Cost of the Tejas: when a sword arm is worth it

The Tejas, fitted with iron bombs, taxiing out for a bomb release test flight from the HAL airfield at Bangalore

By Ajai Shukla

Aeronautical Development Agency, Bangalore

Business Standard, 22nd Feb 11

The spotlight is swinging onto the Tejas Light Combat Aircraft (LCA). It has been cleared for induction into the Indian Air Force, construction has begun on two squadrons of Tejas (40 aircraft), and the IAF is picking 40% of the tab for developing a more powerful Tejas Mark II. Now its designers are hitting out at critics who charge that the Tejas programme has greatly overshot its budget.

PS Subramanyam, the head of the Aeronautical Development Agency (ADA), which spearheads the Tejas programme, has given Business Standard detailed financial figures to argue that the fighter’s development cost has remained within budget. ADA also points out that the Tejas is significantly cheaper than any comparable fighter.

"No overshoot"

Slamming some recent media reports that the Tejas was enormously over budget (e.g. Times of India, 21st Nov 2010, “At Rs 17k cr, Tejas cost zooms 3000%”) Subramanyam reveals that just Rs 6,051 crore have been spent so far on the fighter that performed aerobatics at the Aero India show in Bangalore this month. Another Rs 746 crore (of the sanctioned Rs 3,650 crore) has been spent on the naval Tejas, which will fly from the Indian Navy’s future aircraft carriers.

ADA has provided a detailed cost breakdown. The LCA project began in 1983 (the name Tejas only came later) with a preliminary allocation of Rs 560 crore for “feasibility studies and project definition”. Subramanyam complains that accusations of cost overruns stem from the misperception that Rs 560 crore was the entire budget for developing the Tejas. In fact, this was merely for defining the project and creating the infrastructure needed for designing, building, testing and certifying a fighter.

Tejas: what the MoD will pay

Ser No			Development	Date of Sanction	Sanctioned cost		Spent till 25 Jan 11
1		Air Force
	(a)		Phase-1 (Tejas prototype)	23rd Jun 1993	2188*		2188
	(b)		Phase-2 (Tejas Mark I)	20th Nov 2001	5777**		3859
	Sub-total (a & b)					7965		6047
	(c)		Phase – 3 (Tejas Mark II)	20th Nov 2009	2432		4
	Sub-total (a, b & c)				10397		6051
2	Navy
	(a) (b)		Pre-project design	20th Jan 1999	14		14
			Phase-1 (Tejas Mark I)	28th Mar 2003	1715***		732
	Sub-total (a & b)				1729		746
	(c)		Phase-2 (Tejas Mark 2)	17th Dec 2009	1921		Nil
Total (a, b & c)						3650		746
Grand Total (1 & 2)						14047		6797

*          Includes Rs 560 crores sanctioned on 22^nd Aug 1983

**         Rs 3302 + 2475 on 20^th Jan 2001, and 20^th Nov 2009 respectively

***       Rs 949 + 766 on 28^th Mar 2003, and 17^th Dec 2009 respectively

Only after a decade of infrastructure building did the design work start, when the MoD sanctioned Rs 2188 crore in 1993 (which included the initial Rs 560 crore). This allocation was to fund the building of two “technology demonstrator” Tejas fighters.

“Within this budget we flew the Tejas in 2001, and even built two extra Tejas prototypes”, says Subramanyam. “And that was without any adjustment for inflation or foreign exchange appreciation, though the dollar shot up from 26 rupees to 47 rupees during that period. Our forex component of Rs 873 crore should have been adjusted to Rs 1642 crore.”

Buoyed by the Tejas’ successful test flight in 2001, the MoD allocated ADA Rs 3302 crore in Nov 2001 for Phase 2 of the programme. This was to fund a production line and the building and flight-testing of 8 “limited series production” fighters. Phase 2 will run till 2012, when the Tejas obtains final operational clearance (FOC) for induction into the IAF as a frontline fighter.

In 2009, with the Tejas flight-testing running slow, ADA obtained an additional Rs 2475 crore from the government for Phase II. Subramanyam argues that this is not a cost overrun. “The MoD’s allocation of 2001 contained no protection from inflation. If you roll back our annual expenditure to the base year of 2001, we remained within budget”, says the ADA chief.

The IAF is now confident that its Tejas Mk I will obtain FOC in 2012, within the sanctioned Rs 7,965 crore (Rs 2,188 + 3302 + 2475 crore). All that remains is to integrate a long-range missile; to enable mid-air refuelling; and to enable the Tejas to fly as slow as 200 kmph.

What we got

Subramanyam argues that this money has not just developed the Tejas, but also India’s ability to build serious fighters. “Consider the aerospace infrastructure that we have built across the country, in key DRDO laboratories, defence PSUs, private industry, academic institutions, and test facilities like the National Flight Testing Centre (NFTC). This has bridged a technology and infrastructure gap of 2-3 generations”, he says.

Meanwhile, the naval Tejas will fly within weeks. Significantly different from the IAF version, the naval Tejas must get airborne within 195 metres (the length of an aircraft carrier deck) and withstand the cruel impact of repeated deck landings, in which it must be slammed down precisely where the deck begins. Of the Rs 1,729 crore allocated for the naval Tejas, ADA has spent Rs 746 crore so far.

Encouraged by the success of Tejas Mk I, the MoD allocated Rs 2,432 crore in 2009 for making the IAF’s fighter even better: developing a Tejas Mk II, with a newer, beefier GE-414 engine. Simultaneously, Rs 1,921 crores was sanctioned for the Naval Tejas Mk II. While the navy funded 40% of its fighter from the start, the IAF is a new convert, matching the navy in funding the Tejas Mk II.

“By 2012, the total development cost for an IAF and a naval Tejas --- including a single-seat fighter and a twin-seat trainer variant for each --- will be Rs 9,690 crore. Another Rs 4,353 crore will be spent on the Tejas Mark II, bringing the total cost to Rs 14,047 crore”, says Subramanyam.

The Gripen, a comparable if somewhat more advanced fighter, which Sweden developed during this period, cost US $13.5 billion for 204 fighters, assuming complete tax exemption. A similar number of Tejas fighters entering IAF and navy service would --- provided that HAL holds the Tejas manufacturing price at its current estimate of Rs 180 crore per fighter --- have cost India US $ 11.28 billion.

Given that the Sweden entered the Gripen programme with a mature aerospace industry (coming off the successful Viggen programme), India will have built the Tejas, as also an entire aerospace design and manufacturing eco-system, for 17% less money than Sweden paid for the Gripen.