Rockwell Collins Inc. (COL) has tied up with Tata Power Co. (TPWR) to bid for an Indian Air Force contract as the aerospace-equipment maker seeks to boost sales outside home amid curbs in U.S. military spending.
Rockwell Collins is planning more partnerships in India for future deals, TC Chan, managing director for Asia Pacific, said in a Nov. 21 interview in New Delhi. The company, based in Cedar Rapids, Iowa, is bidding to supply software defined radio in partnership with Tata Power Strategic Electronics Division, he said without disclosing the size of the contract.
The manufacturer joins Boeing Co. (BA) and Lockheed Martin Corp. (LMT) in seeking orders from India, which has tripled its defense spending in the last decade to keep pace with China and counter internal security threats. In contrast, military budget growth has slowed in the U.S., prompting contractors there to fire workers and restructure operations.
“India is trying to update systems across navy, army and air force and that’s one big area,” Chan said. The nation’s “requirements are going to be for the longer term.”
Rockwell Collins plans to cut about 6 percent of its workforce next year as its defense revenue falls amid curtailed U.S. military spending. The company expects to let 1,250 employees go in the fiscal year through September, Chief Executive Officer Clay Jones said last month. Boeing and Lockheed Martin are also paring jobs.
In the next five years, KPMG International estimates, India will seek bids for $42 billion of military hardware -- from fighter jets to artillery guns. Rockwell Collins sees a potential market of $500 million for communication and avionics products in the next five to seven years, Chan said.
The company is setting up a research facility in the southern city of Hyderabad, where it already has a design center. It employs about 500 people in India.
The electronics division of Tata Power, India’s largest non-state generator of electricity, has worked on electronics and software development programs for the nation’s Defence Research and Development Organisation since 1967. The Rockwell Collins-Tata partnership may compete with state-owned Bharat Electronics Ltd. (BHE) and Electronics Corp. of India Ltd. that are developing software defined radio equipment.
Shalini Singh, a spokeswoman for Tata Power, didn’t immediately reply to e-mailed questions on the partnership. Gerard Galway, Indian Air Force’s spokesman, also didn’t respond to a call and text message seeking comments on the tender.
“No matter how hard we try, we cannot get a good insight that a local company can give in India,” Chan said. “Tata will do a significant amount of work on our behalf in order to fulfill that contract.”
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