs (original equipment manufacturers), their suppliers, all ancillary and related end users to set up their units. ”The SEZ would benefit North Karnataka region to a large extent. We are looking forward to create more than 7,000 jobs locally and infuse US$500 million to the economy in the coming ten years. This ecosystem at SEZ will provide an ideal platform to help our customers and partners in discharge of their offset obligations.” Karnataka Chief Minister BS Yeddyurappa who along with the Indian Civil Aviation Minister Praful Patel unveiled this SEZ on 14 November observes, ”Bangalore is perceived to be the India hub for aerospace sector, and today the QuEST Global SEZ in Belgaum has opened up newer avenues to attract foreign investors in the manufacturing space as well.”
QuEST has an alliance with US based Textron Systems, the parent company of Bell Helicopters. As part of this agreement, both the companies will work together to develop manufacturing capabilities within SEZ and attract investment into SEZ from defence and aerospace sectors. This collaboration is part of Textron’s plan to discharge a part of its offset obligation. Melligeri who drives home the point that the offset policy could be the key driver of Indian aerospace industry, is optimistic of QuEST SEZ getting benefited from the offset programme. Incidentally, 90 per cent of the defence offsets firmed up so far covers the aerospace sector. The Indian defence procurement policy stipulates that any foreign defence contract whose worth is Rs3000 million or more would entail an offset obligation of between 30 per cent to 50 per cent of the total contract value. The offset obligation can be discharged through the route of direct purchase, investments or technology transfer.
Perhaps the most striking feature of this SEZ is that land was acquired directly from the farmers without involving the government machinery in the process. The idea was to avoid confrontation that has spelt the death knell of many an SEZs. Farmers were happy to surrender their barren land for this project since they could not put it to productive use. Moreover, the qualified family members of these farmers were provided jobs at SEZ. As rightly stated by Melligeri, ”We wanted to take people along without giving raise to any controversy.” He also drove home the point that “real estate ambition” was never a part of the SEZ.
Clearly and apparently, this aerospace SEZ described as first of its kind ecosystem offering design to build services—right from concept design to the finished product, in the same location, clearly shows that the Indian aerospace sector could thrive beyond Bangalore. As pointed out by Aravind Melligeri, co founder and chairman of QuEST Global, as long as one delivers high quality finished products and services well on time, location is of little consequence to the business operations. He is also clear that Bangalore alone can sustain aerospace enterprise and contribute to its growth is a distorted perception.
The QuEST aerospace SEZ will execute a five year contract awarded by Swedish defence and aerospace major Saab for the supply of machined and sheet metal parts for the cargo door of Boeing-787 Dreamliner aircraft. As it is, Quest is already supplying shackles for the landing gear of some of the Boeing commercial aircraft. Through its partner, Magellan Aerospace, Quest is also in the supply chain of Airbus aircraft. Sources in QuEST Global said that Saab contract is likely to be stretched beyond five year. “This engagement gives us immense pleasure as QuEST Global is among the first Indian suppliers that Saab was associated with and has plans for scaling up in future. The operations being based at SEZ would also allow our customer to enjoy the financial benefit of being a part of the aerospace supply chain ecosystem, the first of its kind in India,” observed Melligeri.
Incidentally, Gripen fighter aircraft of Saab is one of the six contenders in the race to bag the mega Indian defence order for the supply of 126 medium, multi-role combat aircraft (MMRCA). India’s state owned Air India (AI) and private sector carrier Jet Airways have placed order for Boeing-787 Dreamliner, considered a commercial aircraft that is both fuel efficient and easy to maintain. The first of the this aircraft is expected to be received by AI sometime in 2011.
According to Melligeri, QuEST Global SEZ would provide an ecosystem for OEMs (original equipment manufacturers), their suppliers, all ancillary and related end users to set up their units. ”The SEZ would benefit North Karnataka region to a large extent. We are looking forward to create more than 7,000 jobs locally and infuse US$500 million to the economy in the coming ten years. This ecosystem at SEZ will provide an ideal platform to help our customers and partners in discharge of their offset obligations.” Karnataka Chief Minister BS Yeddyurappa who along with the Indian Civil Aviation Minister Praful Patel unveiled this SEZ on 14 November observes, ”Bangalore is perceived to be the India hub for aerospace sector, and today the QuEST Global SEZ in Belgaum has opened up newer avenues to attract foreign investors in the manufacturing space as well.”
QuEST has an alliance with US based Textron Systems, the parent company of Bell Helicopters. As part of this agreement, both the companies will work together to develop manufacturing capabilities within SEZ and attract investment into SEZ from defence and aerospace sectors. This collaboration is part of Textron’s plan to discharge a part of its offset obligation. Melligeri who drives home the point that the offset policy could be the key driver of Indian aerospace industry, is optimistic of QuEST SEZ getting benefited from the offset programme. Incidentally, 90 per cent of the defence offsets firmed up so far covers the aerospace sector. The Indian defence procurement policy stipulates that any foreign defence contract whose worth is Rs3000 million or more would entail an offset obligation of between 30 per cent to 50 per cent of the total contract value. The offset obligation can be discharged through the route of direct purchase, investments or technology transfer.
Perhaps the most striking feature of this SEZ is that land was acquired directly from the farmers without involving the government machinery in the process. The idea was to avoid confrontation that has spelt the death knell of many an SEZs. Farmers were happy to surrender their barren land for this project since they could not put it to productive use. Moreover, the qualified family members of these farmers were provided jobs at SEZ. As rightly stated by Melligeri, ”We wanted to take people along without giving raise to any controversy.” He also drove home the point that “real estate ambition” was never a part of the SEZ.
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