Dr Upadhya, distinguished guests, ladies and gentlemen,
Good afternoon. I am honoured to address all of you on the occasion of this Foundation Day. It seems to me that in this particular year 2011, your Foundation Day carries an added significance. Firstly because it marks 51 years since you moved to Bangalore in March 1960. Fifty-one years is a good time to look forward and plan for the next 51 years. And secondly, because today it is exactly one-hundred-and-a-half years – to the very day – of the beginning of civil aviation in India. It was on Feb 18, 1911 that the first civil aviation flight in India took off, carrying mail from Delhi to Nainital. Even at that time, this flight created a global first, because not only was it the first civil aviation flight in India, it was also the world’s first air mail flight, carrying 6,400 letters. So one-hundred-and-a-half years later, this is an auspicious time to look ahead and see what other global firsts we can aspire to.
And I cannot think of a better occasion and location to do this than right here, because your institution is a visible symbol of India’s technical prowess, independent thinking and ultimately peaceful intentions to the world. Aerospace is a demanding and fascinating field of human endeavour and symbolises the highest aspirations of our civilisation. By shrinking the world, blurring historical and geographic separations, and enabling unimagined levels of connectivity, the science and practice of aeronautics contributes to the development of a sense of unity across cultures and countries.
I am very conscious of this audience’s contributions to our country’s excellent aerospace credentials. Between the pioneering research and development work performed here at CSIR-NAL, the remarkable growth and accomplishments of HAL in the aircraft design and manufacturing space, Isro’s fascinating portfolio of capabilities in remote sensing, communications, satellites and launch vehicles, and the many cutting-edge capabilities developed by the Defence R&D Organisation (DRDO), India has much to be proud of in its aerospace accomplishments so far.
But, as in any field of human endeavour, it is never enough to look back with satisfaction. I believe that the aerospace industry in India is one of the most exciting businesses in the world. I am outrageously ambitious to see Indian aerospace take its rightful place in the world. I see great opportunities out there, and the question we should all be asking ourselves – CSIR, NAL as well as industry – is how can we reach out and grab these opportunities with both hands.
Because the world today is a very different place from what it was 51 years ago, or one-hundred-and-a-half years ago. Institutions like yours have, so far, focused on self-sufficiency, which is indeed vital, especially in the defence arena, and especially so in our geopolitical situation. However, weapons today are not confined to warships tanks and fighter planes. Global competitiveness is today, a new weapon of both offence and defence, especially for a young, energetic country like ours, and especially in civilian aerospace. As the world’s largest democracy, with strong economic fundamentals, and a long tradition of excellence in science and mathematics, it is only appropriate that India should seek a place at the forefront of the fascinating high-technology field of aerospace. It is time for us to reach out and embrace the possibilities that a vibrant Indian aerospace industry can offer to our own people as well as the world at large. And that is what I would like to talk about today.
To understand the context in which this ambition must play out, let us examine some key trends in the global aerospace industry.
The first trend is the growing demand for aerospace products and services in developing nations. Setting aside the significant projections for India’s defence needs over the next decade, India’s demand for civilian airliners is projected to exceed that of Australia and Japan combined. The “BRIC” nations – Brazil, Russia, India, and China – together need more passenger aircraft than the United States, which has historically been the biggest market for such aircraft. So it’s a huge market out there. Can we use our joint expertise to get a part of it?
The second trend deals with the industry that provides those products and services. Gone are the days of the “vertically integrated” aerospace powerhouses. Today there are no “do-it-all-ourselves” monolithic aerospace providers. Instead they have been replaced by a widely distributed network of suppliers and partners. From being centralised businesses with a strong geographic identity, the aerospace giants of yore have transformed themselves into integrators, placing increasingly large responsibilities upon a globally dispersed supplier base. This is truly a global network, with goods and services flowing both ways between countries and continents. What can we jointly contribute to this global network?
The third trend is a happy marriage between developing nation’s aspirations to be more than just consumers, and the necessity for the producers to be closer to their key markets. Starting with the need to support their products in new markets, the OEMs of the world increasingly recognise that they must invest significantly in those markets to ensure a fair balance of trade. Current cost structures in developing economies also make it inevitable that the OEMs increase their sourcing from the very countries that want to buy their products. So there is a life and a business beyond offsets – and we should be looking for opportunities in this space.
The fourth trend – one which the Mahindra Group embraces whole-heartedly – is the global realisation that waste and inefficiency are contributing to a rapid deterioration in our quality of life. Pollution is tangibly degrading our forests and waters, while consumption of natural resources without replenishment is rapidly threatening established lifestyles. Hence the pressure to look beyond conventional business metrics to sustainability and green technologies. Can we work together to create green technologies that are relevant and also outrageously affordable?
I am throwing up these ideas and questions because I believe that these four trends will shape the aerospace world of the future, and we in India must determine how we will participate in that future. Each of these trends creates great opportunities, and it is up to us to harness the collective strength of our many institutions to propel our nation to the forefront on the global arena. And while doing so, let us not forget our social imperative. Our rise to the top has to be inclusive, bringing benefits not only to the educated urbanised few, but spreading out to as many sectors of our population as possible.
