Boeing, which is competing with several global majors to clinch the Indian Air Force’s order for 110 fighter jets, is investing millions of dollars to create an ecosystem for making its product—F/A-18 Super Hornets—in India. The US-based company hopes that the order is actually placed, as it could otherwise derail the government’s plan of indigenizing its defence programme.
Building a modern weapons system like a fighter aircraft is a very complex endeavour, Boeing India president Pratyush Kumar said in an interview.
“Firms pitching for the product need to work for few years to build partnerships, stitch together an ecosystem, to be able to build the product in the country. This costs millions of dollars,” Kumar said. “Major companies (pitching products) will be frustrated if the order does not happen, though the actual investment will be made only after the order is in place.”
Failure to place the order could see the collapse of various partnerships and ecosystems set up for indigenizing the defence programme, he said.
The Indian Air Force had in April set in motion the process of acquiring a fleet of 110 fighter jets, one of its largest orders in recent years, to shore up its fast-depleting squadron strength. The order for 110 fighter jets is estimated to be worth $15 billion, according to a Bloomberg report.
Leading military aircraft producers, including US firms Lockheed Martin and Boeing, Sweden’s Saab and France’s Dassault Aviation, are among those likely to bid for the mega deal.
For the potential airforce order, Boeing has tied up with Mahindra Defence System and state-owned Hindustan Aeronautics Ltd (HAL) for producing F/A-18 Super Hornets. It has also spent millions of dollars to create an ecosystem around building the product in India, by building a supplier network.
Kumar estimates that Boeing would need up to 400 suppliers to make the aircraft in India, compared with about 800 suppliers stationed in the US that help the company build the fighter jet in that country.
“A lot of capabilities need to be created in India to build and support the ecosystem around the aircraft (F/A-18 Super Hornet). We need test and assembly centres, which we plan to establish with partnership with our partners. Then comes training the crew, maintenance, providing ground support to maintain the aircraft, modernisation and repair, engineering capabilities, which would need a huge ecosystem, creating which is costing us millions of dollars,” Kumar said.
The company’s investment in India to build its product here could run into billions of dollars and would depend on the number of aircraft the government finally decides to purchase, he said.
Boeing has also responded to the Indian Navy’s Request for Information (RFI) in 2017 to purchase 57 fighter jets, which is estimated to cost about $5-6 billion, Kumar said. The company has pitched its F/A-18 Super Hornets for the navy’s fighter jet requirements.
“The F/A-18 Super Hornet is a multi-role fighter jet and will not require change of platform for the air force and navy. The deal size is about $6 billion, according to the navy,” Kumar said.
“Recently, we have seen a much more over leaning stance of US government, that makes me confident that there will be something compelling on the table,” Kumar said.
Boeing expects the Indian commercial aviation space to grow rapidly as more Indians belonging to the middle class start flying, which is expected to drive up growth for decades to come.
“The government’s regional connectivity scheme is getting more people to fly especially from the smaller towns and cities,” Kumar said, adding that unless something dramatic happens like oil prices going to $150 a barrel, India’s growth story is expected to continue.