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'All we need is a good leader to propel us in the right direction'

After operating in India for thirty years the Boeing International Corporation established its first liaison office in the country in 1995, an indication of how seriously the aircraft manufacturing giant views the Indian aviation market.

With a $ 3.5 billion Air-India contract hanging in balance, NASA-trained Dinesh A Keskar, president, Boeing India, has obviously a lot on his mind. Archana Masih spoke to Keskar -- who in his avatar as director, international sales, Boeing, has an intimate knowledge of global economies and markets -- about India's growing stature in the aviation business, Boeing's chances of beating Airbus Industrie to the Air-India deal, and the future of liberalisation in India. Excerpts from the 110-minute interview:

What are your responsibilities as president, Boeing India? Do you still look after international sales?

I am responsible for everything that happens to Boeing in India. Sales of the aircraft, activities related to the maintenance base, flight training etc.

I have started working on research activities with NAL and the Indian Institute of Science in Bangalore and ARA, a defence establishment agency. I want to do some kind of technology transfer at a research level between Boeing and the Institute of Science.

We recently had a team down here to discuss what kind of projects could be worked upon together. Not only is this a knowledgeable process but it enables the company to feel that it is not present in a different country merely with a saleable identity, but in the perspective of the entire aviation community.

I still handle international sales but right now I am focussing on India because it is my primary responsibility. I used to do Thai and other airlines from the Asian region, but being based here there is so much to do that frankly one person is not enough.

How many planes have you sold in your career with Boeing? Which was your biggest deal?

The six 747s sold to Air-India was one of my biggest deals. It was worth one billion dollars which is roughly Rs 35 billion. I have been in sales only for six years. I was also involved in the selling of the 777 to Thai Airways and I hope the 777 deal with Air-India will be the next one.

Why did Boeing relocate you to India? Was it part of the gambit to secure the Air-India contract?

In the past there were only Air-India and Indian Airlines. Now with 31 private airplanes it was obvious that we needed someone here. Initially, I had to make at least one trip a month. We felt that that way we could not give people enough time which is not good for a long term relationship with clients.

Some started feeling that we give more importance to Air-India. The work here was so much that half of 1994 I spent on the road because even if one airline like United buys 100 planes and another airline buys two planes, the amount of work is the same.

India being one of Boeing's big markets we opened an office here. We also opened Boeing China a year ago. I have been with Boeing for 20 years and coming to India was partly my initiative too. It has nothing to do with a specific contract or campaign. It was a long term commitment.

Now that I am based here I can look at other angles. HAL, for instance, is looking for a partner to open a flight training base in India. Pilots sent abroad for training cost the airlines a lot of money. There are no 737-300, 737-400, 737-500 simulators in India. If that comes to India, it could save a lot of money for the airlines.

I can do all these things a lot more better now that I am here. Earlier if somebody approached me with these issues, I would say 'I'll take care of it next time' and the next time would never come. And that's why we established Boeing India.

How big is the Air-India contract?

It is a fairly large sized contract. It could be as many as 23 airplanes which is a lot of money and could amount to three-and-a-half billion dollars.

What are your chances of winning the contract?

We are very confident of winning this order. We have the right product, it is a product that Air-India wants. Media reports say the Boeing 777 already has the mandate from the technical committee. But we are still waiting for a formal government and board approval.

It is no surprise that Boeing is going to win the contract because Air-India has to operate in the same global environment as British Airways, Cathay Pacific, Thai, United Airlines etc. Every one of these airlines accounts for the Boeing 777. In 1995 Boeing outnumbered Airbus 3:1. Our market share was 70 per cent.

We sold 346 airplanes and Airbus did approximately one-third of that. Boeing won every single competition last year. Boeing makes more sense from the airlines's point of view.

Basically, the argument is that Boeing is ten per cent cheaper to operate. We go faster. We go farther. We are more comfortable. If we are better in every aspect, we have to win.

Secondly, it was recognised that since the Airbus 340 was built three years before the Boeing 777 came into the fray it has been flying much longer than us. We started flying in May last year. Since we came later into the market we were studying every move our competition was making. We wanted to be better.

We spoke to the airlines, asked them what they expected from a new airplane. We saw every aspect and incorporated many of these things in our airplane. Why would any customer buy it otherwise? That is why the 777 has become a best seller and surpassed all other airplanes.

How soon do you expect a decision from Air-India

That is a very tough question. It depends on how soon the government decision comes through, before or after the election. It is obvious that the airline needs the airplane fairly quickly. So we are all waiting.

Since the airline has already made its recommendation and the board has to take it up soon, we hope it will happen sooner than later.

Is conducting business and making deals in all Asian countries approximately the same? How do you deal with the issue of graft, especially when it is forbidden by US law? Does it make it doubly difficult to make deals in many Asian nations?

Doing business (in different countries) can never be the same. Doing business with two airlines in the US is not the same. There are many misconceptions and misnomers about doing business. You need to understand the local customs, regulations and then dwell into the system rather than trying to do it your way. As long as you understand that, I don't think one can have problems working in any place in the world.

People talk about difficulties in India but one has to understand the realities in a country before starting an assignment. Frankly, doing business in India is not new for us. We have done it since the time of the 707, since the 1960s.

Graft is not an issue we are concerned about. We are an American company which forbids the use of foul practices. My company knows that and I have been briefed on it. Have you ever heard any allegation about Boeing? If you have the right product you can succeed. That's why we are able to sell airplanes in any country in the world.

I think more and more exposures like what's happening in India will really help US companies. We then think we will have a more level playing field that may not exist today.

