'Right time for Western firms to tap Indian aeropsace market'

New Delhi, Jul 10 (PTI) With spending on aerospace and defence growing in India, a major global consultancy firm has said this was the "right time" for European and American companies to invest in the market which is estimated to become the third largest after the US and China by 2020. "This is the right time to tap Indian aerospace market as India has ambitious plans to enhance its capabilities with procurement and support from overseas companies," Deloitte Touche Tohmatsu India Director Nidhi Goyal told PTI here. Such a move "may help (global aerospace and defence) industry to boost their revenues and also plan to consolidate later amidst low cost advantage in India," she said. "India has a major procurement program due to increasing requirement in both aerospace and defence, which is not only attractive for Indian industry but also for companies in Europe, USA and other regions," Goyal said. Her comments came in the wake of a Deloitte report on the performance of the global aerospace and defence industry which suggested "a continued uncertain defence outlook" that was likely to impact its overall financial performance in 2012. The report, however, said that defence spending was "increasing in geographies such as India, China, Japan, the United Arab Emirates, Saudi Arabia and Brazil as a result of increases in wealth and in light of growing national security concerns." It also indicated that defence revenues were likely to be impacted by decreased defence budgets mainly in the West, competing domestic priorities, weaker than expected economic performance in the western world and the drawdown of forces in Iraq and Afghanistan. Goyal also referred to another Deloitte study earlier this year which had said the Indian aviation sector, growing at an annual compound rate of 18 per cent, was likely to buy 1,320 aircraft worth about USD 150 billion over the next two decades. While the Indian helicopter (both civil and defence) market was estimated to be around USD 7.4 billion over the next decade, the MRO (Maintenance, Repair and Overhaul) market was worth USD 2.6 billion. The general aviation market would grow at 12 per cent rate and rise from 650 units (private planes and helicopters) to 2000 units by 2020. The latest report said the financial performance of the global aerospace and defence (A&D) industry generally fell in 2011. "Despite the uncertainty in the defence sector, the report found that the global A&D industry as a whole grew in 2011 to USD 681 billion, posting a sluggish revenue gain of 2.3 percent, compared to 2.5 percent in 2010." While the European industry grew only 0.8 percent, the US industry achieved 3.3 per cent revenue growth in 2011. "Most significantly, it found that reported operating earnings in Europe fell by 21.6 per cent, while companies in the US were able to grow operating earnings by 2.9 per cent." With the defence segment comprising about two-thirds of the global A&D industry, the report "suggests that a continued uncertain defense outlook is likely to impact overall financial performance in 2012," Deloitte's Global A&D Leader Tom Captain said. Another top company official Pauline Biddle said it also showed the widening of financial performance gaps in the European and U.S. A&D firms, continuing a trend from 2010. PTI