Modifying Tata’s Boeing-Airbus deal with co-production at its core is an opportunity for institutional course correction.
In a podcast the other day, External Affairs Minister S. Jaishankar boasted that the Bharatiya Janata Party government of Narendra Modi is the most “strategic” of any the country has had. One may have expected then that, in the context of India’s requirement in the years ahead of 1,500-1,700 commercial aircraft, according to the Centre for Asia Pacific Aviation, and keeping the Aatmanirbharata (self-sufficiency) objective, the massive outgo of foreign exchange, and inherent economies of scale in mind, New Delhi would have helped configure the Tata deal for 400 single aisle and wide-body aircraft differently, premising it principally on co-production.
It would have laid down the principle of private sector companies consulting with the government while negotiating for capital acquisitions, and a template for aviation purchases generally, starting with the $115 billion contract Tata & Sons have signed with Boeing Company of the United States and the European Airbus consortium based in France. This deal is so big President Joe Biden crowed about it creating one million new jobs in America.
India’s belated insistence on co-production may upset Boeing and Airbus calculations. But they will concede the economic logic of making India a second production hub with converging global supply chains for their popular Boeing 737 and Airbus A-320 medium haulers as a cost-effective means of satisfying the burgeoning Indian and international demand for them, which Seattle and Toulouse by themselves will be hard-pressed to meet. Also, Washington and Paris can be expected to appreciate the strategic logic of thus firming up a partnership with India as a pillar for their Indo-Pacific policies.
In any case, New Delhi’s attitude should be clear and firm: co-production—that’s the deal, take it or leave it. What choice does either company have other than to take it? The customer is, after all, king.
Moreover, while Tata may sign the cheque, it is the country’s wealth being shipped out and the government has to have a say. Tata have so far only communicated an intent to buy aircraft; detailed contracts are still to be finalized. The Modi government ought to now ensure that clauses for co-production and system integration of these aircraft in India are central to the deal.
All these years, like the rest of the technology and common sense-challenged agencies of the Indian government when it comes to capital acquisitions, the Civil Aviation Ministry too acted as a “middleman” facilitating commercial deals with Boeing and Airbus and permitted politicians and babus to pocket millions of dollars in pelf. The Central Bureau of Investigation and the Enforcement Directorate are currently investigating decisions by the Congress regime of Manmohan Singh regarding the Air India-Indian Airlines merger and the subsequent order for 111 Airbus aircraft for Rs 70,000 crores.
Corruption apart, the Indian government had habitually played fast and loose with the country’s monies by letting airlines buy civilian planes that get the country little else in terms of substantial technological and manufacturing benefits. In return for the tens of billions in hard currency expended on buying planes of all kinds, a Boeing official revealed his company annually buys aviation goods and services from India worth a billion dollars. Is that a joke?
Now consider India’s main adversary—China, and how it has managed over the years to build up its civil aviation industry such that today most of its civil and military aviation needs are met by Chinese companies, such as the Commercial Aircraft Corporation of China (COMAC). It still buys long haul aircraft from Boeing and Airbus but that’s expected to end soon. The first of the COMAC models was the 100-seater ARJ-21, a flawed product Beijing peddles in Africa for half the cost of Boeing/Airbus aircraft. Its second model, the 170-seat C-919, however, is a medium range plane in the same class as Boeing 737 MAX and Airbus A-320 Neo that Air India is buying.
The first thing the strategic-minded Chinese leadership did was exploit the opening to the US via the Richard Nixon-era “ping pong diplomacy”. It prioritized procurement of aviation technologies by fair means and foul. The very year (1972) Nixon met with Mao Zedong in Beijing, the Chinese Aviation Company of Shanghai bought a single Boeing 707 and promptly reverse-engineered it into the passenger aircraft, Y-10. Helped by President Ronald Reagan’s “Orient Pearl” tech-transfer programme, the Chinese air force likewise rapidly modernized its frontline F-7 (MiG-21) fighter aircraft fleet with advanced US avionics.
