Bangalore: Engineering services major, QuEST, has received an in-principle clearance from the Govt of India's Board of Approvals to establish a 300-acre special economic zone (SEZ) in Belgaum, Karnataka, where it proposes to build an ecosystem for an aerospace supply chain.
The SEZ will carry out precision machining and house suppliers in a single area. According to QuEST officials, talks are currently on with a handful of potential domestic companies and MNCs for the setting up of units at the SEZ.
The SEZ is eventually expected to employ 10,000 people.
QuEST's present facility in Bangalore is also scheduled to move into the SEZ as a 2,00,000 sq ft plant. The facility marked QuEST's move into manufacturing from being an end-to-end engineering solutions company.
According to QuEST officials, there was a need felt for a dedicated aerospace engineering SEZ, following the huge growth in engineering services off-shoring from India, as well as the 'offset clause' for aircraft firms supplying to Indian carriers, which determines that they need to source a certain part of their supplies from India.
According to latest industry figures released by Nasscom, global spending on engineering services was $750 billion in 2004, with aerospace accounting for 8%. This could rise to $1.1 trillion by 2020.
The total offshore engineering spend is expected to grow to $150-225 billion by 2020 and India, with its talent pool and experience in engineering services, could pick up 25% of that. According to QuEST, there is an opportunity of achieving exports of close to $1 billion a year by 2012.
The 'offset clause' for aircraft manufacturers is also expected to give a big fillip to aerospace-linked manufacturing. India is set to issue an RFP for its medium range multi role combat aircraft (MMRCA) programme, through which it plans to buy 126 fighter jets, valued at close to $10 billion.
If Airbus's projections of Indian firms placing orders for 1,100 passenger and freighter aircraft, valued at about $105 billion over the next 20 years, is anything to go by, then with the current offset clause pegged at 30% of the purchase value, the local aerospace manufacturing industry may expect to generate at least $3 billion worth of business over the next 10 years.
QuEST, which has been growing at 40% year-on-year, is the only engineering services company that works with the top three global aero-engine makers - GE, Rolls Royce and Pratt & Whitney.
Very recently, the company had announced that it had received Airbus design approval and AS9100 certification. This will enable QuEST to work on upcoming Airbus programmes like the A350 in areas of engineering design, documentation and manufacturing engineering.
Quest officials also say that a significant amount of the defence offset business, and some of the commercial offset business is expected to be routed through HAL, which in turn could sub-contract it to Indian private players.