Monday, March 21, 2011


Asian Defence and Diplomacy
Neelam Mathews
March 21, 2011

Giuseppe Giordo, the Chief Executive Officer of Alenia
Aeronautica, the aeronautics sector of Finmeccanica
is also Chairman of the Board of Global Military Aircraft
Systems (GMAS), a joint venture with L-3 Communications,
working on the C-27J transport aircraft.Giordo caught up
with Asian Defence and Diplomacy’s (AD&D) Neelam Mathews
to talk on how he viewed India’s burgeoning defence industry and the role
his company anticipated it could contribute to growth of
the Indian defence/aerospace sector.

India’s defence budget is set to increase substantially
over the next decade, with the country looking at spending
approximately $32 billion in its defence procurement
over the next years. Alenia Aeronautica, the Italian aerospace
leader, has chalked out plans that will enable it to
participate in the growth of India’s aerospace industry as it
gradually matures and picks up pace.

“India is a strategic country for us – not just for marketing.
We have started collaborating with Indian industries
and believe firmly in cooperation. India is opening doors
for many countries for us in the Asia Pacific, including Malaysia
and Australia. We want to expand into Asia from our
presence in India,” said Giuseppe Giordo.

The move to make India the hub for the Asia Pacific
seems to be the logical one to follow with defence budgets
suffering in the West because of financial restrictions and
constraints. But Alenia Aeronautica has a global vision as
well, “we are now also moving into markets like Russia
and the Mediterranean,” according to Giordo.

Alenia Aeronautica holds 25% + one share of Sukhoi Civil
Aircraft Company (SCAC) founded in 2000 to develop new
regional aircraft projects, principally the Sukhoi Superjet
100. In February, the Sukhoi Superjet 100 Type Certificate
was completed and confirms compliance of the SSJ100
with the airworthiness regulations authorizing the commercial
operation of the airplane. This work has included
co-operative efforts with Alenia Aeronautica that assisted
Collaborative Trends with noise-compliance and radiation-field tests.

In India there is vast potential for new turboprop planes
as well as the replacement of existing ones. “We would like
to have the National Aerospace Laboratory (NAL) and other
Indian entities study new Indian products. I believe that for
certain number of years Indian companies can collaborate
with ATR. Once the companies have the integration capabilities,
they can start production here. With the growth of
regional transport, India will need around 90 turboprops,”
said Giordo.

On the Indian basic trainer competition
from which the Aermacchi SF.260
was excluded, Alenia is holding talks
with some companies in India, where
the Indian company could have real
and substantial involvement in a basic
trainer programme derived from the
SF.260. With there being requests for
basic trainers from many countries,
Giordo said that “we have developed a
new version for which the Indian company
will do the marketing abroad to
sell it as an Indian aircraft. We expect
a potential of some 100 plus in India
and 400 in the regional market.”

Alenia Aeronautica designs, builds,
integrates and supports complex air
systems from advanced combat aircraft
to military airlifters and commercial
airliners, from special mission
aircraft to Unmanned Air Vehicles
(UAV). It is this diverse portfolio of
high technology capabilities that it intends
to bring into play in developing
a strategic relationship with India.

The Alenia Aeronautica product
portfolio includes the C-27J tactical
transport aircraft, as used by the US
Air Force and five NATO nations. The
ATR 42MP Surveyor for maritime patrol,
the ATR 72ASW for anti-submarine
missions or special mission aircraft
based on the ATR platform.


India has a requirement for
16 medium-sized transport planes for
the Indian Air Force for which a Request
for Proposal (RfP) is expected by
the end of the year. Alenia will be offering
the C-27J. For this programme
and according to Giordo, “we estimate
the demand go up to 100 in the future.”

Beyond India the C-27J has great
potential in many Asian markets, for
example the Philippines and Malaysia
have also shown interest in procuring
the aircraft, as has Australia. “Australia
is a strategic country for us, more in
terms of market. Making India a hub,
for instance, opens possibilities for us
to work with Indian partners for Australia
for the C-27J. With an Indian
collaboration, we will do some engineering
activities in Italy and some in

Alenia has received a Request for
Information (RfI) from the Indonesian
Air Force on the C-27J. With Thailand,
already a customer for the earlier
C-27A, the company is working
with them on logistics support and
has also had discussions on MPA variants
of the ATR. The company has also
responded to an Indian Navy RfI on
an MPA aircraft, offering the ATR 72
with a Selex Galileo mission system.

Giordo is candid on marketing Unmanned
Aerial Systems (UAS) in India.
“The concern (here) is dual use…
we have to work out the mission of
UAS - whether it is for border security
or for nuclear plants, or for patrolling
and Coast Guard-related missions.

That will be another story. If it is for
use in military applications, we are
not allowed. The key is the payload.
While it is an opportunity, we must be
sure before we tap into it.”

There are some hiccups along the
way though. “The procurement process
of India is legendary - it takes
much longer than others. An aspect
the Indian government should consider
is more effective procedures that
will provide better value. The lowest
bid (L1) unfortunately is not always
the answer. It is imperative that lifecycle
costs be considered,” Giordo explains.

Given India’s present industrial
base in defence production, while cooperation
with government-owned
Hindustan Aeronautics Ltd (HAL) is
not always an option, Alenia is also
in talks with smaller private companies.
“We are making some progress
in this…if Indian authorities want a
solid industrial base, they need other
companies in addition to HAL,” says

Moving up the ladder, Giordo is
clear that offsets will not be the only
reason to do business with India. “If
you have to consider offsets only,
you’re not there for the long run. However,
if you consider industrialisation,
it is not just about long-term work
packages. Instead of concentrating on
quantity, you then work on quality.”

The strength of Indian companies,
Giordo feels, lies in specific parts design
and manufacturing. He says that:
“They need to jump to an integrated
role. Alenia needs to jump into that
process as well. I believe some countries
will become major competitors
and India is one. There is no way to
stop them…the best way is to collaborate.”

India does not permit foreign shareholding
of over 26% in defence companies,
resulting in potential foreign collaborators
desisting from investment.

Giordo feels otherwise: “26% equity
does not mean you lose control provided
you have solid work sharing.
It is essential to have a good (local)
partner…you can sign any number of
legal agreements, but there is always
the need to have transparency in relationships.”

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