Simultaneously, Beijing began a decade-long negotiations with McDonnell-Douglas that fetched in 1985 a deal to co-produce the MD-80 passenger aircraft for both the Chinese and international markets. In time, the American company’s entire assembly line and production wherewithal, including computer-assisted design, etc. were bought out. Despite assurances to Washington, the metal-bending machines meant for the MD-80, for instance, were immediately employed in Chinese combat aircraft production. China paid $1.2 billion for the whole transaction. It was, perhaps, big money at the time but it obtained for China the technological know-how, know-why, and the latest aircraft manufacturing and management techniques that it has since utilized to produce modern civilian and military aircraft, assisted by a sustained programme of electronically filching US designs, technological secrets, and proprietory information.
It is the sort of strategic singlemindedness the Indian government and military need to be capable of. Indeed, the Indian government on the one hand takes pride in sticking by agreements at any cost, as Jaishankar affirmed in that podcast and, on the other, despite the PM’s efforts stifles indigenously-developed technology just so foreign hardware can continue to be purchased by all and sundry, especially the armed services. Aatmanirbharata can go suck.
Modifying Tata’s Boeing-Airbus deal with co-production at its core is an opportunity for institutional course correction. If Prime Minister Modi grabs it, besides generating literally millions of high paying jobs and raising the quality of skilled manpower, he will establish India as a production centre for high value Boeing and Airbus aircraft with gains spilling over into the military aviation sector, and a magnet for other high-tech global industries. Lose it, and India remains a technology plodder and client state.
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[Published in The Sunday Guardian, Feb 26, 2023, at https://sundayguardianlive.com/opinion/convert-orders-for-boeing-airbus-into-co-production-deals
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Security Wise 
Good Morning Dr. Karnad, The House of Tata’s would benefit with such co-production deals- So, why haven’t they looked into it while placing the order?
Email from Major General Dhruv Katoch (Retd):
Sun, 26 Feb at 2:04 pm
Bharat,
I believe that most of the Boeings and Airbus passenger planes contracted for will be taken by leasing companies from Tata’s. This way, they get the aircraft at a fair price without having to go through the process of negotiating individually with the manufacturers.
I think a good option for India would be to buy the Embraer, which is up for sale and manufacture in India with full IPR. That would give a boost to the Indian manufacturing industry also.
Dhruv
Co-production is the more economical option in the long run, and Tata and GOI sgould have pushed for it from the start.
Email from Group Captain RK Narang (Retd)
Sun, 26 Feb at 2:29 pm
Respected Sir,
I have posted on your website (Awaiting moderation), which has few errors, is it possible to replace the that text with the following:
China has been able to convince both Airbus (Europe) and Boeing (USA) despite not being a democracy. Airbus A-320, A-330 and Boeing-737 are being manufactured in China since 2008, 2016 & 2018 (partnership signed in 2015). China was able to assert and ask Boing to manufacture B-737 for the promise of 300 aircraft in 2015 despite being a communist country and competitor of the USA and Indian order is much larger and can be leveraged for domestic manufacturing.
Indian civil aviation manufacturing sector has suffered due to lack of civil aviation manufacturing technology ownership. I had deliberated on the need for civil aviation aircraft manufacturing in India and stakeholders to take civil aviation technology ownership in my article “Make in India in civil Aviation” in 2017. (https://capsindia.org/wp-content/uploads/2021/10/D-D-APR-JUN-2017-FULL.pdf). In order to correct these anomalies, the above article proposed the following, which remain relevant even today:
(a) Establishing of R&D DIRECTORATE in MoCA
(b) CIVIL AVIATION R&D AND PROCUREMENT COUNCIL – the establishing of the council was proposed to leverage procurement of large number of aircraft by Indian private aviation companies
(c) Involvement of AVIATION R&D ORGANISATIONS in civil aviation procurements negotiations and approvals by the Indian government (NAL/ HAL/ AVIATION MANUFACTURING INDUSTRY).
(d) Indian Government BALANCING COST ESCALATION of the private sector in such deals for aviation technological gains
(e) CIVIL AVIATION MANUFACTURING TECHNOLOGY OWNERSHIP by the MoCA
The civil aviation manufacturing deals are best suited to help private industry take the lead in commercial aircraft manufacturing but this can not be done without the full government backing and ownership by the Ministry.