You have been born in India, educated here. What are the changes you see in post-liberalised India. Or are they no changes at all?

Post-liberalised India has a lot of western activity. Pepsi, Coke and KFC, but those are the consumer goods. Coming to the real thing like the availability of computers, it is absolutely impressive. I visited some computer fairs here and it is no different to what we have in the US which I think is a tremendous, tremendous achievement.

I remember when I left India in 1975 I used to come to the Tata Institute of Fundamental Research to use their computer. It was very ancient and we came all the way from anywhere to run the programme there because it was one of the few places available. Now that computer power is available in pocket computers.

What I am trying to say is the time we had that computer here the world had already advanced to the next generation and the next generation. When I went to the University of Cincinnati there was a big difference. Whereas there is not much difference now. In fact Windows '95 was simultaneously introduced in India. Taking the Pentium technology, we are at 133 mgz, so I think that is a big difference. Access to this technology will keep companies globally competitive.

With our talent and access to these resources I think it will really be good for India.

How different is it doing business now and doing business in the India of the license Raj? When did you first come to India for business?

I first came to do business here in 1989 and started the 747-400 activity and discussions with Air-India. The period between 1989 to 1991 was not an easy. We went through an election, the assassination of Rajiv Gandhi, so it has been quite turbulent. It has been quite steady after that.

Are you satisfied with the pace of reforms? What more needs to be done?

It is the pace of reforms which is the real issue, not the reforms itself. I am not qualified to answer on the pace, but as long as we continue with the reforms it will be great for the country.

What are the hurdles you foresee in the liberalisation process? Do you think it can be reversed if the BJP or the National Front comes to power? Or do you think the process is far too gone for any party to reverse the reforms?

If we have to make an impact on the world we have to attract foreign investment. The investment dollars around the world is limited with an inordinate amount of choices. They (investors) can go to India, Vietnam, China, US, every place in the world. Everybody wants companies to come in. So India can do its share by continuing with the reforms and showing that business is done here according to the westerly accepted way.

If the bureaucracy is reduced further in terms of getting approval, it will help further. They have already come a long way. I can see the difference in the customs from what it was ten years ago. These things are going to help.

I think the reforms have gone too far. I don't remember any political party even remotely saying they want to revert the reform process. Even the Communist states don't say that. There is no question of going back. It is just how quickly you can get there.

Do you think it is more difficult to change the Indian mind set than to restructure the Indian economy? Do you see a visible change in the mind set of Indians involved in the decision making process?

There is always some resistance to change. Even we at Boeing underwent a complete change. (The period) Between 1985 and 1995 saw a complete change in the way we do business. As a senior manager I saw how people reacted to it. There are some who immediately take cognisance of the fact and want to play with it. There are few who resist and there is a large bunch who will just sit on the fence, to wait and see which way the wind is going to blow in six months's time and then decide which way to go.

So it is the leaders who have to take this role. They have to lead and the mass will subsequently follow. I think it is a short term problem; and when I say short term I mean 10 years. This will then become a way of life and to change that will be very difficult.

There is a definite difference in the way business is conducted in India because the decision makers know that they either ride the trend or get left behind.

When do you see India making an impact on the global economy? Do you think India will ever become as relevant as China? Or will it always play a secondary role to China where the economy is concerned?

This is not only possible, but it will happen. And the reason it will happen is because we understand different cultures, we have an international way of conducting business, we speak English, we have a legal system accepted by the West. It may be slow but it is there.

We have a tremendous amount of trained manpower, good education which many other countries lack. They may have the resources, but don't have the work force. That is what happens in the Middle East, in Japan.

Indians have a capacity to excel. There are many people of Indian origin who have gone outside and done extremely well. In US, the single group with the highest family income per capita are Indians. Their family income is twice the average family income in the US. My family income was $ 56,000 while the average in the US is $ 24,000. There are about a million Indians in the US and I am sure similar statistics will hold true in the UK and other places.

So all we need is a good leader to propel us in the right direction, and this will eventually happen. I am confident because it is not by surprise that so much foreign investment is directed into India, it is not by coincidence that all these multinationals are coming here. It is happening because they think India is a big market that needs to be tapped. Our potential is unlimited and there is a tremendous future out here.

Should government controls end if we are to achieve higher growth? Or are some controls needed?

Yes and no.You do need some rules and barriers. You can't open the floodgates and let people do what they want. Even countries like the US which are 220 plus years old have rules and regulations, barriers and controls. The queues in front of the American consulate in Bombay is an example of these rules.

The same applies in every set of business, and I think somebody with a better global overview should decide how high the barriers should be, where they should be high and where they should be low. But I definitely feel they should be regulations and barriers. They should accommodate the current market trend.

For example, if there is a great demand for software companies in India, the investment should be made attractive. If we have enough of a particular commodity, the barriers should be more difficult which is obvious to some extent in the custom duties imposed. Reduction in barriers is what it takes to grow but these should be reduced at a proper pace so that the local industry does not go out of business.

What needs to be done to enhance the quantum of foreign investment in the country?

There is already a tremendous amount of approved foreign investment. But I am surprised that there is a light and day difference between the amount of foreign investment approved and the actual amount of investment that comes into the country. For example, if somebody gets a project cleared for $ 100 million, you realise it never really came through.

In the last couple of years, less than 15 per cent of approved investment really got done. If that was just raised from 15 per cent to 50 cent it would be better than doing anything else. We have to figure why all the approved investment is not happening. If we just did that, the growth would be much more significant rather than worrying about a higher number of approvals.