AA: Are we looking at mostly civil commercial links or military as well?

CC: I think it covers both the commercial and defence side. Our commercial side can integrate very easily into that environment. We've been working on a government-to-government background for many years to better understand each other's systems and with two large democracies you have variances that need adjustment. We've been doing that over a period of time as we get to know each other.

AA: Was it always such smooth sailing?

CC: I would say where we were four years ago, yes, it was a little rougher. I think we've come an incredibly long way with a lot of help from friends in India, friends of India in the United States, various business councils that are working together, both from the U.S. side and the Indian side. They are working together in an industry-to-industry perspective to understand each other, work through some of the challenges, look for opportunities for U.S. industry going to India and also for Indian companies, defence firms with productive capabilities to come to the United States on projects. Yes, there are challenges, but I think we are overcoming them and coming to a good understanding of how to work together.

AA: You recently won a huge U.S.$ 11 billion order to supply 68 aircraft to Air India. How does this help Boeing in its calculations for future sales strategy?

CC: Where it helps Boeing is with the country approach, how we can leverage what we're doing on the commercial side and the military side with our partnerships, whether it's with Hindustan Aeronautics Limited (HAL) or Tata or other Indian suppliers. What we can then do is bring that in with our global supply chain. It really gives them much more variety of work that they can look at and we can partner them with.

AA: You're integrating your civilian and military supplies, aren't you?

CC: Not in the international market right now. What you see is that in India you've got a commercial Boeing aircraft company that's been doing business for 50 years. You've now got a military side that's been in India for three years or so, both on the market and on industry relationships purely from a defence perspective. If you go back to next generation of products like the P-8 (anti-submarine reconnaissance aircraft) and, like, tankers (aerial refuelling aircraft) for the domestic customer here, yes, you are seeing collaboration where we use the best of commercial top forms and integrate the best of defence capabilities and the two of those – one plus one equals four – you get a really good bang for your buck.

The other benefit is that Boeing has been in India for many, many years and that relationship is well established and it's not only in the aircraft industry. When you do a big commercial deal, it brings in financial institutions, Indian legal institutions, which I think is also helping on the defence side to better understand how to work inside the Indian system. So it has paid benefits to us and some of our discussions on other programmes.

AA: If we look at what you have in mind to sell to India in the foreseeable future, are we looking at the P-8, the Boeing 737, the Apache and the heavy lift helicopter?

CC: I think that's just the start of it because if you look at our support systems side, then you talk about training, helping existing systems, logistical support. So it's not just the platforms themselves that give us an opportunity to do other work in India.

AA: When we look at the platforms what are we looking at?

CC: P-8 (surveillance and reconnaissance aircraft, F18 (strike fighter), CH 47 (heavy lift transport helicopter), Apache (attack helicopter), the Harpoon (anti-ship missile), the 737 AEW (airborne early warning and control aircraft), the C-17 (military transport). Discussions with the Indian government are continuing.

From a bigger picture perspective the P-8 for the U.S. Navy is on track and may be accelerated. What we're seeing is the commercial product platform coming together with military capabilities. We're starting to see interest in the international market in the P-8's capabilities and l think that's a good harbinger of things to come. I would also add that the P-8 is the largest commercial programme, global tender commercial programme that a U.S. company has entered into negotiations with the Indian government. We've paved ground in many areas and on the latest issue we're paving ground to understand all the issues involved with a full blown commercial negotiation.

AA: Could you elaborate?

CC: The largest programme of the U.S. has been the C-130J (military transport aircraft), but that was government-to-government single vendor. That was 1.2 billion and we're larger than that – and it's a commercial programme.

AA: How will developments on the nuclear deal affect relations between Boeing and India?

CC: The military-to-military relationship has been solid to begin with. So I'm not sure that the nuclear deal…it certainly has a positive effect if it goes through. But l think the military-to-military relationship has been established and it's going to remain and will continue to grow stronger, irrespective of what happens. If you look at the relationship outside of acquisition programmes, the exercise programme has been going on for quite a few years and has grown rapidly – large naval exercises, country air force exercises, Indian Air Force just deployed Su 30s to the U.S. to participate in one of our exercises in Nevada. That's a first. And as we work together, train together, see each others' equipment, there's a natural interest in different capabilities to meet different needs. So we believe it helped spur an interest in U.S. equipment and in particular some of the things that Boeing has got.

AA: What kind of off set arrangements have you in mind for India?

CC: Let me put this in context. There has been a lot of discussion in industry about the kind of framework that has to go on. The market is more familiar with the specific programmes, but I think in general all the companies want to see an expansion of the off set policy, that new programmes should include what they call 'banking' of off sets. We believe that allowing other pieces of the economy to participate would be in India's long-term interests. But that's a decision for the Ministry of Defence. Certainly our track record for participation worldwide is very good. We've got about U.S. $ 30 billion of offsets with customers around the world. I think what we're doing differently with India is to bring in the best of Indian industry to Boeing's global supply chain and that is a somewhat different approach.

AA: Can you put a value on that? Are we talking a billion U.S. dollars, 10 billion?

CC: It all depends on the value of contracts from an off set perspective. But let me give you a little different perspective. India is different. Our belief is we're looking at Indian industry in partnership with Boeing company and our supply chain. We have the ability to create long-term business relationships. So you have a proactive push as to how do you grow this business and then one of the variables in there is off set. So you've got good business opportunities, you're already seeing us move outwards with HAL, you've seen us moving out with Tata, we're moving towards a joint venture, so we see this environment as extremely positive business wise and we're not waiting for off sets, we're trying to create these long-term business relationships.

AA: What about this business year? What's the value of the offsets?

CC: We don't have any, we haven't signed any contracts yet. But the MoA (memorandum of agreement) with HAL was for a billion dollars over 10 years. The Tata JV (joint venture) is still to be determined. Let me give you a different perspective. The Boeing company has done U.S.$ 30 billion in off sets worldwide and exceeded every commitment. So let me be clear. These aren't off sets yet because we haven't sold a major platform. This is a decision by Boeing to work in India because of the value it brings us and the value it brings India. If the policy changes, we think it will, we can apply some of that for an off set in the future.

AA: How does Boeing compare the Chinese and Indian markets?

CC: The Chinese market is now a strictly commercial market. Boeing can't sell military products to China, that's American policy. So we have long-term partnerships with the Chinese on the commercial side, nothing on the military side. With India it's a combination of commercial and military. Whether India is more lucrative potentially depends on demand for the product. I would say India is more diversified because you can go across the entire Boeing portfolio, whereas China is more focused on the commercial products that we offer.

AA: So how important will these foreign markets like India and China be for you as a company?

CC: The great advantage for Boeing is that we are both a commercial and defence company. The commercial side can be very cyclical and the defence side can be very steady. India is new in terms of both the commercial and defence business and with the defence business it's worth more than U.S.$ 15 billion that we're looking at over the next 10 years. The commercial market I would say is far larger than that. This is why there is so much emphasis on how much we're putting into India already in terms of an upfront investment. This is a very important strategic market for the Boeing company – both commercial and defence.

AA: Are there any remaining political objections in the U.S. for military sales to India?

CC: I wouldn't say there are political restraints, there are always releasability issues that any government has. The U.S. government starts with the position that we do not release classified technology to anybody, then everything is an exception to that, even with the UK and Australia. We have gone from two kilometres an hour range with India to the supersonic range in four years. We've had serious discussions at multiple levels, cooperation in many cases and working together in many parts of the world. The whole relationship has evolved very rapidly as we prepare to understand what the Indian services and the Ministry of Defence needs.

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