India still has many opportunities as Indigo is expected to acquire 500 aircraft and total of 1700 aircraft are likely to be procured by the Indian aviation industry.
warm regards
Gp Capt R K Narang VM (Retd.) PhD
Professor, interesting ideas and perhaps worthy of pursuing to build commercial aviation in India. From a military stand point though, India already has avionics, radar, composite body structure, and weapon systems tech. What is lacks are fighter jet engine, and semiconductor tech. Don’t know about heads up displays and other critical tech for military aircraft, but even for jet engines, GE is saying they will co- produce in India with ToT, though the devil is in the details.
Another thing to keep in mind is the willingness of multi nationals to invest in India also depends on how free Indian private companies are to operate and make their own decisions. Serving up sarkari tarkari in every deal maybe counter productive to building investor confidence.
However, the key geopolitical factor that will aid the transfer of military tech to India is the rise of China and the absolute necessity of building a balancing coalition to counter it. The US knows it cannot do this alone, and Japan and India are the two bulwarks of any such coalition.
The US is also invested in building the Indian economy, again to counter China. Supporting a million jobs in the US through this deal is great political optics. India needs to be friendly towards the US, just like it needs to be friendly with Russia. So giving the US a few wins will also need to be be part of the Indian grand strategy. It’s a balancing act for India, made more difficult, since any balancing coalition for China should actually include Russia. US’ mistake on this front just makes India’s job harder.
Prof Karnad,
Possibly out of context, but found it worth a shout. 🙂
EAM S. Jaishankar: China being a larger economy, it was common sense not to pick a fight with it.
Former Congress President Rahul Gandhi: When the British ruled us, wasn’t their economy smaller than ours? Do you not fight if your enemy is stronger than you?
Eerily similar to one of your YouTube talks on ‘Why is India not a Great Power (yet)?’ I think. Looks like someone in GOP likes reading you thoroughly 🙂
Dr karnad,
This is a private sector deal with the west, the government has no right to interfere.”The government has no business with business” is what the modi government practices only when they are not supposed to.
Also, there is great news on the military front.The “dry version” of the Kaveri engine has finally passed high-altitude trials in Russia with flying colors.In fact, it provided a thrust of 48.5 KN as compared to the benchmark requirement of 46 KN.This engine will power the HAL Ghatak long range stealth fighter-bomber which is inarguably the single most important project of DRDO/ADA.In fact, this project has a much higher chance of succeeding than AMCA, mainly due to much less stringent engine requirements.
Also, the expendable 4.5KN Manik engine has finally been perfected by GTRE I’m a recent test.This engine will power the 1500 km range LRLACM supersonic missile which play a critical role in pulverizing PLAAF bases should a misadventure ever take place.
The dry Kaveri engine with minor design tweaks can provide an output thrust of 60 KN.Add an afterburner and you get the required 110 KN thrust for AMCA.The fact that the GTRE has managed to perfect the dry engine and manik with such meager budget is proof that it can develop the afterburner within 4-5 years if receives even a billion dollars from the money allotted for the deal with General Electric. The money we will pay for the deal is nothing but tribute to the American empire.Also, it’s absolutely ludicrous for anyone to think that the Empire will part away with the tech of one of its most advanced jet engines to former and future enemy.Any policymakers who thinks otherwise is naive, to say it mildly.As you mentioned in your recent posts, the US consider thermonuclear weapons designs, nuclear submarine propulsion,jet engine technology as its three Crown Jewels which it will never ever impart to anyone else, even the British.
Dear Dr Karnad
Another wonderful article from your flowing and wonderful pen. Now MK Bhadrakumar has been saying that US wants to topple the Modi government as it did to Rajapaksha and Imran Khan in Sri Lanka and Pakistan, respectively. The reason that MK Bhadrakumar gives is the Indian support to the Russian war efforts in Ukraine. The same was the case with regime changes in Sri Lanka and Pakistan, respectively. MK Bhadrakumar also believes that Soros is also playing in this regard.
I believe you remember when the Imran Khan government fail last year in April, I was also saying the same thing.
