'There is some overcapacity in India'

India is a good investment destination says Christian Scherer, executive vice-president in charge of strategy and future programmes at the aviation giant Airbus. In an interview with ET, he said Airbus was working closely with its customers in India to enable them to beat the global economic slowdown. Excerpts:

How is the current global economic crisis different from the previous ones?
This crisis is different in that it has been triggered by the financial sector collapse. The previous crisis for the aviation industry was 9/11, caused by factors which were different. The current one is a financial crisis and the scale is very high. We think that the aviation industry would not feel the impact in the long run.

We are optimistic that demand would grow in the long-term and liquidity crunch would not persist for long. Cost of financing has gone up, but we feel banks and financial institutions would continue to lend to the aviation sector in the long term because it is a good business. We actively work with institutions like export credit agencies for providing finance to airlines. In rare cases, we also lend a helping hand.

What is the impact of the global slowdown on Airbus?
We would not be affected much because Airbus started restructuring three years ago. It has enabled us to tackle the crisis in a much better way. Unlike many others, we were prepared when the crisis surfaced. We are extremely close to our customers. If some adjustments have to be made due to the crisis in terms of rescheduling deliveries, we do that without much disruption.

What are your plans for India?
We will continue to grow our supply base in India with focus on six key areas which include engineering, design, training and research. Each of these areas are equally important for us to grow in India. We see our outsourcing volume growing here in excess of $1 billion in the next few years. Airbus plans to step up outsourcing and we have targets set for 2020. India will get a large chunk of this business.

Airbus currently employs 200 highly-skilled professionals at its design centre in Bangalore. The headcount will double to 400 in the next few years. The major plans of Airbus for India are three-fold. One, it is a very growing market, probably the most aggressively growing market for the next 20 years.

We would also continue to develop our fast growing supply base in India, which is strong and very promising. This is to gain effectively an industrial foothold in a country that has a lot to offer, particularly very talented engineers, quality manufacturing capabilities, design capabilities, research and technology.

Does this mean more investments from Airbus flowing into India?
It means investment flowing into India from Airbus and our related companies. It means vast expansion possibilities for aerospace companies and related firms that are already established in India.

What kind of recovery from the global economic slowdown do you see for the airlines?
We don���t have a crystal ball, but we do have the confidence that we are in a growth business. Air transportation ��� which is what feeds us ��� is highly correlated to economic growth. There is a bit of recession right now worldwide, but in India, there is a slowdown and not recession .

In the long run, our industry is a growth industry. To answer your question specifically, I cannot tell you when this crisis will be over, but what I can tell you is that our business will probably grow, will probably even double over the next 15 years and India is a major player in world economy and we intend to grow with it and for it.

Do you expect India���s airlines to order a large number of aircraft anytime soon?
I cannot exactly tell you when. Right now there seems to be a little bit of overcapacity in the Indian market. That is not surprising. It is happening in other markets as well. We have excellent relationship with all our Indian customers and are making small adjustment to the deliveries of airplanes to back our customers.

All I can tell you is that we do expect to see traffic growth rate here in double digits over the next few years.