French defence major Thales sees India as manufacturing, export hub

French multinational Thales, which has businesses in defence, aeronautics, transport and security, sees its India headcount doubling and its turnover trebling to €1 billion over the next 3-5 years.

While that is the immediate objective, the long-term plan is to employ India as a manufacturing base and also export ‘Made in India’ products and solutions.

According to Patrice Caine, Chairman & CEO, Thales SA, India is among the company’s top three priority countries, after the US and China. Reforms by the Narendra Modi government — that include opening up the defence sector for FDI — will only aid growth here, he added.

Caine points out that considering the challenges in the country (where no one size fits all) and the level of specialisation required to overcome it, Indian solutions could act as a global prototype which can be redesigned to suit requirements in other countries.

Opportunity in Rafale

The off-set clause in the Rafale fighter jet deal is a classic example, he said, of how it provides an opportunity and a “strong incentive” to Thales to “move its supply chain from Europe”.

“Many companies would have said that the offset clause in the Rafale deal is a constraint and life could be much easier with a straight sale. That’s not my opinion. It is for us a strong incentive to move our supply chain from Europe to India. But, more importantly, we can set up our engineering capabilities so that tomorrow we can develop in India genuine products serving both Indian and export market,,” he told BusinessLine on the sidelines of Thales Media Day.

Currently, Thales’ turnover from its India operations is to the tune of €300 million, and over the next “three to five years” it will more than treble to €1 billion.

While defence accounts for the lion’s share of the company’s turnover at present, other segments too will grow in future.

But it is not just defence that will aid top-line growth. The other four verticals that include space, aeronautics, ground transportation, security (including cyber security) are expected to see good traction.

So it is obvious that the company will make “significant investments” in the country. “We need also to win some customers and markets. So we need to invest more than what we had in the past,” Caine said.

Some of the joint ventures that the company has currently had or are working on include ones with MKU, HAL and Reliance Defence, among others.

Increasing headcount

With India being among the key markets, Thales intends to increase its headcount in the country.

According to Caine, the number is likely to double to 3,000 over the next 2-3 years.

In fact, the company’s current headcount break-up here includes 320 people being employed by itself and another 130-odd by Guavus — a US-based real-time big data analytics firm. The remaining are through its ecosystem (900) and JVs (150).

“We will leverage our acquisitions (Guavus and Gemalto) in India and double the headcount in the near future,” he said.

(The writer was in Paris recently at the invitationof Thales SA)

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