Do you think that this is the reason that Modiji wants to placate the US by offering him concessions such as these Boeing deals ? I would love your views on this.
Dr Kota, designer of Tejas, mentioned Indian industries should have focused on aeronautics manufacturing, mostly the jet engines, the scale will help cover the cost of developing a good engine, now its a lost opportunity, developing engines take decades. As you pointed out, local production and ToT is the only way to overcome this gap. On the other hand, I am not sure if west will ever share such tech with anyone outside west. Japan, South Korea didnt get it. Moreover when it comes to tech like (the ones where they still have an edge) like lithography aystems, the west, will never transfer/share at any price.
No. But they allowed China to buy a leading lithography company in the Netherlands!
Oh no !
Professor, would you know the types of chips required for advanced miltech applications? I know that for Autonomous Vehicles, with all the radars, and lidars and ECUs/GPUs, 22nm chips will suffice. Whereas the latest chip tech is at 3nm (iPhone 14 Pro). Indian chip tech lags both these significantly. Chinese SMIC can make 14 nm and they were blocked at 7nm by the US.
Also, given the kind of sarkari culture of the Indian business environment and the raja maharaja culture in Indian Lala owned companies, true innovation won’t happen (IT/EC is the only sector where such innovation has happened, and that’s because the lalas are professionals – maybe biotech too and recently some defence tech). So Indian policy makers need to realize that partnering with leading tech nations is not an option, it’s necessary.
5nm-9nm
Professor, I was watching an interview of Fiona Hill on YouTube yesterday to get a different perspective on US foreign policy decisions on Russia. She was on the National Security Council under Trump and served both Presidents Bush and Obama.
Basically she admitted that the US made a mistake on Georgia and Ukraine in 2008, the start of the decline in Russia US relations. She also admitted that the US did not communicate red lines clearly to Russia in this period. Basically, the advisors advised Bush to hold back on Georgia and Ukraine joining NATO. But the US still went ahead and made statements to this effect in the Munich Security Conference in 2008.
Another interesting learning was that Trump was unable to prevent the US foreign policy establishment from worsening Russia relations even though he asked the right questions and wanted to improve relations with Russia. To me this also sounds like the deep state being more powerful than the executive, though she also mentioned that Trump was quite unpredictable and anything could have happened.
However, to me this confirms that the US made mistakes in dealing with Russia and that the deep state wants to continue antagonising Russia, even though it does not make strategic sense.
Now they are trying to sell tarkari to India that it should wean itself away from Russia for military supplies, all the while making the world a much more dangerous place. There is a Chinese saying that is very apt – matters of war are matters of the state. You lose the war and you lose the state (popularised by Kevin Rudd, ex Aussie PM, I might add).
This is the conundrum in the current war in Ukraine. Whoever loses, loses the state, or will take a big hit to its national power. The problem I see is that if the US loses national power, China wins! And it’s unlikely that Russia loses (even Fiona Hill admits this). It will likely go nuclear before that happens.
This a great opportunity for India to increase its political power as it is the only economic global power that has good relations with the West and Russia. It’s likely that the US will emerge weaker from all this. And like Gab Singh mentioned earlier, it will be more flexible with India on hi tech.
Professor,
Here is a video from an analysis by the Australian National University on why China will not be a superpower. The video is 7 years old – so one can judge the accuracy of their predictions. One can say that they were right on demographics and economic growth, right in many ways in their strategic assessment, but not so accurate in the assessment of the military modernization of China (though some points are still valid).
Still, it’s a good reminder to everyone that the Chinese dragon is breathing some hot air. While the Ukraine war will likely benefit Chinese power, some of the longer term population trends and economic implications give credence to many current assessments of Chinese peak power.
https://indianexpress.com/article/india/india-rejects-oics-unwarranted-references-on-jammu-kashmir-8479462/
Good response by India. Nobody gives a damn about this OIC anyways. They couldn’t do anything about Palestine 🇵🇸 till now and talk about Kashmir 😆
Dr karnad,
Do you have any idea about the weight of the Pokhran-II “S1” Thermonuclear device’s weight.Was the 200 kt device in the weight range of 350-400kg and capable of being used for MIRV’s?
