Rolls-Royce: Roaring Through the Indian Sky With Bigger Bets India holds great promise and potential to be a key growth driver for Rolls-Royce as the company leverages the country's civil aerospace and emerging defence opportunities
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In 1933, the contrail which enveloped the cruising altitude of the first flight of the Indian Air Force Number One Squadron, bespoke the growing solidarity between Rolls-Royce and India. The legacy commenced in 1932 when Rolls-Royce engines powered the first commercial aircraft of Tata Aviation. Fast Forward to 2024, India is one of the fastest-growing large economies in the world with a target of becoming a $5 trillion economy in the next five years and the partnership continues strong.
In 2012, when Kishore Jayaraman joined Rolls-Royce as India president, the engine-maker was transitioning from licensed production to engineering services and component manufacturing; his vision was to build capabilities through empowered teams thereby enabling sustainable growth. Over time, bold decisions and his skill to gauge future opportunities, the company expanded its engineering, digital, supply chain and manufacturing footprint in India and is better positioned to capture emerging opportunities.
Importance of RR in India: Exports & Investments
Spanning over 67 years of co-production, Rolls-Royce relationship with HAL dates back to 1956: the beginning of Make In India story as HAL commenced licensed production of combat jet engines in India. Since then, the camaraderie has grown stronger and continues to extend across aerospace and marine segments. The two established joint ventures in India – the joint venture with HAL known as International Aerospace Manufacturing Pvt. Ltd. (IAMPL), manufactures over 160 high-precision components for the Trent family of civil engines as well as components for defence engines. The other joint venture with Force Motors serves both local and global markets. IAMPL is now expanding its operations in India and setting up new manufacturing facilities in Hosur, Tamil Nadu which will create further capabilities for exports of complex aerospace components from India to serve the global supply chain of civil and defence aero-engines.
"Our joint venture with the HAL is all export as we make these components in Bangalore and they go into our facilities in UK and get assembled into the engine. So in reality, these are a hundred percent export. Now, the other joint venture with Force Motors in Pune, have about 70 plus per cent exports and 30 per cent domestic. The whole series of our power systems, MTU branded engines, the series 1600 enginesl; the entire global production was moved to India, therefore, in principle, we are doing considerable exports," Jayaraman said.
Talking about investments in India, the president, said, "Every single country at every single point in time adds value by its growing GDP. Since a decade there has been a big manufacturing push in India from about 15 per cent to 25 per cent of the GDP. As the need changes with requirement for products and services, we would address them," he added.
Indigenisation in the defence sector has been a key focus for India over the past decade, a collaboration model which leads to co-creation of technology and capability could contribute to India's combat strategy, self-reliance ambitions and enhance support to existing fleets. Rolls-Royce is keen to partner with India for combat aircraft engine codevelopment, wherein the Intellectual Property (IP) will be created and owned by India, allowing future upgrades and exports, and enabling indigenous new engine development in future. Today, over 750 Rolls-Royce engines of 10 engine types are powering Indian Military aircraft.
Going Green With Tech
In February 2023, Rolls-Royce announced an order from Air India for 68 Trent XWB-97 engines, plus options for 20 more, powering the Airbus A350-1000. The Tata-controlled airline also ordered 12 Trent XWB-84 engines, the sole engine option for the Airbus A350-900. "Our engines with Air India, will be 50 per cent SAF (sustainable aviation fuel) compatible from day one," he said.
Explaining the decarbonization strategy, he said, "Through our decarbonisation strategy, we will become a net zero carbon company across our value chain by 2050 at the latest. In terms of new products, we would aim to attain net zero by 2030." Besides, RR aim to lead the way in sustainable power for new aviation markets with an all-electric solution that will get the company closer to a NetZero future. Battery technology has been integral to the creation of RR's first all-electric aircraft which comprised of 6,000 cells and an advanced cooling system that can withstand extreme temperatures. In its maiden flight, the first electric aircraft, reached a speed limit of about 350 miles per hour, a speed record.
Not only electric, hydrogen can be a game changer too. In a major step towards proving that hydrogen could be a zero carbon aviation fuel of the future, Rolls-Royce and easyJet earlier confirmed that they have set a new aviation milestone with the world's first run of a modern aero engine on hydrogen. The ground test was conducted on an early concept demonstrator using green hydrogen created by wind and tidal power.
So the question is how do we move up the value stream to have it all green? "When we speak of electric aircraft and the battery is being charged by fossil fuels it is definitely not green. But if the battery is charged through green hydrogen such as solar or wind power, then that's green. The world is used to fossil fuel, it's very hard to disrupt it, it will take time, but it is not impossible."
According to a report released by International Air Transport Association in September 2023, the SAF market remains in its early stages of development, making the task of estimating a global price a challenging one. During 2022, the average SAF price estimate was around $2,400/t, albeit with significant differences across regions. This is around two and half times higher than the price of conventional jet fuel. To achieve a substantial scale-up of SAF production, collaboration is required between governments and key industry players. Such efforts will pave the way for globally synchronized strategic policies, offering incentives and facilitating the investments necessary to bring about the expansion of SAF capacity and production in time for aviation to meet its net-zero commitment by 2050.
"SAF is costly and all the stake stakeholders are coming together to address this. When the economies of scale kicks in, the prices will start coming down," he explained.
2023 At a Glance & 2024 Flight Path
In August 2023, Rolls-Royce reported a strong recovery in profit helped by better pricing for maintaining the engines that power long-haul aircraft like the Airbus A350 and Boeing 787. The company reported first-half underlying operating profit of 673 million pounds ($854 million), more than five times compared with the year ago. As the Air India pact too revolves around A350, did India as a market contributed to the British company's phenomenal growth? "The global team has achieved a remarkable feat! From an India point of view, we are a team that supports our global businesses. We make sure that we are there alongside them and we create new products or new technologies that is required to make sure that the existing products on the existing fleet flies safely, reliably and efficiently. India is an integral part of the global team."
Focused on co-creating opportunities for its defense business and an IP in India, RR aims to leverage India's supply chain capabilities, "2023 was a year that marked RR close to its normal business operations post the pandemic. I think 2024 would be a build out on 2023 achievevments because the Air India deal feels like home coming!"