The Telegraph
Monday , February 10 , 2014
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Boeing chopper parts plan


New Delhi, Feb. 9: Boeing, the $85-billion aerospace and defence giant, wants to make India a global hub to make parts for its CH-47 Chinook helicopters.

“We want to make India a global hub for sub-assemblies for our Chinook helicopters,” said Pratyush Kumar, president of Boeing India.

Boeing has got repeat orders from the Indian defence forces for the helicopters, which can carry loads up to 9.5 tonnes at 282 kmph.

The US company needs to offset 30 per cent of the price tag for the helicopter by producing components or doing research and development here.

Boeing is not in favour of setting up facilities in India as it is not economically viable to set up a unit just to meet the offset requirements. Hence, the bid to make it a global sourcing hub.

“Offsets are a catalyst (to Boeing joint ventures or production deals with Indian companies) but the real motivation is to lower costs while retaining quality. In the long run, you have to teach them (Indian vendors) to fish in global waters,” said Kumar.

India is likely to spend up to $100 billion over the next five years on defence procurement. Analysts feel the move by Boeing, in line with similar deal sweeteners by other foreign defence contractors, is aimed at future business.

Initially, Chinook’s ramps, pylons and electrical harnesses will be sourced from India.

“The ultimate goal will be to source sub-assemblies of more (aircraft) platforms,” Kumar told The Telegraph.

To meet the offset requirements, Boeing has deals with HAL, Bharat Electronics, the Tata group, Larsen & Toubro, Dynamatic Technologies, Wipro, Infosys, HCL Tech and Infotech.

Rule tweaks by India have forced global arms suppliers to tie up with domestic companies to produce at least 30 per cent of their defence order locally.

Top officials involved in framing the defence purchase norms said “the terms are such that tech transfers have to be made without licence fees and without restrictions on domestic production, sales or even to some extent exports”. This is expected to prompt defence contractors to transfer technology to Indian joint venture partners. However, local companies complain that rules restricting foreign investment to 26 per cent, instead of the 49 per cent sought by them, have hampered the technology transfers.