India’s proven fizzled thermonuclear weapons will not make china twice before undertaking any major provocation. Jaishankar is the man personally responsible for the LAC standoff and loss of Depsang plains.It’s unbelievably treasonous for him to casually say “you cannot fight a larger economy”.As per this man’s logic Vietnam,Taliban and all other countries invaded by the US since WW2 should have lined up the roads and meekly thrown their arms and bowed before the white master rather than kicking them out of their countries after beating the enemy black and blue.
Jaishankar is an average IFS babu more concerned about settling his kids in the US than ensuring the strategic security of this huge country.The Chinese PLA faces the same moment of truth that German chief of general staff Helmuth von Moltke faced in 1914 wrt Russia.Attack the enemy now or it would be too late in a few years.Besides, the proximity of the 2024 elections provide a perfect timing to invade us in October-December this year.Coincidentally, these months are perfect campaign season in the eastern Himalayas(remember the timing of 1962 war).Their political objective would be to finish off modi and the bjp electorally and to ensure weak coalition governments for decades.Besides this would be a demonstration of strength to Taiwan and US.The Chinese are currently employing classic deception to create an illusion of “normality” as they quietly continue building up troops at the LAC.It’s obvious Jaishankar and his team have clearly not read in any depth about the 1969 USSR-China standoff and how Mao deterred a massive 25,000 Soviet tank tsunami with a combination of willpower and Megaton weapons.Mao’s successor Deng was also successful in deterring US intervention during the 1989 Tiananmen Square crises.They also deterred any US attempt at preemptively attacking them during the 1990-2012 period.They used their infallible thermonuclear umbrella to build up their economy and conventional military and are now effortlessly projecting power and have nearly attained Great power status by laughing their way through the process.If we don’t have the capacity to think ourselves than at the very least we can learn from what our enemy has done.Jaishankar and his team are incapable of even this.
@Ayush- Jaishankar doesn’t have any real clout in the GOI.
Guru “Dronacharya” of BJP. The current NSA is dealing with China. I wonder what’s the opinion of your Ex RAW grandpa about this man, whose biggest wish is to forever be in the limelight.
@Gaurav
Jaishankar is an average babu “crown prince” (google what his father was).His reason for being a motormouth,especially since the Russia-ukraine war started is to whitewash his critical role in the absolutely catastrophic Indo-US nuclear deal in 2008.That deal was equivalent to signing a Non-proliferation treaty(NPT) with the US.He(jaishankar) has a PhD in nuclear weapons.He knows very well that if we had tested once more after Pohran-II(in the 2000’s) with full-yield megaton explosions,as Dr karnad’s friend (now deceased) K. Santhanam(test director of Pokhran-II) wanted,we would have removed any doubts in the minds of the US and China and acquired an eternal,infallible shield.The LAC standoff and Galwan would have never happened.
Thanks to the military buildup under Vajpayee,at the time of the Indo-US nuclear deal , the military balance between us and the Chinese was nearly not as lopsided as it was in 2020.Hence, nuclear weapons were not an urgent priority of the GOI.Right now,we are scrambling to put anything we can between us and the chinese,all without increasing the budget to 3% of GDP.Sound military logic dictated PLA’s decision to go in against us in spring 2020.In the abscene of both conventional and nuclear deterrence why should the PLA think twice before undertaking any major actions?Besides, covid served as a perfect distraction.We are actually fortunate the PLA didn’t launch full-scale kinetic operations back then or even now.The well-learnt lessons from their catastrophic 1979 invasion of Vietnamn that wars almost never go according to plan,saved us.
Santhanam’s assessment of a failed test and recommendation for more hyrdogen weapons tests was on dot.
