Some of Boeing’s largest contracts in India require a 30-50% offset. Do you see such compulsions being waived in the near future?
We have offset requirements traditionally around the world and take them very seriously. On the BCA side, related to Air India, our offset requirement is to the tune of $1.7 billion. We submitted a plan and we will meet that offset requirement. On the defence side, we’ve submitted a plan for P-8 (military aircraft currently being developed for the US Navy) as well as MMRCA. We’ll put plans together to meet the offset requirements. We would, however, like and continue to encourage our Indian customers to look at the best means of designing an offset program. Right now, the Indian government has one and we’ll meet that. We, however, do believe in the fact that the program can be modified to get India more of what it wanted with slight changes to the existing offset requirements.
How’s the Boeing-Tata JV doing? Of the $500-million aerospace component work in India (that’s the pact), how much has been utilised?
Well, we haven’t put a value to the JV but it could be up to $1 billion. But the floor beams is in place. It has been affected somewhat by the delay in the 787 program. But this is going to be one-of-its-kind. It will be new to India, and unique around the world — sign wave floor beams of titanium — it takes out the weight and strengthens floor at the same time. Now that’s an example of how a joint venture can provide value to India, and India can provide value to Boeing.
So when do we get to see the 787?
The current schedule shows the first flight in the second quarter of 2009, and the first delivery in the first quarter of 2010. Boeing has been in India for 60 years. But why has it taken so long to see co-development between Boeing and its India division or other Indian companies? Sixty years ago, India didn’t ask for co-development. They were happy to buy DC-2s and DC-3s and 707s. The world has changed in India. So the prices in terms of expectations have changed. There have always been collaborations in India. In 2007-08, there were nearly $100 million in terms of collaboration. In 2009, there will be almost twice that amount. In 2012, there will be $500 million worth of manufacturing, IT and R&D. We’ll be investing in and partnering with Indian companies. You have the floor beam program, then the collaboration with HAL in terms of lean processes, program management and best practices and work content going into HAL. We believe there will be more tangible programs over time. Were we to win the MMRCA program of 126 aircraft, 108 of those will be co-built and co-manufactured by HAL. That’ll be a significant sharing. The manufacturing capability of HAL will transcend even what they’ve had in the past.
What kind of aerospace manufacturing work is being done with HAL as part of the $1 billion MoU Boeing has signed with them in 2007?
Well, it’s everything from component parts to manufacturing of larger pieces and ultimately, its systems integration. Ultimately, they have to assemble the F-18. So it goes beyond the actual manufacturing of parts.
So how much has diplomacy got to do with more co-development work?
I think that the very fact that we are in the defence side of the business is factored into the warming relationship between the US and India that has occurred in the past six years and as a direct result of the Bush administration’s priority in dealing with India as a strategic partner. I think that will carry forward in the Obama administration, the enduring common interests of the two largest democracies of the world.
Is Boeing planning to make India a manufacturing base anytime soon?
No, we won’t go it alone. I see continued work with partners on large-scale component manufacturing. I don’t see Boeing setting up a manufacturing facility here.
Brigadier(Retired) Sukhwindar Singh
http://www.svipja.com/
(A Global Solution for Offsets)
Credit: The Economic Times
