After US giants pursuing mega defence deals in India, small and medium American firms are now jostling for a place, eyeing a multi-billion dollar opportunity in India.

The US Department of Commerce’s first Aerospace Supplier Development Trade Mission to India is currently on a five-day trip to the country. The Mission has 11 aerospace companies, many of which are suppliers to Tier-I and Tier-II aerospace companies in US and different parts of the world.

“This mission is one of the many steps we are taking to foster and strengthen the relationships between US companies and potential partners in India,” said Karen Zens, Deputy Assistant Secretary, US Department of Commerce, leading the trade mission, at a reception hosted here by the Indo-American Chamber of Commerce (IACC).

The mission, which included representatives from a variety of US aerospace industry manufacturers and service providers, is aimed at introducing US companies to key industry and government officials, potential strategic business and joint venture partners and existing equipment manufacturers in India.

According to a brief on commercial setting provided by the department, Indian aerospace sector ranks among the world’s most dynamic, with airlines in India in the process of buying over 300 aircraft valued at about USD 35 billion between 2007 and 2012.

India also represents a large and growing annual market for air defence equipment, estimated at 3-4 billion US dollars.

India is planning major procurement of military aviation hardware and is also upgrading its surveillance, defence and strike capabilities, in keeping with its expanding strategic role as a regional power, the department said.

Expenditure is needed to keep pace with this growth. New product requirements (especially multi-role combat aircraft) and replacement needs of the military aviation sector are expected to cost about USD 15-20 billion in the next 3-5 years, it said.

The Indian market is particularly promising for US suppliers seeking Joint Venture opportunities. Indian aerospace companies are trying to evolve as serious players in the global market. The evolution of the Indian aerospace industry is part of a broader industry trend toward supply chain consolidation and the embrace of lean manufacturing.

According to the department, many traditional first tier supplier responsibilities are being pushed down the supply chain to second and third tier suppliers. As the larger firms move into aerospace system integration, lower-tier firms have little choice but to globalise themselves.

In many cases, once established in India, first tier firms require their supply chain partners to begin dealing directly with Indian members of the supply chain. While extremely challenging for SME suppliers, these new relationships bring an added benefit - the opportunity for additional sales with other aerospace companies doing business in India.

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