But the public opposition via op-eds and speeches mounted by nuclear stalwarts and myself during the negotiations almost upended the nuclear deal that followed. This massive corpus of op-eds made clear, among a host of other devastating conclusions about the dual-use N-programme, just why signing the N-deal with the US was tantamount to joining the NPT. These writings were collated and published as a book — PK Iyengar, AN Prasad, A Gopalakrishnan, Bharat Karnad, ‘Strategic Sell-out: US-Indian Nuclear Deal’ [New Delhi: Pentagon Press, 2009]. It lays bare the entire sordid tale of how the MEA negotiating team led by Jaishankar, then Joint Secretary (Americas), gave into US demands, and with what consequences to national security. Those interested may want to read these writings that in toto are a crushing indictment of the Manmohan Singh govt for selling India short. It is a taint Jaishankar can never wash off. [Incidentally, his JNU PhD was in international relations not nuclear weapons (about which, technically, he knows next to nothing)].
Professor,
Does the JS have full authority to negotiate such deals? I would imagine the PM, NSA, Cabinet Secy and Defence Minister would have had to sign off. From what I recall reading at the time, the PM was actively involved in making this happen. How culpable are the higher authorities in this respect? And how much power does the JS have if higher ups push a certain direction? You have to remember that India is a Raja maharaja culture.
Yes!
@Ayush- You wrote a whole essay on Jaishankar without addressing the point which I raised in the second paragraph of my previous comment.
Indo US nuclear civilian deal was signed in 2008 so, almost 15 years have passed. I don’t think there’s even a single electricity producing nuclear reactor which was also an oft repeated (GOI of that time) statement.
It’s likely that Jaishankar is a CIA mole but I also have serious doubts about the integrity of the current NSA.
What stops Modi government from conducting thermonuclear testing now?
Modi is in power for nine years now. All these so called treaties and agreements are just pieces of paper.
Any strong nation can choose to sideline them for its strategic objectives.
China provided India with the aforementioned opportunity in Mid 2020. GOI is still sleeping.
@Gaurav/Bharat
What I wrote about JS in my comment is exactly what my Gramps thinks of this man.In fact, he never stops abusing him,especially when JS tries call out “western hypocrisy” in front of cameras to impress our nationalistic but unknowledgable youth.
Jaishankar is more to blame for the current LAC standoff than even the Chinese PLA.It’s because of this man we don’t have an infallible shield like US,China and Russia do.We still haven’t learnt the lessons which Alexander the Great,the huns,Mohammed Ghori,mughals,Nader Shah and the British taught us.
I will not hide the fact that I very deeply admire both CCP and its PLA.They are very formidable and worthy enemies.As I mentioned earlier , proven Megaton-range warheads were used by the previous generations of CCP leaders to save China from a 1945 Manchuria style Soviet blitzkreig in 1969 and deter Iraq-style American regime change during the Tiananmen Square crisis in 1989.More recently,Putin has also deterred western intervention and even limited military aid using his large arsenal of proven Megaton nukes.The possession of such weapons eliminate the possibility of any offensive warfare.
https://www.japantimes.co.jp/news/2023/02/11/asia-pacific/china-nuclear-warheads-triple/
My point is that these weapons are, were and will remain the final word in strategic deterrence.Great powers rely on their thermonuclear arsenals to deter each other and use their conventional militaries for imperialistic power projection.Our biggest enemy is not China but our policymakers as Dr Karnad opined long ago.
Yes,the modi government can tear the Indo-US nuclear deal into shreds and toss it into the trash can literally tonight if it wants to.The chinese,by occupying some 900 sq.km of the strategic depsang plains have already given us the ultimate justification.But the reason they don’t do it is because of the obvious fear of western Sanctions.More importantly ,the Babus who actually implement the decisions fear personal sanctions like those that have been imposed on the Russia ,against their bank accounts in western banks which contain their ill-gotten wealth and also the possible expulsion of their progeny who have been quietly settled in the US,especially in New york or California.The US uses this as a critical leverage during negotiations with all foreign countries.But its much more effective on us cowardly Indians because slavery to the white man is apparently hereditary in our case.Russia, a very strong -headed country with a nominal GDP of only $1.3 trillion dollars has made an absolute laughing stock of the “tidal wave” of western sanctions.We , the fifth largest economy can do just same if not more if we have the guts which we don’t.
@Ayush- You are giving far too much credit to JS as if he is solely responsible for India’s foreign policy blunders.
You completely missed my question please refer to it again, it is directed at the present Indian NSA, who isn’t JS.