India’s Global Defence and Aerospace Hub- Hyderabad VS. Bangalore?

India is poised to become one of the most important markets in the Defence Sector, defence and aerospace vendors make a way for India, Andhra Pradesh government goes all out to attract investors, by projecting its capital Hyderabad as the best destination for aerospace investment. The Indian Information Technology (IT) and ITeS-BPO sector plays a vital role in the growth of the two cities Hyderabad and Bangalore. Both cities are now in a race to be called the center of India’s Defence and Aerospace industry.

Bangalore still ranks ahead when it comes to attracting attention from the global aerospace and defence giants, the gap between the two cities Hyderabad and Bangalore is closing faster than anticipated. The fifth largest metropolis of India, Hyderabad is the center of the Indian long range missile program. Many defence establishments and important research and training centers are located in Hyderabad, including the Indian Institute of Chemical Technology (IICT), Defence Research and Development Laboratory (DRDL), and Defence Metallurgical Research Lab (DMRL).

In the past few months, some of the India’s biggest business companies, Tata Advanced Systems and the Mahindra Defence Systems have announced plans to expand or set up aerospace related ventures in Hyderabad, giving a boost to the AP government’s efforts.

Tata Advanced Systems Ltd. (TASL) launched the first Sikorsky S-92 Helicopter Cabin made in India at its facility at the aerospace and precision engineering Special Economic Zone (SEZ) on the outskirts of Hyderabad.  The Tata group has decided to make Hyderabad a hub for its defence and aerospace investments.

Tata Advanced Systems, a unit of Tata Sons Ltd, invested nearly Rs. 1,000 crore to set up the helicopter cabin manufacturing facility at an aerospace and precision engineering special economic zone at Adibatla on the outskirts of Hyderabad. The Tata group has decided that all its aerospace and defence—the new area of Tata group—investments will be centred at Hyderabad in Andhra Pradesh.

Nova Integrated Systems Ltd, a venture of Israel Aerospace Industries Ltd (IAI), a developer of military and commercial aerospace technology, and Tata Advanced Systems has sought about 75 acres of land at Ibrahimpatnam near Hyderabad to develop advanced technology systems for the country’s defence sector.

The venture plans to develop, manufacture and support a wide range of defence and aerospace products, including missiles, unmanned aerial vehicles, electronic warfare and homeland security systems. IAI had announced plans to invest $50 million in Nova to own 26% of the venture, while Tatas would own 74%.

Similarly, a joint venture between Tata Group and AgustaWestland of Italy is said to be considering setting up a helicopter manufacturing unit at GMR Group’s aviation special economic zone (SEZ) at the Rajiv Gandhi International Airport in Hyderabad.

Andhra Pradesh is going all out to woo the Tatas to invest massively in the State and set up manufacturing units in various sectors and promised all necessary support from the government. Andhra Pradesh Chief Minister K Rosaiah addressed a letter to him offering to allocate required land either near Visakhapatnam or in north coastal Andhra districts of Vizianagaram or Srikakulam for setting up Tata’s Titanium refinery.

Mahindra and Mahindra , Tata’s rival in aerospace, has also asked for 50 acres in Ibrahimpatnam for defence projects. Mahindra is also promoting a 250-acre aerospace SEZ outside Bangalore, but the project has not taken off, due to land acquisition issues, which could delay any progress for at least another 12-18 months. The Tata SEZ, on the other hand, already has tenants that include diversified manufacturer Punj Lloyd and government-controlled undertaking Midhani.