OEMSPEAK – Air­bus Group, MBDA, Na­van­tia, Rock­well Collins, Rolls-Royce and Saab In­dia

In­ter­view with Yves Guil­laume, Pres­i­dent In­dia, Air­bus Group


SP’s M.A.I. (SP’s): What are your views on the progress of the In­dian de­fence in­dus­try so far and where do you see it head­ing in the fu­ture?

Yves Guil­laume (Guil­laume): Over the years stag­nant or even shrink­ing de­fence bud­gets in the West have made Asia-Pa­cific and par­tic­u­larly In­dia an at­trac­tive mar­ket for global de­fence firms. This rep­re­sents an op­por­tu­nity for the In­dian de­fence in­dus­try, pub­lic and pri­vate, to part­ner with leading global play­ers such as the Air­bus Group and to­gether work to­wards build­ing a ro­bust In­dian mil­i­taryin­dus­trial base. Such an ap­proach will not only help mod­ernise the In­dian armed forces but will also bring cut­ting-edge tech­nolo­gies into the coun­try and stim­u­late the In­dian econ­omy. A lot can be achieved as far as the mod­erni­sa­tion of the In­dian armed forces and in­di­geni­sa­tion of tech­nolo­gies is con­cerned. Go­ing for­ward, I ex­pect this process to pick up more pace.

SP’s: Which open deals do you think the new govern­ment can bring to a con­clu­sion quickly?

Guil­laume: Let me give you some ex­am­ples where Air­bus Group is com­pet­ing. The con­tract for six A330 multi-role tanker trans­port (MRTT) air­craft for the In­dian Air Force is one. The ne­go­ti­a­tions are in the fi­nal stages and we look for­ward to con­clud­ing the con­tract with the Min­istry of De­fence in the near fu­ture. The ac­qui­si­tion is go­ing to be ab­so­lutely trans­for­ma­tive for the In­dian Air Force and will put it in a se­lect group of oper­a­tors at the fore­front of the cur­rent revo­lu­tion in air-to-air re­fu­elling.

The re­con­nais­sance & sur­veil­lance he­li­copters (RSH) ten­der where Air­bus He­li­copters’ Fen­nec is com­pet­ing is an­other ex­am­ple. Fen­nec is a sin­gle-en­gine he­li­copter of­fer­ing un­matched hot and high al­ti­tude per­for­mance ca­pa­bil­i­ties to the In­dian armed forces. The new he­li­copters are sup­posed to re­place the age­ing Chee­tah/ Chetak fleet which is now de­plet­ing as it has been in ser­vice for over 50 years in In­dia. Since the is­sue of the cur­rent re­quest for pro­posal (RFP), till date, a to­tal pe­riod of over five years has elapsed. This is the third time that the RFP has been is­sued for the same pro­cure­ment, the first be­ing in Novem­ber 2003. We are fully com­mit­ted to sup­port this pro­gramme and hope that this ac­qui­si­tion process will soon be con­cluded by the Min­istry of De­fence.

SP’s: What are your views on In­dia’s off­sets, FDI and tech­nol­ogy trans­fer poli­cies for de­fence pro­cure­ment?

Guil­laume: We fully sup­port In­dia’s poli­cies re­gard­ing off­sets and tech­nol­ogy trans­fer which have been im­ple­mented to boost the coun­try’s indige­nous de­fence in­dus­try and safe­guard its sovereignty. How­ever, one must bear in mind that off­set ac­tiv­ity should be based on a sound busi­ness case. It has to be sus­tain­able. Other­wise, it will not re­sult in long-term mean­ing­ful ben­e­fits for the lo­cal in­dus­try. In In­dia, the re­vised De­fence Off­set Guide­lines is­sued in 2012 added cer­tain new fea­tures such as ‘mul­ti­pli­ers’ and mod­i­fied/clar­i­fied some of the ear­lier pro­vi­sions. The new guide­lines pro­vide for­eign OEMs greater flex­i­bil­ity and in­cen­tive in meet­ing their off­set obli­ga­tions.

As for the 26 cent cap on for­eign di­rect in­vest­ment (FDI) in de­fence, we re­spect the law of the land. We have suc­cess­fully worked and de­liv­ered re­sults within the perime­ter of the ex­ist­ing pol­icy. How­ever, if the cap is raised and we are al­lowed to form joint ven­tures where we have more man­age­ment con­trol, it will be eas­ier for us to de­velop a larger in­dus­trial base here. A mech­a­nism with suf­fi­cient checks and con­trols can be built into the pol­icy so that In­dia’s in­ter­ests re­main fully pro­tected.

SP’s: What new op­por­tu­ni­ties in de­fence do you see for Air­bus Group in In­dia in 2014 and what are your ex­pec­ta­tions from the new govern­ment?

Guil­laume: The op­por­tu­ni­ties are im­mense. Apart from the MRTT and RSH com­pe­ti­tions where we ex­pect for­ward move­ment, Air­bus De­fence and Space will soon re­spond to the re­quest for pro­pos­als to re­place the Avro medium trans­ports with the mod­ern C295 air­craft. This is a very im­por­tant pro­gramme for us – cov­er­ing 56 air­craft – but also for the In­dian in­dus­try be­cause of the ex­cel­lent col­lab­o­ra­tive prospects that it of­fers.

For over 50 years, Air­bus Group has sup­ported the mod­erni­sa­tion of the In­dian armed forces and the de­vel­op­ment of indige­nous ca­pa­bil­i­ties. We look for­ward to fur­ther strengthen our part­ner­ship with In­dia and ex­pand our in­dus­trial foot­print here. We are hope­ful that the new govern­ment will ac­cel­er­ate the mod­erni­sa­tion process, con­tinue to re­form the de­fence pro­cure­ment pro­ce­dures, and take steps to in­cen­tivise even greater co­op­er­a­tion be­tween for­eign OEMs and In­dian com­pa­nies.

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