Air India & Tata Advanced Systems to invest Rs 2,300 crore in Karnataka

Air India is planning to set up a Maintenance Repair and Overhaul (MRO) facility and 'create' Bengaluru as the aviation hub in South India, an official statement said.

Bengaluru: Two Tata Group companies — Air India Ltd and Tata Advanced Systems Limited — on Monday signed a memorandum of understanding (MoU) with the Karnataka government to invest Rs 2,300 crore in the state’s aerospace and defence sectors.

The move is expected to create over 1,600 direct jobs and 25,000-plus indirect job opportunities, Tata Group said in a statement.

As per the plans, Air India will invest Rs 1,300 crore to develop a maintenance, repair and overhaul (MRO) facility at the Kempegowda International Airport (KIA) in Bengaluru for single aisle as well as wide-body aircraft.

This alone is expected to generate over 1,200 highly skilled jobs, Tata said.

“We are delighted to witness this landmark collaboration… This investment not only propels Karnataka’s aerospace industry to new heights but also augments employment opportunities, thereby contributing to the state’s economic growth,” Chief Minister Siddaramaiah said.

The MRO facility will not only add to India’s self-reliance but also bring in international business, experts who spoke to DH said.

This may also allow Air India to become a major MRO player. 

“It is a massive win for Karnataka and Bengaluru as a city because they would have been up against Hyderabad for this, or Air India could have chosen to expand in Nagpur. This indicates to me that Air India is planning various long haul operations from Bengaluru in the future,” Rishi Jain, proprietor of Jain Aviation Consultants, said.

In light of increasing air passenger traffic and the record plane orders placed by Indian carriers in recent time, the domestic aviation market has a sizeable MRO appetite. 

Tata Advanced Systems, meanwhile, has planned three projects with an investment of Rs 1,030 crore.

These include a passenger-to-freighter aircraft conversion facility (Rs 420 crore), a gun manufacturing facility (Rs 310 crore) and defence research and development (Rs 300 crore). These ventures are expected to generate over 450 skilled jobs.

As per the state government, the gun manufacturing facility will source 50% of its 13,000 parts from Karnataka, which is estimated to provide employment to 2,000-3,000 people across 300-350 small and medium enterprises.

“This means big business for Air India because there is a shortage of cargo conversion slots in the industry currently. The list includes a waiting period of years, not months,” an industry watcher who did not wish to be named, said.

“The agreement with the government and Bangalore International Airport comes at an opportune time and will not only bolster the state’s aviation ecosystem, but also be a step ahead in our mission to become a world-class airline and provide our customers the elevated travel experience that they truly deserve,” Air India Chief Executive Campbell Wilson said.