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April 7, 2015

To secure one navy bid, Airbus talks to six Indian partners


European giant Airbus, which has failed to bag helicopter contracts in India since 2007, is making an all-out bid this time around to change that script. Sources told FE that the Paris-headquartered firm has bid for a $2-billion naval utility helicopter deal in association separately with the Tata Group, Punj Lloyd, L&T, Pipavav, Mahindra & Mahindra and Reliance.
Airbus Helicopters made separate presentations with each of its six local vendors to the navy between March 30 and April 1, sources familiar with the matter said.
However, the desperate move by Airbus has the Indian Navy cautious. This is because some of the demands from the multinational made during the presentations were in deviation of Defence Procurement Procedure, 2013. Key changes requested by Airbus include 100% credits even if 30% Indian content is achieved, full management control with 51% or higher equity stake and complete discretion on technology transfer.
In response to an email query, Airbus said: “The RFI for the Naval Utility Helicopter (NUH) programme has been sent to multiple Indian companies under the Buy & Make (Indian) category in accordance with DPP 2013. Under the Buy & Make (Indian) category only Indian companies can reply to the RFI and the terms of the competition allow them to discuss potential tie-ups with multiple foreign OEMs (original equipment manufacturers).”
The Airbus statement added: “We, as a foreign OEM, are also allowed to talk to multiple Indian companies and this is what we are doing at the moment. We have not formalised an exclusive partnership with any Indian company as yet but will do so by the time the response to the RFP is due.”
During the recently concluded Aero India, vice-president for sales and customer relations in India Rainer Farid had told the FE, “Airbus Helicopters has initiated the process to get approval for a joint venture with an Indian partner to manufacture helicopters in India, with a majority stake held by the European company. And the company is going to compete for an order for NUH to replace the Chetak, with their AS565 MBe Panther.”
Farid had told FE that his company would be looking to have a controlling stake of “over 51%” in the joint venture.
This, he said, is because of the imperatives of production management, quality assurance issues and for building a global supply chain. “What is important is that we would have to convince our suppliers to transfer technology to India,” he said, adding that they still have to decide on the Indian partner. “The IPR will be owned by the joint venture,” he added.
Official sources, however, maintained that such an approach could lead to unacceptable delays in the procurement process or even a single-vendor situation which could stall the programme altogether, as is the case with Airbus’ bid with the Tata Group for the Avro programme for the Indian Air Force.
Eurocopter, now Airbus Helicopters, has been not had a happy run in India. A long-pending tender for 197 reconnaissance and surveillance helicopters (also referred to as light utility helicopters) was withdrawn by the defence ministry in 2007 after a process that took place over more than a decade, in which it had fielded the AS550 C3 Fennec. Russian Helicopters had also bid for the order with its Ka-226T.
The navy has been facing a severe shortage of helicopters with its continuing induction of new warships. Currently, the navy has 42 vessels on order in addition to warships already in service, most of which will require between 01-02 helicopters on board. The navy uses the Chetak (Alouette III), Ka-28, Sea King, Ka-31 and the Dhruv advanced light helicopter.
The navy has received as many as 10 bids from Indian companies for the NUH programme. To keep the process transparent and avoid any challenges at the selection stage with multiplicity of bids, the navy had encouraged OEMs tying up with a single Indian partner.
Hover mode
* Bids for a $2-bn naval utility helicopter deal separately with the Tata Group, Punj Lloyd, L&T, Pipavav, M&M and Reliance
* However, Indian Navy is cautious as some of the demands by the MNC were in deviation of the Defence Procurement Procedure, 2013
* Airbus requests 100% credits even if 30% Indian content is achieved
* Also wants full control with 51% or higher equity stake and complete discretion on technology transfer

 financialexpress

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