Boeing is eyeing commercial aircraft orders worth over $40 billion in the next 20 years and defence sales of another $10 billion to $15 billion over the next ten years from India and has drawn up ambitious plans to source products and services from the country to stay "agile and competitive" in the global marketplace.
In a little over one year, Boeing has inked five agreements with top information technology and engineering companies, which will result in key components for its civilian and military aircraft being manufactured in India.
"For us, the holy grail is manufacturing," Boeing India President Ian Q R Thomas told Business Standard in an exclusive interview.
The most significant of these took place last month when Boeing signed a sourcing deal with TAL Manufacturing Solutions Ltd, a 100 per cent Tata Motors subsidiary, for floor beams made with titanium and composite materials for its 787 Dreamliner.
"After the first 100, all the 856 Dreamliners we make will use these beams. Nobody else has this technology," said Thomas.
This will meet a large chunk of the $1.8 billion purchase obligation that Boeing carries for bagging the $11-billion, 67-aircraft deal from Air India. (The company has also agreed to bring aerospace business worth $1 billion to the state-owned Hindustan Aeronautics Ltd.)
But, according to Thomas, Boeing's India strategy has now assumed bigger proportions. "This was just a catalyst to set up an onshore presence in India," he said.
"We see a constellation of capabilities here in information technology, business process outsourcing, engineering, research and development and manufacturing," said Thomas, who holds a PhD in history from Cambridge University and was briefly with The Royal Gurkha Rifles in Borneo.
In addition, Boeing along with Air India will set up a maintenance, repair and overhaul centre at Nagpur and a school for training pilots in Mumbai (the venue could change) at a total cost of $175 million. Its spares and after-market services facility at the Noida Special Economic Zone will go on stream later this year.
While identifying opportunities amidst India's "frugal engineering skills," Thomas is chasing three defence orders at the same time Multi-mission aircraft for the Navy, heavy-lift and attack helicopters and multi-role combat aircraft for the Air Force. The Left may have stalled the Indo-US civilian nuclear deal, but Thomas sounded hopeful of getting these orders.
Boeing has estimated that India will buy 911 commercial aircraft worth $86 billion over the next 20 years.
When asked how much of this market the company hopes to grab from arch-rival Airbus, Thomas said: "It is a balanced duopoly. We have 65 per cent of the market by value."
Though several observers have said that some of these orders could be cancelled if recession sets in, given the thin operating margins of Indian carriers, Thomas is unfazed: "We are confident of the partners we have chosen."<hr>
Boeing's Indian alliances
- February 2007: MoU with L&T for exploring opportunities in defence
- December 2007: 10-year agreement with Hindustan Aeronautics to bring over $1 billion of aerospace business to India
- January 2008: Agreement with Indian Institute of Science, Wipro and HCL to develop network technology for aerospace
- February 2008: Deal with Tata Motors for floor beams for the Dreamliner
- February 2008: Joint venture with Tata Industries to make defence equipment
