OEMs seek higher con­trol of business

Ram Prasad, Man­ag­ing Di­rec­tor, Rock­well Collins In­dia


SP’s M.A.I. (SP’s): What do you think about the 49 per cent FDI limit in­creased from 26 per cent re­cently? Ram Prasad: While the limit in­crease is not a ma­jor dif­fer­ence to Rock­well Collins and other in­vestors, the changed mind set of the gov­ern­ment is en­cour­ag­ing. As the FDI limit in­creases, it helps Rock­well Collins, and other com­pa­nies, who want to invest more in In­dia for de­vel­op­ment ver­sus hav­ing to im­port di­rectly and then work for off­set credit. In the pre­vi­ous ar­range­ment with only 26 per cent FDI, it was harder to jus­tify in­vest­ing in key tech­nolo­gies. Now that the limit has in­creased, we can be­gin to be more as­sured that we will ben­e­fit more from the in­vest­ments, have more con­trol of the prod­ucts and man­age our in­tel­lec­tual prop­erty more closely. Rock­well Collins wel­comes this change and we are look­ing for­ward to even more favourable FDI changes in the fu­ture. SP’s: What all can your company of­fer to our coun­try with this change, now, ver­sus the past limit? Prasad: Although it prob­a­bly does not change the type of prod­ucts we would sell to In­dia, the change in the FDI limit could change the amount of work we do in coun­try, the type of work, and the struc­ture of our business ar­range­ments.

We be­lieve strongly in our strat­egy to part­ner with In­dian com­pa­nies to bring prod­ucts and so­lu­tions to In­dia. We are work­ing with part­ners in In­dia to cus­tomise and add value to our prod­ucts, so­lu­tions and ser­vices to meet In­dian cus­tomers’ spe­cific needs. This change in the FDI limit en­ables more eq­ui­table part­ner­ships and al­lows us to ex­plore dif­fer­ent op­tions for business mod­els as we do in other coun­tries, such as JVs, con­sor­tiums, team­ing re­la­tion­ships and 100 per cent owned sub­sidiaries. This change is a step in the right di­rec­tion.

The types of prod­ucts we are bring­ing to In­dia in­clude: com­mu­ni­ca­tions up­grades, net­work-cen­tric war­fare, avion­ics, com­mer­cial air­craft sys­tems, business air­craft sys­tems, avi­a­tion pas­sen­ger pro­cess­ing sys­tems, sim­u­la­tion and train­ing, and ser­vice so­lu­tions. SP’s: As on date can you brief us about your joint ac­tiv­i­ties with In­dian in­dus­try? And the business ar­range­ments in­volved in th­ese joint ac­tiv­i­ties? Prasad: In In­dia, for de­fence ap­pli­ca­tions, we are fo­cused on com­mu­ni­ca­tions, avion­ics, sit­u­a­tional aware­ness so­lu­tions for he­li­copters, SAT­COM, EW, and net­work­ing sys­tems. To­day we have ra­dios, GPS and EW equip­ment on mul­ti­ple mil­i­tary air­craft, in­clud­ing the fol­low­ing ex­am­ple cus­tomers: • Our pArt­nEr­sHIp wItH ElEC­tron­ICs Cor­po­rA­tIon oF In­DIA, LtD (ECIL)

for elec­tronic counter-counter mea­sure (ECCM) ra­dio mod­ules • DO 228 Com­mu­nI­CA­tIons AnD nAv­I­GA­tIon EquIp­mEnt For HIn­Dus­tAn Aero­nau­tics Limited for In­dian Navy, Coast Guard and Air Force VAr­I­ous AvIon­ICs AnD ElEC­tron­ICs pACk­AGEs For In­DIAn AIr ForCE C-130, C-17 and fu­ture he­li­copter pro­grammes Com­mu­nI­CA­tIons AnD AvIon­ICs on tHE In­DIA NAvy’s P-8I mAr­Itime pa­trol air­craft and new gen­er­a­tion he­li­copter pro­grammes Team­ing with In­dian part­ners has been and will con­tinue to be a key el­e­ment in our strat­egy. Dur­ing Aero In­dia 2013, we an­nounced our team­ing with the TATA Strate­gic Elec­tron­ics Di­vi­sion (SED) on pur­suits re­lated to Soft­ware De­fined Ra­dios. Dur­ing De­f­expo 2014, we an­nounced that In­dia-based Park Con­trols & Com­mu­ni­ca­tions (P) Ltd. se­lected Rock­well Collins’ new 721S Fixed Site Ground ra­dio as an in­te­gral part of an ad­vanced teleme­try sys­tem for the In­dian Air Force. Again, this is a good ex­am­ple of how we are part­ner­ing well with lo­cal com­pa­nies.

In ad­di­tion, with our ac­qui­si­tion of ARINC last year, we are also pro­vid­ing our suite of pas­sen­ger pro­cess­ing tech­nol­ogy to Ter­mi­nals 1D and 3 of Indira Gandhi In­ter­na­tional Air­port. In­dia’s Bureau of Im­mi­gra­tion also uses Rock­well Collins’ ARINC eBorders Ad­vanced Pas­sen­ger In­for­ma­tion Sys­tem (APIS) which al­lows them to re­view pas­sen­ger in­for­ma­tion even be­fore the air­craft lands at their des­ti­na­tion air­port, op­ti­mis­ing ef­fi­ciency and pas­sen­ger flow and en­hanc­ing over­all bor­der se­cu­rity and con­trol.

• SP’s: Why there seems to be a de­mand for 51 per cent FDI limit, still? Is that jus­ti­fied? Why? Prasad: As I un­der­stand it, the de­mand is not for a higher num­ber, but in­stead it is for higher con­trol of business ac­tiv­i­ties and decision mak­ing. For ex­am­ple, if FDI is 100 per cent then the decision mak­ing process is the eas­i­est as it would lie en­tirely with one company’s board to make all the de­ci­sions. It is im­por­tant to also note that FDI in­flow would be at its best if FDI limit is 100 per cent. On the flip side, we un­der­stand this is not ideal for the Gov­ern­ment of In­dia when at cru­cial times the decision made by a for­eign OEM may not be com­pletely in line with their in­ter­ests. This is par­tic­u­larly of con­cern if the tech­nol­ogy is crit­i­cal to the coun­try’s se­cu­rity. So a so­lu­tion is the one which lies in be­tween th­ese two lim­its. There are sev­eral pro­pos­als one can think of rang­ing from 51 to 76 per cent, hav­ing the key decision maker CEO be of In­dian ori­gin, build non-re­trac­tion clauses, etc. Here is an ex­am­ple that would work well for both the OEM and the gov­ern­ment: 100 per cent FDI would qual­ify the OEM for an off­set obli­ga­tion through a lo­cal company. As long as the em­ploy­ees of the company are from the lo­cal pop­u­la­tion, and key de­liv­er­ies are made for lo­cal con­sump­tion with clauses built in for non-re­trac­tion from business, then both the company and the Gov­ern­ment of In­dia ben­e­fit.

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