Ashwini Chanan, Director – Government relations, Honeywell India |

With exports of aircraft components having crossed the $5 billion mark in 2014, not many question India’s rising stake in the blink-and-you-miss business of innovation in aerospace manufacturing. Ashwini Chanan, Director – Government Relations, Honeywell India, talks to The Dollar Business about India’s growth story and how nose-to-tail manufacturing can become a ‘Make in India’ reality

Interview by Steven Philip Warner | The Dollar Business

TDB: In the past few years, Honeywell has outsourced a huge portion of their work to India to reduce R&D and manufacturing costs. In the business of manufacturing of aero structures and aero systems, strategically, where does India stand as a hub for “back-end manufacturing work” for Honeywell?

Ashwini Chanan (AC): Clearly, Honeywell is a strong example of why India is no longer valued only for its cost or labour arbitrage as a “back-end manufacturing” destination, but more for its knowledge capital and its ability to create value for global customers through cutting-edge technology development. Honeywell Aerospace has been supporting India’s defense, civil aerospace and automobile industries for more than 40 years. More than 2,800 dedicated aerospace engineers are working everyday on aerospace technology solutions for India and the world from our technology and engineering centers in Bangalore, Hyderabad and Madurai.

Our Defense and Space business supports Indian military by bringing its leadership in engine technology, unmanned aerial vehicles, navigation and helicopter safety. Our Air Transport and Regional business unit enables air traffic modernisation, and supplies avionics, APUs and service to help aircraft fly safer, smarter and greener. Our Business and General Aviation unit is a leading provider of systems, products and after-market services and support making general aviation safer, more affordable and easier for operators. Overall, Honeywell India has seven state-of-the-art manufacturing facilities and five technology development centers in the country. 13,000 employees, including 8,000 engineers work to develop and manufacture technologies that tackle some of the toughest challenges in energy, safety, security and customer productivity in India every day.

TDB: So how big is Honeywell’s contribution to India’s export-manufacturing of avionics, aero structures and aero engines?

AC: By working with our partners we create many components used nose-to-tail on aircraft in India. These are either exported immediately or become available for export, based on market demands. For example, Honeywell has a 40-year-long partnership with HAL, which manufacturers our TPE331 turboprop engine for domestic applications and export opportunities. In 2014 we signed an agreement with Tata Power SED to enable manufacturing under licence of our TALIN inertial land navigator system for military ground-based platforms.

While we are focused on bringing this locally made product to India today, there is no reason why aircraft components manufactured in India cannot be exported across the world. 

TDB: How much of a boost has the Indian aircraft manufacturing industry received from the 2005 ‘Offsets Policy’ that mandates foreign contractors to source components and systems from local vendors?

AC: In 2005, the Defense Procurement Procedure emerged in its earliest form, complete with certain offset requirements. In its initial conception this was relatively limited and restrictive, however in subsequent versions offset requirements have expanded to include civil aviation and homeland security. Indian manufacturing has benefitted from the increased scope in offset requirements and industry enforcement to adopt the “Make in India” initiative.

 

 

TDB: To encourage the industry, in your view, should the Indian government provide greater incentives to ‘India-based’ aircraft component export-manufacturers?

AC: Governments globally are not just regulators of business; they also play the key role as an enabler of business. In India, the government is not just the regulator and enabler but also the owner of a large pie of the economy. The recent focus on ease of doing business is what makes the government more of an enabler and not a mere provider of subsidies.

TDB: The largest sub-category of exports by value [$2.91 billion in FY2014; as per Ministry of Commerce data] is ‘Airplanes and aircraft whose unladen weight exceed 15,000 kg’. Has India really emerged as a wholesome manufacturer of aircraft for the world?

AC: While most of the dominant OEM airframers are located in US, Western Europe, and, increasingly China and Russia, aircraft are effectively “built” around the world. Although India is not a top global exporter of complete airframes, it contributes significantly to the engineering and technology within most modern aircraft flying today.

 

TDB: The future of this industry appears bright given the rising optimism about raising the already raised FDI level in defence (with 100% being allowed in specific cases). Is it good news (considering economies of scale and developing capabilities for exports in the defence sector)?

AC: We recognise the government’s decision to raise the FDI cap as positive intent to increase foreign investment. This will only help towards increasing investment from highly experienced and innovative international firms, since they typically take on considerable risk when doing so. We believe the government will continue to discover new ways to secure additional investment from overseas and it is imperative this continues, as foreign expertise is critical to India realising its long term “Make in India” objectives in aviation and defence.

TDB: Talking about the world’s leading aircraft and aircraft component makers, Honeywell eyes India as a global sourcing base for aircraft components. Will India’s offering on the world stage in this industry get more diversified in the years to come?

AC: India’s offering in aircraft components is already highly diverse. As a result, Indian companies are winning contracts from many companies around the world, including Honeywell, by providing components spanning nose-to-tail of aircraft.

TDB: Some experts claim that the aerospace component-making industry in India is still primitive, and that we still have great distance to cover before we can be proud of meeting international standards, quality-wise. How much truth is there in such a claim?

AC: We recognise that India’s role in the aerospace component-making industry is changing, as India is now placing considerable focus on the safety and quality of aviation engineering. An example of this focus is evident in the agreement between Bilateral Aviation Safety Agreement (BASA) and the US Federal Aviation Administration (US’ FAA). The FAA now supervises the certification of certain aircraft components, ensuring they are tested and meet internationally recognised standards. These regulations are the most stringent in the world, and it is encouraging that India can now certify to this level. 

 

TDB: What’s Honeywell’s take on the need to encourage participation of private firms in India in the business of aircraft export-manufacturing?

AC: We encourage the private sector to continue developing competencies in this market. We see a majority of this activity taking place in tier-one cities, especially those with a strong engineering talent pool, which is often in cities with reputable academic institutions. Tier-two and tier-three cities support acceleration of their industry and manufacturing growth and we expect this positive trend to continue.

TDB: ‘Aircraft components as an export business in India’. How exciting and challenging is it?

AC: India is rapidly building its capabilities to emerge as a global manufacturing hub of aerospace components. This growth is further spurred by the government with the “Make in India” initiative, which is expected to strengthen the regional aviation industry. Currently, aircraft parts exported from India are subject to multiple checks and must be certified by the US FAA or BASA. Foreign companies have recognised India’s engineering and production proficiencies, choosing to outsource manufacturing work to India. In addition, Indian manufacturers are now exporting various parts of aircraft and helicopters to countries including the US, UK, UAE, Singapore, Ireland and Turkey.

Recent reports indicate that the export of aircraft and spacecraft parts from India have increased nearly 70% between April and December 2014, compared to the same period in 2013 and the total value of exports has surpassed $5 billion in 2014 compared to $3 billion in 2013. With this level of growth in both domestic and exportable technologies, this is an extremely exciting and encouraging time to be in India. We are optimistic about the prospects of our operation in India over the long-term.