India & America must work together to create jobs: SpiceJet Chairman

In an interview to CNBC-TV18's Shereen Bhan, Ajay Singh, Chairman of SpiceJet spoke about the potential of the aviation sector in India.

Below is the verbatim transcript of the interview.

Q: Aviation clearly is a big focus area of opportunity and collaboration. In fact the Prime Minister mentioning the aviation sector and the possibilities this morning.

A: India is the fastest growing aviation market in the world today. We are growing at 20-25 percent and despite that growth, just about 3 percent of Indians fly. So, there is obviously great potential and therefore there is great potential to buy planes.

SpiceJet has bought up to 205 aircrafts from Boeing. They are worth USD 22 billion. As per the United States Department of Commerce, that creates 1,32,000 American jobs, high paid, high skilled American jobs right here in the United States. So, I think that is great leverage that we have on the Americans to say to them that as India grows, and as India prospers there will be more and more jobs created for Americans in the United States.

Q: Is that how you believe India should pitch the Make in India and Make America Great Again story, it isn't an either or but it has to be jointly sold.

A: It has to be both because as India builds smart cities, as we build our roads, airports, and ports, there will be huge numbers of American jobs created here in India. However, if India is to provide this massive market to the Americans, then the Americans must also try and work along with India to give a fillip to India’s Make in India program. It is only fair that we should have aircraft, for example, built in India for Indians and so as we create jobs for them here, they must create jobs for Indians in India.

Q: Since you were talking about that Boeing order, 205 aircrafts and you have just announced 20 more on the sidelines of the Paris air-show, take me through what we can expect in terms of deliveries, FY18 is when you start to get the orders in?

A: These aircrafts start coming in, in August of 2018 and then they come pretty quickly all the way to 2024. In addition to the Boeing aircraft that we bought, as you know, we have also placed an order for Bombardier aircraft. Today we are the largest regional operators of aircraft and we have placed an order for up to 50 Bombardier aircrafts. These start to come in, in April of 2018.

Q: You were talking about joint opportunities. In the defence space in aviation in specific, what more can both sides to do to encourage Make in India to nurture and facilitate the ecosystem that will be required for some of these big deals to go forward?

A: India is again, the largest importer of arms in the world. It is only right that that no longer remains the case in the future. We need to build defence equipment in India. The Americans are amongst the largest suppliers of such defence equipment and the technologies that go behind that defence equipment. And, India is a great strategic partner for the Americans to have because they are both democratic nations, they are both strongly fighting terrorism around the world.

It is in everybody's interest that in Asia, there is a counter balance to the Chinese. And therefore, in India's prosperity, there is going to be an opportunity for greater stability. So, I do hope that the Americans will continue with the policies that they followed under President Bush and President Obama and continue to ensure that they provide technology provide equipment and work with India, both so that jobs are created in the US as well as prosperity is created in India.

Q: One of the things that the Prime Minister spoke of while he was meeting with US business leaders was the goods and services tax (GST) and how that could be a game changer for the Indian economy. For the aviation sector in specific though, there are concerns about the implementation of the GST and the backend preparedness. What is your own take? How ready are you for July 1?

A: I think we are completely ready for July 1. There are just one or two issues which we have raised with government. I think one is the double taxation issue which relates to import of aircraft and if you are taxing, if you are charging custom duty on the import of aircraft you should not also be charging tax on leasing of the aircraft. I think that is an issue that has been raised and I think the government accepts that there will be a clarification issued on that.

Secondly we oppose the import duty on aircraft which was not imposed so far. So, the issues are relatively small, we don’t think that there is going to be a major impact on aviation. On the contrary, I think one tax for one country is an incredible thing and we think that it will lead to great prosperity in India.

Q: Another headline that is of course doing the rounds in India is the privatisation of Air India. Would you be interested?

A: I think we are too small to be interested in Air India. Air India is a terrific asset, but with huge challenges and it needs somebody much larger than a SpiceJet to look at Air India.

Q: But if that were to be the case that the privatisation does indeed take off, what will it mean in terms of the aviation landscape and who would you place your bets on in terms of interested parties?

A: From media reports, it appears that the Tatas are interested and I think that would be great for Air India and for the country because they have had that asset before and they have the wherewithal to try and clean up the situation that Air India is in and there are terrific challenges there. But it needs somebody with deep pockets to look at that. But for those assets to become more productive can only be a great positive for India.

Q: Let me ask you about your key expectation from the Trump-Modi meeting in terms of taking the economic partnership, the strategic partnership forward.

A: I think there is no real difference that that will occur now between what was happening under President Bush and President Obama and what happens under President Trump. The direction is going to be the same. There is going to be a greater focus on terrorism and how both countries can together work to bring down terrorism around the world. I think President Trump will recognise that India is a great strategic partner to have and in terms of the economics of it, India has a potential to create a massive number of jobs in the US.

So I think there will be great recognition of that fact and I am confident that on the defence side there will be much more interaction between the two countries, many more accords and even some defence production shifting to India.