Airbus Mulls India Assembly for C295 Aircraft in Military Pitch

Airbus Group NV (AIR), aiming to pitch its C295 plane to the Indian Air Force, said it may set up a local assembly line for the military transport aircraft as it seeks to boost business outside the U.S. and Europe.
The planemaker will bid for the Indian contract next month, Christian Scherer, head of marketing and sales at Airbus Defense & Space, said by e-mail. India, the world’s largest arms importer, invited bids last year for 56 transport planes to replace its aging fleet of Avro aircraft.
“Clearly at present we have minimal revenues from the Indian defense market but the potential is enormous,” Scherer said. The C295 “has tremendous potential for industrial collaboration including the possibility of a final assembly line in India.”
Airbus is also eyeing an Indian Coast Guard order for transport aircraft, and plans to offer either the C295 or the smaller CN235, Scherer said. Over the past decade, India has boosted spending on upgrading military equipment as the nation looks beyond its traditional rivalry with Pakistan.
Scherer said Airbus is now “very close” to finalizing a contract to supply air-to-air refueling aircraft to the Indian military, a deal potentially valued at more than $1 billion. The company was named preferred bidder to supply six tankers, which are modified A330 passenger jets, in January last year.
Rafale Planes
Indian defense orders often face years of delays. In 2012, the government chose Dassault Aviation SA (AM) to supply at least 126 Rafale combat planes after initiating the purchase plan about five years earlier. A final accord has yet to be signed. In January, the nation scrapped a $753 million deal to buy helicopters from AgustaWestland following a 15-month corruption investigation.
“India is always going to be a challenge for international players,” Scherer said. “Naturally the defense business has its unique complexities, but I think we understand the Indian system much better today.”
Asia’s third-largest economy has tripled its military outlay over the past 10 years, and in 2013, the nation had the seventh-largest defense budget in the world. India’s military modernization largely depends on U.S. equipment. The country is buying 10 C-17 transport planes, valued at about $5.8 billion, making it the largest operator of the aircraft after the U.S.
The country is also buying eight P-8I maritime surveillance aircraft made by Chicago-based Boeing Co. (BA:US) as well as six Lockheed Martin (LMT:US) Co. C-130J transport aircraft valued at about $1.2 billion.
Scherer said Airbus provided technical advice through India’s Defence Research and Development Organization on the nation’s light combat aircraft project. The plane won initial operational clearance in December, paving the way for its induction into service.

Sumber : Bloomberg News