Ambition in the sky

Companies can be missing link in aeronautics

India has everything it takes to become a respected name in aerospace — scientific, engineering and software expertise. But while it has forged ahead in space, it has till now failed to make a mark one level below in aviation. It has successfully launched others’ satellites but there is no globally commercially successful aircraft that it can call its own. The disconnect has become more glaring in the last decade as India has forged ahead as both a source for engineering services and a location for R&D facilities for the aeronautical industry. While leaders like TCS and HCL Technologies offer engineering design services to global aeronautical leaders, international names like Airbus, GE and Honeywell have set up in India research laboratories to cater to their aeronautical businesses. This hiatus — having the bricks but not owning the building — is, in fact, a reflection of what prevails in the software space where high-end service capability to develop products is not matched by the ability or willingness to own them.

To own products and become an original equipment manufacturer (OEM), you need not just capabilities but an appetite for risk-taking, deep pockets to back it up and both the desire and the resources needed to build and own brands. It is the latter which have been missing in aeronautics and it is here that the worm seems to be turning. Mahindra & Mahindra has announced not just its desire but also an impatience to successively manufacture aircraft components, assemble general transport planes and design an 18-seater aircraft in two years. Towards this end, it has acquired an Australian company which makes 6-20 seater turboprops and teamed up with National Aerospace Laboratories to develop a five-seater. M&M has spent Rs 175 crore on the acquisition and earmarked Rs 250 crore for the manufacturing programme. The Tatas are treading a similar path. They have tied up with several international aerospace companies to go into full-scale assembly and production for both the civilian and defence markets. Most recently, group company Tata Advanced Systems has signed up with Sikorsky Aircraft to manufacture helicopters.

The importance of this entrepreneurial push can be gauged by comparing the aeronautical history of India and Brazil. Hindustan Aeronautics Ltd (HAL) and the iconic Brazilian firm Embraer both began life in the public sector. The Brazilian firm kept moving forward by absorbing technology which it licensed and getting orders through the offset route. HAL has also done the same and is among the top-50 global aeronautical firms, but it is not known as an independent aircraft-maker. Embraer, on the other hand, is now the world’s third-largest commercial aircraft manufacturer and has a dominant position in regional jets. India buys VIP jets from Embraer, not the other way around. Significantly, after falling into a severe financial crisis following the failure of an aircraft it designed, Embraer was privatised in 1994. HAL has not been blessed or cursed (depending on your viewpoint) by overvaulting ambition, crisis and privatisation. Currently, there is a massive offset opportunity of $30 billion before India which all Indian players in the field are banking on for their bread and butter needs. But offset by itself will not get you far. You need to have a dream. Anand Mahindra says he wants M&M to be India’s Embraer and that it is his role model.