Mumbai: In a first for any foreign aerospace and defence original equipment manufacturer (OEM) in India, Airbus Group exceeded the $500 million annual procurement mark from India in 2015.
Over 6,000 people at more than 45 suppliers, both public and private, are directly engaged in providing engineering and information technology services, aero-structures, detail parts and systems, materials and cabins to the Airbus Group for several of its leading platforms, including A380, A350 XWB, A320 Family, A330, C295W, A400M, Eurofighter, Tiger and NH90.
The group has now set its sight on exceeding $2 billion in cumulative procurement, covering both civil and defence, in the five years up to 2020.
Pierre de Bausset, 54, president of Airbus Group India, in an interview with Mint, said Prime Minister Narendra Modi’s ‘Make in India’ campaign has received a shot in its arm with Airbus Group’s annual procurement from India in 2015.
Bausset said the Group which is embedding Indian companies, including small and medium enterprises (SMEs), in its global supply chain as well as Indian engineers in its global engineering organization has a two-pronged Make in India roadmap.
What is the update on procurement? What is the key driver of your India procurement strategy?
Embedding Indian companies firmly in our global supply chain is one of the pillars of our business strategy in India and we have done really well. In 2015, we crossed $500 million in annual procurement from India which is a 15% growth over 2014. This is a major feat considering that it is independent of any defence offset obligations. Don’t take this as an indication of the possible growth rate going forward but just to give you a sense, in the last decade our procurement from India has grown 16 times.
Airbus Group sustains a very deep supply chain across the world and for us the important thing is to find suppliers who can meet our exacting quality standards, deliver on-time and on-cost consistently. This is what brought us to India. Here we have a supplier base which has the skill-set, and a readiness to develop. They have passion and ambition to be in the global league and that’s exactly what we want. We are helping our suppliers get to the level that is required in this particular industry. It’s a win-win.
You say that every Airbus commercial aircraft being produced today is partly made in India. How is that?
That’s because we have over 45 suppliers today in India contributing to all our commercial aircraft programmes. For example, Hindustan Aeronautics Ltd (HAL) makes half of the A320 Family forward passenger doors produced worldwide. Dynamatic Technologies Ltd makes flap-track beams for the A320 Family on a global single-source basis and has been contracted to manufacture them for the A330 Family. UTC Aerospace Systems Ltd makes evacuation slides, interior and exterior lighting, power drive units, auxiliary motors and passenger supply cabin modules for all our commercial aircraft. Mahindra Aerospace Ltd is on contract to supply a million aero-components per year. Aequs recently added to a pre-existing sheet metal, assembly and forging facility. Tata Advanced Materials Ltd (TAML) provides composite parts for the wing for the A350 XWB and the A320, while TAL Manufacturing Ltd solutions is supplying over 500 sheet metal and machined parts and sub-assemblies for the A320. Infosys Ltd, Geometric Ltd and Tech Mahindra Ltd provide engineering and IT services.
Do you have small and medium enterprises as part of your supply chain in India?
SMEs are the growth engines of our sourcing activities in India. After a contract award, we work with our tier-1 suppliers to develop the second tier of suppliers. For example, for the A320 forward passenger doors work package to HAL, we have been supporting them by developing tier 2s who are SMEs. Some of the better-known SMEs working for us in India are CIM Tools, Gardner-Pranitha, Triveni, Sansera Aerospace, Sefee India, PMI, Vijaya Metal Finishers, IndoMIM, PMI and Recaero India.
What future trajectory do you see for your industrial activities in India?
We are here for the long haul and our interest is in expanding our industrial engagement with India. Today we have crossed $500 million in procurement which supports over 6,000 jobs across our supplier network. Tomorrow, we would like to do more, much more. We have set our sights on exceeding $2 billion in cumulative procurement in the five years up to 2020. If the defence ‘Make in India’ programmes that we are pursuing with local partners—C295W military transport aircraft and helicopter manufacturing—materialize, we will set up system integration and final assembly lines for them in India. On the space side, we have already designed and produced telecommunication satellites in India with ISRO-Antrix and are working to expand this cooperation
Buying from India is one aspect but do you also develop in India?
It would be a waste of an opportunity at our end if we didn’t utilize Indian engineering talent. We have an engineering centre in Bengaluru, where employees are working on structural analysis, digital mock-up, computational fluid dynamics and other such core areas primarily for our commercial programmes. The Airbus Emerging Technologies & Concepts Group which has teams in Toulouse and Hamburg is headed out of our office in Bengaluru. Then we have the Airbus Group Innovations team, also in Bengaluru, focusing on research and development in big-data, cloud computing, aero-thermal analysis, etc. They have filed two patents. We also have two dedicated design centres—with AxisCades for fuselage and with Quest for wing and pylon—each employing over 200 engineers.
What is your roadmap for Make in India? How do you realize this?
There are two legs to our Make in India roadmap. The first one is about making in India through suppliers, which is already happening. The defence and space programmes that we are competing for in India form the other leg. We have bid to produce the C295W together with Tata and have partnered Mahindra for helicopter manufacturing. Our value proposition for these programmes is that together with partners, we will help India create an indigenous defence industrial eco-system. We will help set up final assembly lines in India for these products, make industrial investments, support local supply chain development and skill people. I believe this is what India wants. In fact, this is what it needs and we are ready to do it.
What is the status of your joint venture with Mahindra Defence?
We signed a memorandum of understanding (MoU) with Mahindra Defence to produce military helicopters in India in July last year. Since then we have made significant progress in forming the joint venture which will compete for several programmes such as the Naval Utility Helicopter (NUH), Naval Multi-Role Helicopter (NMRH) and the Reconnaissance & Surveillance Helicopter (RSH). Our idea is to put India on the world map for military helicopter manufacturing. While we close the JV formation formalities, Mahindra and us are engaged in identification of potential industrial sites, screening the existing local supply chain and defining initial work packages to be industrialised in India. We want to have the ground work ready for a quick take-off in case we are awarded a contract.