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Billions at stake at Aero India '07

Talks are on to clinch deals worth as much as $10 bn each for global majors and India Inc, reports BR Srikanth.

india Updated: Feb 10, 2007 03:52 IST

In the backdrop of the deafening roar of military jets in the air and frenzied VIP activity on the ground, quiet discussions are on at Aero India 2007 to clinch deals worth as much as $10 billion each for the global aerospace majors and Indian industry. This year’s air show has gone past being a mere showcase for state-of-the-art jets and equipment to a busy bazaar where big-ticket international firms and local companies are doing serious business.

Overseas firms are not only selling sophisticated products but also expect to strike partnerships to help them face the global market with cost and expertise advantage. Indian companies are hoping to make the best of the Centre’s new offset policy for defence procurement, which could fetch them $10 billion over the next five years.

Orville Prins, vice-president, Business Development (India) of Lockheed Martin (US), calls the air show a “historic occasion as companies from around the world try for collaborations with the Indian industry. The Indian budget for military acquisition will jump substantially over the next five years and we hope to pitch for a market of $10 billion over the next 10 years. We will also explore the civilian aerospace and related markets too”.

Other players like Boeing, Northrop Grumman Corporation (both US companies) and Bombardier Inc of Canada are looking for the same. Dr Dinesh A Keskar, senior vice-president for sales for Boeing Commercial Airplanes, says the “show has been good with high quality companies and visitors. Such events are increasing because of the booming Indian economy. We (Boeing) have revised our market projections (made in 2005 for India) from $35 billion over the next 20 years to $72 billion”.

Both Northrop Grumman and Bombardier are also keen on partnerships with local companies.

Union Minister of State for Defence Pallam Raju finds this “the right  beginning for Indian industry because the new offset policy stipulates that 30 per cent of all defence acquisitions worth over Rs 300 crore ought to be awarded to Indian companies”.

On Friday, Larsen and Toubro Limited and European Aerospace and Defence Group took the first step towards joint exploration of business opportunities in defence and aerospace. MV Kotwal, senior executive vice-president of L&T, and Daniel Baubil, executive vice-president and head of global industrial development of EADS, signed a memorandum of understanding to establish a long-term, profitable and stable relationship to address the requirements of aerospace and defence markets in India and abroad.

In a related development, French defence, electronics and aerospace major Thales was chosen by Chennai-based pilot training academy Rudradev Aviation to supply four advanced flight simulators worth $60 million. Two of the flight simulators for Rudradev Aviation will be configured for the European Airbus family (A320 and A330-200) while two others are for the competing US-based aircraft manufacturer Boeing (727-800 and the 777-300ER).

Email BR Srikanth: srikanthramaswamy@hotmail.com