BackMake in India at centre of our business strategy: Airbus
Airbus Group India unit chief says the company's objective is to manufacture locally not just for the Indian market but also for exports
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Goa: Airbus Group is looking at India as a potential manufacturing hub with over 45 Indian suppliers already embedded into its global supply chain for commercial aircraft production, said a top executive of the firm’s India unit.
“India is important for us not just as a market but also as a strategic resource hub. India has a lot to offer us and we have a lot to offer to India. We see India as a potential manufacturing hub for us," said Pierre de Bausset, president and managing director of India unit at the Defexpo 2016 on Tuesday.
“We have over 400 engineers at our own facility in Bengaluru engaged in core engineering work across all our civil aircraft product range. This shows the emphasis we place on integrating top Indian talent pool in our global engineering organization. On the defence side also things are looking up with proactive policy changes by the Indian government including the rolling out of the ‘Make in India’ programme," Bausset said.
Make In India is the brainchild of Prime Minister Narendra Modi to promote India as the world’s next manufacturing destination and attract foreign direct investment (FDI).
The European aerospace and defence company has offered to build the C295W military transport aircraft in India together with Tata Group as a replacement of the Indian Air Force’s ageing Avro fleet. The offer is currently being processed by the ministry of defence and the field evaluation trials for the aircraft are expected in the near future.
Airbus has said that if selected for the contract, it will help set up a C295W final assembly line with Tata and will support the creation of an industrial ecosystem in India to feed the final assembly line (FAL).
On helicopters, Airbus has partnered with Mahindra Group and is proposing to produce military helicopters in India under the framework of the Naval Utility Helicopters (NUH), the Naval Multi-Role Helicopters (NMRH) and the Reconnaissance & Surveillance Helicopters (RSH) programmes.
“Our intent is to put India on the world map for military helicopter manufacturing together with Mahindra. To give you an example, if we are selected for the NUH programme where we are offering our ‘Panther’ helicopter, we will move the FAL to India and establish India as a global hub for this platform," Bausset said.
If the ‘Make in India’ initiatives that Airbus is pursuing in India materialize, Bausset had said early this month that the Group’s investments in India will be over ₹ 5,000 crore and help create more than 10,000 highly skilled jobs.
“Basically, we have strong affinities to India and a keen will to weave our destinies together. ‘Make in India’ is in the front and centre of our business strategy," Bausset said.
Airbus Group has plans to set up integrated manufacturing clusters and to develop an aerospace and defence-focused ecosystem in the country in partnership with complementary domestic industrial partners in order to support different projects under the ‘Make in India’ framework.
For helicopters, Airbus is already taking steps that will help it in rapid implementation and ramp-up in case the contract is awarded.
“Together with Mahindra, we are already engaged in identification of potential industrial sites, screening of the existing local supply chain and defining initial work packages to be industrialized in India," Bausset said.
In 2015, Airbus exceeded $500 million in annual procurement from India from over 45 suppliers. “Point to note is that all this is independent of any defence offset obligations," he said.
State-run Hindustan Aeronautics Ltd makes half of the Airbus A320 family forward passenger doors produced worldwide, while Dynamatic Technologies Ltd makes flap-track beams for A320 on a global single-source basis and has been contracted to manufacture them for the A330 family.
Mahindra Aerospace Ltd is in a contract to supply a million aero-components per year, while Aequs Pvt Ltd recently added to a pre-existing sheet metal, assembly and forging facility. Tata Advanced Materials Ltd provides composite parts for the wing for the A350 XWB and the A320, while another Tata unit TAL Manufacturing Solutions Ltd is supplying some parts for the A320. Infosys Ltd, Geometric Ltd and Tech Mahindra Ltd provide engineering and IT services for the Airbus.
“I want to stress again that all this sourcing from India is independent of any defence offset obligations. It is purely business driven and because we see value from buying in India. Moreover, what we buy in India, we make in India so our procurement from India also contributes to ‘Make in India’," Bausset said.
On the space side, Airbus Group has an association with ISRO and its commercial arm Antrix.
“We have designed and built two communication satellites together in the past. ISRO launched our SPOT 6 and SPOT 7 earth observation satellites as well as our subsidiary Surrey Satellite Technology Ltd DMC-3 satellites last year. We also supply critical equipment to India’s space programmes," he said.
Referring to the new Defence Procurement Procedure (DPP), he said if it succeeds in simplifying processes, cutting the time it currently takes between issuing a tender and its closure, it will be good.
Is he happy about the 49% limit in FDI?
“The issue is not the limit per se. The business case for high-tech transfer to India becomes more compelling if foreign OEMs are allowed to have adequate equity and management control in the JV in line with the risks they are taking and the contributions they are providing. Our objective is to manufacture locally not just for the Indian market but also for exports," Bausset said.
“We are ready to find a global market for made in India products through our extensive sales and marketing organization but for that we need to take the responsibility of the product. This can come only if we have management control of the company producing it," he clarified.
So how hopeful is he about multi-role tanker transport (MRTT) tender?
“We are definitely hopeful and are waiting to hear from the ministry on next steps. We have diligently followed all the processes, guidelines and DPP rules and look forward to a constructive dialogue on the way forward. From our side we have replied to all their queries and requests for clarifications," Bausset said.
Airbus A330MRTT was evaluated as the preferred bidder inclusive of life-cycle costs by a ministry-constituted expert committee and this happened twice, the last time in 2013.
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