Friday, 19 June 2009

Interview: Dinesh Keskar, President, Boeing India

(Photo: Dinesh Keskar, President, Boeing India)

by Ajai Shukla
Business Standard
19th July 09

Dinesh Keskar was appointed President of Boeing India on 1st March 2009, with direct charge of civil aviation, as well as Boeing’s defence business in India. In his first media interaction since his appointment he discusses Boeing’s initiatives for cracking India’s defence market.

Q.    How big are the opportunities for Boeing in India's defence market?

For me India is not new. I’ve been working here since 1987… but handling Boeing’s defence business is new to me and I’ll be the first to admit that. But there are clearly significant opportunities coming up in India.

The P8I deal (India’s $2.2 purchase of Long Range Maritime Reconnaissance Aircraft) that we did earlier this year is a military watershed for us… there are new RFPs (Requests for Proposals, or calls for tenders) in the areas of helicopters and the 126 fighter deal (India’s proposed $11 billion purchase of 126 medium fighter aircraft). We think we have products and technologies that we can share and partner with India.

Q.     Your appointment… is it a recognition by Boeing that India’s defence market demands having a man in charge who clearly understands India’s culture and how business is done here?

I have a very good knowledge of how India works. Certainly it helps to put somebody who understands how Indian culture and ethos here are, okay. And secondly, even though I don’t have a military background, I have a Ph.D. in engineering and I can learn (defence issues) fairly quickly… What can you do more easily; take an MBA and teach him engineering, or take an engineer and teach him (defence business). Of course the latter is the easier thing to do.

I’ve been at Boeing for 30 years and it is not as if I am completely unfamiliar with military business. I don’t know as much detail about (the military)… but I will learn now. I can tell you the fuel burn on a 787 airliner right now, but I will not be able to tell you about the fuel burn on an F/A-18 (fighter). But give me six months and you’ll be amazed to see what I know about (the military end of Boeing’s business).

Let me tell you that India is a very strategic part of what is happening at Boeing right now. Outside of the United States --- which remains our biggest defence market --- India remains within the top two or three defence buyers globally.

Q.    What are your priorities for fine-tuning Boeing’s way of doing military business in India?

We’re already doing the right things here in India. Otherwise we would not have done so well on the P8I purchase. There is no substitute for having the right product that meets (the user’s) requirements. That is fundamental. Now my job is to convince the Indian government here that we have the right products that will serve them best.

So the most important thing (in doing business in India) is to be able to communicate properly. And you’d be amazed how often that message doesn’t reach the right people. You may have the best product but if nobody knows about it, who will take it?

Q.    Who are the right people in this case?

The government and the Ministry (of Defence, or MoD) and the concerned (military) service. These are the stakeholders, these are the customers. Our competition does the same thing, so there is nothing new in it. But communication is a key area.

Our second big thrust area will be in offsets. There are large offset requirements on all the deals here, whether commercial or military. I will give (the MoD) the comfort that we have the ability and means to discharge those obligations… We have that track record (in civil aviation); we have demonstrated that, not in millions, but in billions. We need to communicate that ability.

We have done partnerships. We signed a partnership with Bharat Electronics Limited at Aero India (in Feb 2009); Hindustan Aeronautics Limited is another big one… In the past we have had a network of suppliers that have worked with Boeing and we would like to enhance that network (for) discharging our obligations in offsets.

Q.    So effective communications with the government and building on your ability to discharge offsets are two major thrust areas. Anything else?

Of course a lot depends upon the government-to-government relations, which Boeing cannot do anything about. But the only reason why opportunities for Boeing are growing is that the relationship is excellent.

As you know… the civil nuclear deal has had an effect on what Boeing can do in India. Why do you think that five years ago Boeing didn’t have any potential here in the military side? The (government-to-government) relationship was different then.

Q.    But strategic engagement has not translated into defence business for US companies like Boeing.

I didn’t say there was an automatic linkage. All I’m saying is that these (Indo-US) agreements are enabling us to come into the talks; it’s giving us a seat at the table, which we didn’t have earlier. But now we have to earn our keep.

A lot of people assume that… just because (there’s a strategic relationship) it’s going to be the US all the way. That’s not going to be the case. India does not operate like that. And that’s why knowledge about India helps. I know a little bit about how this country works, as opposed to somebody having this misperception about… just because the civil nuclear (deal) is done we can go to sleep because no matter how bad the product is… it’ll go through. You may have the best product but you’ve still got to make sure it wins.

Q.    Before bidding for any defence deal, you’ve got to first take permission from the US government… And Washington has not been forthcoming in granting permissions, especially for transfer of technologies.

At least, today, we are discussing these issues. Three years ago we did not even have a conversation about this. It always takes two to negotiate….

Clearly India wants the best of everything. They also understand that there are certain responsibilities, rules and regulations attached to these things… and they will work those things out. This is no different from selling Boeing airliners, which incorporate dual use technologies… like the chips in an airliner’s Inertial Reference System, which can also be used to guide nuclear weapons… and we successfully got (US permissions) for that.

Yes, so you carve out the technologies where you don’t have restrictions. At our Research & Technology Centre in Bangalore we are already working on technology projects in collaboration with IITs, NAL (National Aeronautical Laboratory) and with other institutions of the Ministry of Science & Technology.

Not everything is restricted. There are a lot of things you can do: structural technologies; material technologies; you can do research in those arenas.

Q.    And finally, your biggest challenge ahead in Boeing’s defence business.

Defence business is done in two ways; you can either do a direct commercial deal (between the MoD and the US company concerned) or you can do a Foreign Military Sale (through Washington’s FMS programme). (In airliner sales) I dealt directly with Washington. In defence business everything goes through the US embassy in Delhi. So I am learning that… you need approvals to talk, to make presentations, to say what you have to say…