Airbus Group is at the forefront of Prime Minister Narendra Modi’s ‘Make in India’ initiative in aerospace and defence. The company’s sourcing from India jumped 12-fold during 2007-14. It exceeded $400 million in 2014 and is growing briskly. In an interview with Huma Siddiqui, Airbus Group India president Pierre de Bausset said together with its local partners such as Tata and Mahindra, the group is proposing to build aircraft like the C295 and several helicopter types in India. Excerpts:
Q. How are you supporting the government’s ‘Make in India’ initiative?
A. To start with, we have put ‘Make in India’ at the centre of our business strategy here. We are already making a lot in India through our suppliers. We are always increasing India’s contribution to our global products and at the same time we have proposed multiple projects, especially in defence, to kick-start a defence-focused industrial ecosystem in India. To give you some examples, we have proposed to produce the C295 military transport aircraft in India along with Tata as a replacement for the Indian Air Force’s aging Avro aircraft fleet. We have teamed up with Mahindra to produce military helicopters locally. We have jointly designed and manufactured telecommunications satellites with ISRO-Antrix and are working to expand this cooperation.
Q. Can you elaborate on how Airbus Group is already making in India?
A. We have around 40 Indian suppliers, both public and private, embedded in our global value chain. These suppliers, which include Hindustan Aeronautics, Indian Space Research Organisation, Dynamatics, Aequs, Tata, Mahindra, HCL and Wipro, are providing us with aero structures, detail parts and systems, and engineering services which figure in all our commercial aircraft programmes as well as defence platforms such as the C295, the A400M and some of our helicopter platforms. Our sourcing from India has increased 12-fold during 2007-14. It exceeded $400 million in 2014 and is growing briskly. This is how we are already making in India.
Q. Make in India in defence is all about enhancing indigenous production and making India self reliant. Do you think this is possible and in what time frame?
A. It is fitting that India seeks self sufficiency in its defence needs and it is possible. However, the aerospace and defence industry requires huge investments in capability and capacity building, making the work force skilled, etc. These investments show results in due time. A robust aerospace and defence industry cannot be built overnight. That is why initiatives like ‘Make in India’ are valuable, because they set a strategic direction and help all stakeholders such as foreign OEMs, domestic industry, end users and government officials focus on the objective of building a domestic defence industrial base. Even countries with a mature defence industry do not build everything themselves. They focus on key technologies which are important for their sovereignty and which are not available on the world market. For the rest, they trade.
Q. Capability building is a key national issue. The government has a specific programme called Skill India. Are you running activities that support this initiative?
A. We have already been leveraging the engineering talent of the Indian people as well strengthening it by plugging the engineering staff at Airbus Group India in our global R&D and innovation set up. Almost 80% of our direct workforce in India is employed in engineering roles. We have two engineering centers – one focused on civil aviation and the other on defence – and an innovation facility in Bengaluru. Airbus’ Emerging Technologies & Concepts Group (ETC) which has teams in France and Germany is headed out of our office in Bengaluru. We also work closely with our suppliers and conduct trainings to keep their workforce of over 5,000 people working on our projects, up to date on skills. We have extensive relationship with Indian universities and institutes such as the IITs, IIMs and the Tata Institute of Fundamental Research.
Q. What do you think about the recent changes to the DPP that have been approved by the Defence Acquisition Council?
A. We fully support the Indian defence ministry’s push towards promoting indigenous production as well as supporting MSMEs to become a part of the Indian defence industrial base. Since our India strategy revolves around partnering with Indian companies to meet domestic needs and target export markets jointly, we are encouraged by initiatives to make the Indian defence sector more vibrant and capable. Although I would like to add that we need more clarity on the issue of strategic partnerships in the context of the Aatre Committee report. The government will have to consider minutely whether limiting one strategic partner per segment would be beneficial or not. Moreover, the FDI limit of 49% needs to be reconsidered as the business case for high-end technology transfer to India becomes much more attractive if foreign OEMs are allowed adequate equity and management control in the JV.
Q. What is the status of C295 bid?
A. After the government decided to move ahead with our bid, now the evaluation process is on as per the defence procurement procedure. This is an excellent ‘Make in India’ project. Out of the requirement for 56 aircraft, Tata and we would build the majority of the aircraft in India. The local final assembly line will spawn a robust base of domestic suppliers that will feed the production line. This is a tangible opportunity to translate Make in India into reality. Moreover, when the programme will start, we strongly believe that production will not stop at 56 but will increase to cover additional Indian and global orders.