Mumbai: US aircraft-engine maker Pratt and Whitney Inc. plans to supply engines to Boeing Co. and Lockheed Martin Corp. if they win the bid to sell 126 multi-role combat aircraft, estimated to be worth more than Rs40,000 crore, to the Indian Air Force in what will be the biggest defence purchase deal in India ever.
In addition to the two US-based plane makers, Russia’s MiG Corp., Gripen Saab of Sweden and Europe’s Eurofighter, with European aerospace company EADS N.V. leading the consortium, also plan to submit bids for the 126-aircraft tender by May.
“India is a prospective market...and with new strategic US-India relationship, there could be lot of two-way trade,” said Thomas E. Farmer, president for military engines at Pratt and Whitney.
A Pratt and Whitney engine. The US firm, which has been associated with HAL and L&T, said it is taking a long-term view on participating in Indian defence opportunities
The Associated Chambers of Commerce and Industry of India (Assocham), a lobby of trade associations, predicts that India will buy military hardware and software worth $30 billion (Rs1.2 trillion) by 2012, most of it through imports, as its armed forces buy multi-role fighter jets, artillery guns, helicopters and long-range maritime spy aircraft.
Pratt and Whitney, a unit of US conglomerate United Technologies Corp., said it is taking a long-term view on participating in Indian defence opportunities. “We will also undertake offset obligations in India for any big defence deal. For long, we have been associating with companies such as HAL (Hindustan Aeronautics Ltd) and Larsen and Toubro Ltd for manufacturing and design activities,” said the firm’s communications manager (military engines), Steven C. Lowry.
India’s defence policy mandates that foreign contractors source components from local vendors for at least 30% of the value of military orders, if they are worth more than Rs300 crore. In fighter plane deals, the value of offsets could be as high as 50%.
“India and China are going to be the next key markets where we will be focusing owing to the sheer market size. Any business needs critical mass to have a profitable proposition and India has it,” said Stephen N. Finger, president, Pratt and Whitney. Finger said his company, which supplies engines to Airbus SAS and Boeing planes, has a strong relationship with Indian carriers, including Air India, Jet Airways, Kingfisher Airlines and Simplifly Deccan.
Pratt and Whitney and Kingfisher Airlines have signed a $300 million contract for engines to power the Indian carrier’s new fleet of Airbus A330 planes. It also has a $60 million engine maintenance deal with Kingfisher to maintain engines for its new fleet of ATR 72-500 turboprop aircraft.
“As an engine maker, we will have to work together with plane makers and their customers. Besides matching various stringent safety and other standards of plane makers, we should convince customers to select our engines as we are investing several millions in developing them,” Finger said.
For instance, Hyderabad-based Flyington Freighters Ltd has chosen Pratt and Whitney engines for its newest freighter A330-200F from Airbus.
“If Flyington Freighters had not chosen its engines, Pratt and Whitney would have been out of this newest A330-200F version of aircraft for at least seven years. All engine manufacturers closely work with customers and planes makers to get their engine installed,” said a Mumbai-based analyst, who did not want to be named.
Another unit of United Technologies and maker of the Black Hawk military helicopters, Sikorsky Aircraft Corp., plans to bid for tenders to supply anti-submarine choppers, medium-lift twin engine civil helicopters and multi-role helicopters to the Indian defence.
The civil choppers would also be targeted at corporate houses, and oil and gas exploration firms in India, a market seeing a steady rise. “As a part of targeting the civil market, we will be selling a helicopter to a Mumbai-based corporate house in the next two to three months,” said Gautam D. Phull, manager of strategic planning at Sikorsky, declining to name the customer.
Pratt and Whitney is also exploring a maintenance, repair and overhaul (MRO) facility for servicing the more than 600 of its engines used by planes in India, as well as those of rival aero-engine makers such as General Electric Co., Rolls Royce Plc. and Safran Group.
“We have seen our MRO business growing at 15% every year and we are willing to invest in India. We need at least 100 engines a year for successful MRO,” James Keenan, a senior vice-president with the company, said.
Besides HAL and Kingfisher, the company is in talks with state-run airline company National Aviation of Co. of India Ltd for setting up engine repair shops.
Hamilton Sundstrand, another affiliate of United Technologies and maker of parts for aerospace, space and industrial equipment, is sourcing machining products, plastic mouldings, fasteners and electronic parts from India. Safraz Nawaz, director (global sourcing) of Hamilton Sundstrand, said the company is developing strategic partnerships with two-three Indian suppliers and expanding its presence here through sourcing project management and technical support. “We are also helping Indian companies to accomplish our specifications and the quality requirements for aerospace parts. We are conducting joint evaluations with our potential suppliers,” Nawaz said.
Hamilton Sundstrand, which supplies almost all parts of an aircraft, is also actively eyeing supply centres in India.
“We are depending on India for engineering design and manufacturing capabilities. We hold about 15% in Hyderabad-based Infotech Enterprises Ltd,” said Paul Adams, senior vice-president (engineering) at Pratt and Whitney.
This correspondent was at Pratt and Whitney’s facility in Connecticut, New York, recently as the company’s guest.