In our view, there is one area of aerospace endeavourwhere we can be globally differentiated as well as socially inclusive and relevant. That area is general aviation.
Consider some numbers. India’s strong economic fundamentals contribute to an annual GDP growth rate of 7-8%. With 124 million air passengers in 2010, air travel is growing at a rate of about 12%. Tourism is poised to grow at a rate of 9-10% – all remarkable growth projections indeed. However 70% of our country's population lives in rural areas with limited access to the best in education, health care and work opportunities. Yet all of us – corporations as well as high technology institutions – continue to think of ourselves as primarily urban. Almost all our current aerial connectivity is confined to our urban centres, even while our surface connectivity is threatened by major infrastructure challenges. Look at the threat. Without a strong transportation network that reaches beyond the urban centres, we are threatening our continued economic growth, and we are denying our rural brethren equal opportunity to participate in that growth.
That’s the threat. And with the threat comes an opportunity – an opportunity to overcome these threats by leveraging civilian aerospace to connect the rural hinterland to urban centers, providing them with better connectivity, better services and improved access to markets. We may not have thought about it, but many rural folk have. A few years ago a young farmer from a town not far from here approached us at an air show. His current market reach was limited to towns and villages within a short road trip of his farm, since beyond that distance his produce would perish. Being located away from the biggest cities in this region, his ability to grow was stymied not by capital or entrepreneurial spirit but by connectivity, In other words, surface connectivity was limiting the ability of his market segment to expand beyond its borders. He wanted to know how we could help him.
The same aerial connectivity that could solve his problem would also provide a conduit for tourism, health and educational services to extend outward from urban centres to the rural areas. Charter flights from urban airports could make it viable for tourists on a tight schedule to visit parts of the country that are currently unreachable. That connectivity in turn creates revenue for the residents of those outlying areas, allowing them to benefit from India’s strategic attraction as a tourist destination. Healthcare can be dramatically improved by air ambulances that can provide a lifeline for critically ill people in rural areas that are miles away from good medical assistance.
General aviation is hardly a new idea. Even in the USA, with its excellent surface connectivity, the general aviation fleet clocks up nearly as many flying hours annually as the commercial services. In Australia, the “Flying Doctors” have become legendary for their services to people far from urban healthcare. In Papua New Guinea, non-profit operations routinely provide emergency assistance to rural populations far removed from conventional civilisation. The aircraft that perform this role typically have less than a hundred seats (often in the two- to 20-seat range) and are cost-efficient in short hauls with the light loads that these operations demand. But the current fleet is aging, and many of the aircraft in current use were designed to meet much older regulatory standards. Decades of experience distilled into regulatory improvements are thus not incorporated in the majority of the fleet. Further, using older engines, systems and manufacturing processes, the existing fleet is not eco-friendly to operate or maintain.
What we have then, is a unique confluence of opportunities and imperatives. General aviation offers a potential arena where India could propel itself forward, developing a portfolio of aircraft that cater to the current imperatives of eco-friendliness and operational efficiency, while also meeting the latest safety standards. This area of focus could provide India (and much of the rest of the world) a clean, green transportation solution for locations and distances where other solutions are not feasible. In developing these capabilities, we will have to create a design and manufacturing infrastructure that is on par with the best in the world, thereby also aligning ourselves with the other trends identified earlier. All participants benefit – research organisations, industry, users, rural populations. We would love to work together with you on this because if we can help to build an aviation industry that also improves lives, we would be living our corporate “rise” philosophy. We would be living our belief that by accepting no limits, thinking alternatively, and driving positive change we can improve lives and help all our stakeholders and communities to rise.
So what are the key enablers for these ideas to become reality? I believe there are two primary enablers. One: the way we approach aerospace technology acquisition and two: the way we build public-private partnerships.
In technology development, we have historically maintained a strong policy of self-reliance, largely motivated by our strategic defence focus. But we clearly must also acquire new technologies to be globally competitive. In our view, we need to find the middle ground between “home-grown” technologies that are developed in isolation, and “transfer of technology” that carries the flavour of adopting someone else’s existing answers. Our preferred term for this is “technology co-development”, wherein we partner with established entities within and outside India to develop the next new solution.
Why is this important? Let us take the example of general aviation engines. We could adopt the path of license-manufacture within India of engines developed abroad – what we call “technology transfer” – where the benefits are purely financial (through labour cost arbitrage and avoidance of duties). Or we could choose to indigenously develop a complete engine from first principles (“home-grown”) wherein we are destined to repeat all the mistakes made by established entities over decades – and then develop a complete product support capability for the finished product. Instead of either extreme, in today’s globalised world, it could be far better to embrace the idea of a partnership between established players and our own industrial and research expertise to jointly build upon existing knowledge and infrastructure to develop the next generation of products. This attitude shift would enhance our capability to generate future new technologies, and simultaneously make us integral parts of the global supply chain.
