Up,Up,and Away!

Up, Up, and Away!

Amongst all the humdrum news on an economy with so much lead sewn into its seams that it always seems to be wading through water, Mahindra Aerospace making bold to declare it will give Indians an 8 seater ‘utility’ aircraft is indeed good to know. It will be made at its brand new, Rs. 150 crore, 25,000 sq. metre facility in Kolar district, 50 km away from Bangalore.

This is the first proper announcement of a private conglomerate, and at nearly $17 billion turnover, the Mahindra Group qualifies, entering the manufacture of aircraft and aircraft components in India.

It is certainly time we started making civilian application planes here in this country, considering the strides made in so many areas. This includes not only the high tech areas of software and biotechnology and pharmaceutical discovery, but also space exploration, satellites, missiles, even submarines and aircraft carrier building, nuclear weaponry and power plants, etc.

But it is remarkable, though no more than a lack of policy emphasis, that, apart from what the government owned HAL does for the Indian Air Force, assembling military aircraft in the main, nothing else has happened so far in 66 years. The government’s efforts have been plagued by cost overruns and delay and a sad lack of technological flair.

The turbo-props Mahindra plans to manufacture initially are small utility planes, rugged in  design, developed for the great Australian outback, and good to access remote places in India - Air Jeeps in effect. This is a tremendously grounded approach and the Mahindra Group must be congratulated for adopting it.

This plane is to be manufactured in collaboration with Mahindra’s 2010 acquisitions Aerostaff, a aircraft components manufacturer, and turbo-prop plane manufacturer GippsAero, both from Australia.

Another 5 seater is slated to come on stream in due course in collaboration with government owned National Aeronautical Laboratories (NAL).

Mahindra’s recent acquisition GippsAero, has reportedly sold some 250 aircraft out of Australia to customers in the US and Europe. The GA8 is already certified in 38 countries, and Mahindra is working via GippsAero on a 10- seater turbo-prop derivative of the GA8 which will also be launched from Australia in 2014 -followed thereafter perhaps by an eighteen-seater version too.

As yet, India’s certification processes are so cumbersome, as are its duty and import structures, that Mahindra is forced, more or less, to run its aircraft manufacturing and sales from Australia.

Though, the point is, this is expected to change somewhat in the next two years as the policy attitude to private sector participation in such government monopoly areas is changing. With the  expected advent of a less corrupt if not a corruption-free government led by Narendra Modi in 2014, these sectors should get a boost. NaMo has already indicated his strong support to domestic defence production, and the private sector applications will automatically benefit alongside.

Group Chairman Anand Mahindra too likens the GA8 to the Mahindra Jeep, made in India in succession to the WWII American Willys, which has, for decades, gone where there were practically no roads. He says his utility plane, the GA8, coming up for local manufacture soon, will do likewise in the air and ground.

The prospect is reminiscent of the land and take off anywhere US made military transport ‘Buffalo’ or even the famous and rugged ‘Dakota’ of  the forties and early commercial aviation.

It is exciting to contemplate the first plane to be made in the private sector here, particularly as more and more companies and businesses in India are buying aircraft to support their operations. Even the jewellers of Kerala are reported to be shopping for Embraer jets!

And because nothing is made or assembled in India so far, unlike the high-end cars, the costs on an imported basis are naturally very high. Nevertheless, it indicates the demand is very much there in the liberalised India of today. Most electioneering is done by air these days, as is the bulk of VIP movements around the states and the country.

Mahindra’s sober scaling of its operational foray gives the project a lot of credibility. It is also eyeing, via its aircraft components manufacturing acquisition Aerostaff, and its manufacturing facility near Bangalore just commissioned, some 20% of the over $40 billion  aircraft components purchases made by the Indian armed forces.

In further developments, Mahindra has also entered into a strategic technological partnership with Spanish Tier 1 aerostructures supplier the Aernnova Group.

While Mahindra has taken the plunge first, hedging its bets between the red tape ridden defence sector, and the expected robust demand from the privates; the Tata Group, Reliance Industries and others will most likely follow suit into different parts of the defence oriented and civilian applications manufacturing industry.

The trouble is that there are powerful forces that are not in favour of local manufacture because of the significant brokerages to be earned from continued imports. There is also the matter of huge R&D spends  and constant need to initiate collaborations and joint ventures to keep abreast of, and develop new technology.

Despite this challenging ground reality, for strategic reasons, India has made a significant beginning with the manufacture of stealth frigates for the Navy for example, in addition to the more nascent mentions above; and will continue to enlarge its domestic manufacturing capabilities in the years to come.

Our neighbour China has made substantial progress in this regard and for the same compelling reasons. Countries like India and China which anchor the so-called ‘Asian century’, cannot go very far into the future without setting up its own manufacturing in areas of defence production and civil aviation.

 (932 words)

October  24^th, 2013

Gautam Mukherjee