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An Honest Proposal
EADS’ roadmap for India looks beyond market presence
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EADS has ambitious plans for India. For the company, India is not a mere market but a potential partner, a point which chief executive officer, EADS DS, Dr Stefan Zoller reinforces time and again. “We have delivered our bid for 126 MRCA. Now we are working on an overarching strategy on how to become an Indian citizen,” he says during a brief interaction on the sidelines of ILA 2008. Sitting in the intimate conference room inside the sprawling EADS chalet at Schönefeld, even as Eurofighter Typhoon is being towed towards the run-way for its afternoon flight, Dr Zoller unveils EADS’ strategy for India, which includes, partnerships, co-development and co-production with the Indian companies.
“There are two-ways of looking at this,” he says. “One, we could look at the Eurofighter campaign, which obviously is very important. Or we could look at developing an overall strategic relationship which goes beyond the campaign; a relationship where India need not be a mere buyer but also a supplier of joint EADS-India technologies. I am talking of making India a technology hub and deliver out of India to Europe.”
To the Indians present in the room, insulated from the noise of the air show, Dr Zoller’s words appear both delectable and impossible. Such a grandiose idea obviously invites many questions, the most important being, how will such a plan be realised? But EADS has a roadmap. Agreements will have to be signed, some of which are already sealed with the possibilities of future cooperation. Notable among them are with BEL for offsets, DRDO for co-development, Tata Group for technical cooperation, Alpha Technologies and so on. Talks are on with Larsen & Toubro as well.
However, somehow the urgency that Dr Zoller communicates does not reflect on the ground in India. Though EADS has opened an office in Delhi and has been expanding its area of influence in India, the pace does not seem to keep up with the ambitious plans. Dr Zoller agrees. “We are far behind our own expectations,” he says. “There are limitations to what we can do. We are keen to have exclusive agreements, but there are only a few defence companies in India and they already have various agreements with companies from other countries. We don’t want to be simply one of the many,” says Dr Zoller, combining candour with cautiousness.
At this point, his colleague Dr Bernhard Gerwert, CEO EADS Military Air Systems, interjects, “We cannot be faster than the Indian defence industry.” The reference is obviously to India’s defence procurement procedure (DPP) policy, the review of which is underway and has not yet been released. Unless the DPP 2008 is released, there is bound to be some amount of confusion among the foreign players.
This is a small issue compared to the greater challenges that EADS may face. Zoller points out one. “We have to see how a European group ought to position itself as a long-lasting partner of India,” he says. However, some comfort can be drawn from EADS’ background. Having worked with different companies in Europe, EADS understands the pulls and pressures of multinational partnerships. “All we need to do is to expand this level of work to include India, a sort of global expansion of EADS,” he says.
What is refreshing is the candidness with which Zoller speaks. According to him, while the Eurofighter campaign is paramount for the moment (“We have to offer a multi-billion offset package to India by 8 August 2008,” he says, almost in the passing), the need to go beyond this campaign has arisen out of ground realities. “We are an all-European company. Where are the markets now? We have a presence in Gulf and China we cannot do much about as it is embargoed. That leaves the US and India. And we are aware of the fact that the buyer-seller relationship cannot continue in the long term. It has to transform into a partnership.”
Here is a big challenge for partnership. All the European partners of EADS have nearly-matched technological base. Not so India. Even as EADS strives to make India a technology hub, is it confident that India would be able to absorb that technology? Zoller lets Gerwert answer that. “There are two aspects to technology,” Gerwert says. “Software and hardware. While we will bring the hardware expertise, we will look at software capabilities in India. This will bridge the technological gap.”
Both Zoller and Gerwert insist that there is a difference between a research institute and a production company. “Often people forget to make this distinction,” says Gerwert. “For instance,” he says, “DRDO is a research institute, so it is not right to expect it to deliver on production. If this distinction is blurred, neither the research institute nor the production house will be able to deliver.”
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