Achieving this level of partnership on the global stage is not a simple exercise. For us to be successful in such exercises, we need to channel the best of Indian industry as well as research institutions, working together as peers. There is so much scope for equal partnership. As I said earlier, our research organisations such as CSIR-NAL have develop an excellent research capability building on a strong Indian tradition of science and engineering excellence harking back over centuries. They combine a large team of dedicated scientists with specialisations in cutting-edge aerospace domains, and an excellent collection of facilities to design, test, analyse and optimise engineering solutions They have a great deal to offer the world in creating a new generation of efficient, optimised, environmentally-friendly products. But they need to convert these skills into profits.
And their partner in commercialising this capability should be the Indian private sector that has grown up and come into its own on the global arena. Starting with the heady days of the early 1990s, the Indian private sector has spread its wings and learned to soar in global skies. We have learned how to listen to the marketplace, distill explicit and implicit customer desires into product requirements, synthesise a plan to create products that meet those requirements, build a business case for the product, and then proceed with creation and delivery of those products. A combination of the technical prowess of the research institutions and the business savvy and market-driven product development capabilities of the private sector is surely a rich and rewarding recipe for our collective success.
So we have three key ingredients for future achievements in the aerospace domain. Firstly, the recognition that global success is the only acceptable yardstick for our domestic endeavours; secondly, a partnership model leveraging the technical prowess of research organisations and the product definition and development capabilities of industry; and thirdly and most importantly, a willingness to partner domestically and internationally for mutual success. We are proud to have already embarked on this path with CSIR-NAL on the development of the NM5 – a five-seat general aviation multi-purpose aircraft, where we have recently brought onboard our colleagues from GippsAero in Australia as well.
There are two other domains where India’s private sector could participate in the globally networked industry, with benefits for our own domestic industry. One such domain is aerospace manufacturing, where the private sector has been largely inward-focused, and functions at a “Tier-3” level, supplying components for domestic consumption. As identified earlier, two of the key trends in the global aerospace industry are sourcing from target markets, and outsourcing to strategic partners as part of a networked supply chain. With projected US$ 100 billion in relevant procurements over the next decade, coupled with its low manufacturing cost base, India is well positioned to commit to entering this network. By committing to enter this global network, Indian industry will by necessity acquire best-in-class technologies and skills, which will in turn benefit the Indian aerospace industry at large.
The other domain where the private sector could increase its participation in the global aerospace industry is in design engineering services. We already have several largecorporations with a “blue-chip” clientele of aerospace majors. By increasing the level of participation in the programs of the majors, our industry is stepping up from being a service provider to be a design and development partner. Again, this will further accelerate the development of our experience and skill sets, which in turn will benefit Indian aerospace industry.
These growth domains are also synergistic with the strong analysis and development capabilities of our research laboratories and educational institutions. Over time, the combination of the acquired skills and innate capabilities could be the launchpad for creating new solutions for larger global problems – such as green propulsion, alternative fuels, and environmentally sustainable manufacturing techniques.
Before I conclude let me summarise some of the initiatives within the Mahindra Group aimed at contributing to a larger role for Indian industry in the global aerospace industry while at the same time contributing to the development of a vibrant aerospace industry domestically.
On the design engineering side of the business, we have built-up an excellent relationship with multiple global aerospace OEMs. Over time our teams have moved up the value chain from providing design support to taking on responsibility for design packages, and are now getting into certification aspects for the OEMs.
On the manufacturing side of the business, we have acquired Aerostaff Australia, a manufacturer of precision sheet-metal components for several major aerospace and defense OEMs, and are developing an aerostructures manufacturing facility in India, which will go live in 2013.
On the general aviation side of the business, we have already committed our efforts to developing and marketing a portfolio of light aircraft in the 2-20 seat range. The NAL-MAPL joint development, the NM5, is one initiative in this space, as is our acquisition of GippsAero in Australia, producer of the GA8 Airvan, which features the lowest cost-per-seat-mile in its class in the world.
While we are starting with utility aircraft in the two- to 20-seat class, we are eagerly watching the opportunities to bring our efforts to bear in developing the next higher class of civilian aircraft – regional transports. It is our hope and intention to work together with the best minds in the country in defining, developing, innovating, producing and marketing uniquely capable aircraft for the 21st century, thereby laying the foundations for a vibrant aerospace future.
In conclusion let me say that you, in this audience are the new aeronauts, the ones who are constantly pushing new frontiers of air and space. So, in a way are we, because we too are constantly pushing the frontiers of business and growth. But we modern day aeronauts had some distinguished predecessors – the famed Argonauts of Greek mythology. The Argonauts were a band of intrepid adventurers, who, the story goes, journeyed with Jason, in a ship called the Argo, and sailed beyond the edge of the known world, in search of the Golden Fleece. They had many adventures and they ultimately succeeded. But the interesting thing is – why did they go in search of the