An IAF HS-748 Avro. The MoD has tendered for 56 aircraft to replace its vintage Avro fleet
By Ajai Shukla
Business Standard, 12th June 13
The defence ministry’s (MoD) global tender
for supplying the Indian Air Force (IAF) with 56 medium transport aircraft is
deeply flawed, say Indian companies that will compete to build 40 aircraft in India
in partnership with a foreign vendor who will supply the first 16 ready-built.
Air Chief Marshal NAK Browne, the IAF boss,
has touted this as a game-changing contract that would bring India’s private
sector into aerospace manufacture. But private company CEOs say the contract is
set up to fail, shutting the doors forever in their face and leaving the field
clear for public sector monopoly, Hindustan Aeronautics Ltd (HAL).
The 56 aircraft to be supplied under this
contract will replace the IAF’s aging Hawker Siddeley 748 Avro aircraft. The
MoD tender --- termed Request for Proposals (RfP) --- has gone to eight global
vendors including Boeing, Ilyushin of Russia, Antonov of Ukraine, Franco-German
consortium EADS, Embraer of Brazil and Alenia Aeromacchi of Italy. By Oct 8th, each
bidders must select an Indian partner, termed the Indian Production Agency
(IPA), and submit their detailed proposals.
Defence Minister AK Antony told parliament
last August that the contract, worth an estimated Rs 11,897 crore, would see
the first aircraft delivered 24 months after signing, and all 56 delivered over
the next eight years.
But this may never come to pass, say three CEOs
from the Indian private sector, pointing to what they term “fatal problems”
with the proposal. Their greatest apprehension is the enormous cost of establishing
a Greenfield aircraft production unit, and an airfield and control tower to
test and fly out the aircraft that are built. Acquiring hundreds of acres of
land and setting up such a facility will be an expensive and time-consuming
task that could incur serious delays.
“It would be hugely uneconomical to
establish such a facility just to build 40 aircraft for the IAF. The MoD presumes
that, after delivering the IAF aircraft, the facility can build for the global civilian
market, amortising the cost over many more aircraft. But why would a foreign
vendor establish a line in India that would compete with its home facility?”
wonders an Indian defence company CEO.
Besides the possible loss of jobs in the
home country, foreign vendors would calculate that Indian aerospace
manufacturing costs are significantly higher than in developed countries.
Industry bodies have suggested that one of
the IAF’s base repair depots (BRDs) be used for setting up the production
facility. The BRDs, which carry out major repairs and overhaul of aircraft,
have vast tracts of land and functional airfields that could be given on lease
to the IPA. If the BRD cannot spare land, the industry bodies have proposed
that the IAF acquires adjoining land under the national defence clauses. But
the MoD has not accepted that suggestion.
Besides this, Indian CEOs point to another major
problem --- the certification needed for aircraft built here for the civil
market. Furthermore, each individual component built in India would require
certification for civilian aerospace use, a rigorous and time-consuming process
that would significantly raise the cost.
“Eventually the foreign vendor will end up
supplying all 56 aircraft from abroad. With the Indian partner mired in land
acquisition, certification, licences and procedural formalities, the MoD will
have no choice but to fall back on import. This is set up to become an MoD case
study of how the private sector, given an opportunity, failed to rise to the
occasion,” says a private defence company CEO.
Watching from the wings is HAL, which has
steadfastly opposed the proposal to build through the private sector. Top HAL
officials have lobbied with the MoD to let HAL manufacture the transport
aircraft at its Kanpur facility.
These issues are only emerging now because
the MoD has tightly controlled access to the RfP document. While issuing it on
May 8th to eight foreign vendors, the prospective IPAs, have been
denied a copy. When Indian industry bodies officially requested for a copy of
the RfP, the MoD turned them down.
Business Standard has a copy of the RfP in
its possession. The MoD has not responded to an emailed request for comments.
Shuklaji, fully agreed, nicely elaborated & its bang on target. The entire process is a delay tactics. I doubt how these govt. economic planners clear to get the jobs & if they have any other equivalent in other countries also.
ReplyDeleteNothing but crybabys. Do they really expect that everything will be given to them on a platter?
ReplyDeleteLet one private company make a Pilatus competitor and bring it commercial production, prove its mettle to join IAF. We can then divulge RfP's and the like.
ReplyDeleteThis is completely backwards, the RFPs should be issued to Indian companies and we need to allow those companies to go find their partners, if needed to bid on this.
ReplyDeletecujo
Yup, the rfp is designed to fail. Why would the MoD babus (and their political handlers) let go of a source of power and wealth? In their minds, only HAL--known worldwide for its incompetence and non-performance--deserves the Indian taxpayers' hard-earned money to waste. In the meantime, Indian private companies have set up top notch oil refineries and car plants that compete worldwide in sharp contrast to these wasteful PSUs.
ReplyDeleteAs long as HAL and other DPSUs remain alive under government control, India will never make even world class guns and bullets, forget fighters and transports.
Have you bothered to look at the origins of Pilatus or any western aircraft manufactuirer? If you did, you would find that ALL of them without exception were nutured by their governments in the interests of building viable global defence competitors free of government inefficiency. No country of note wants to mess around with their defence capability. India is absent from that list.
ReplyDeleteThis is going to end making the MoD look incompetent in the eyes of the world - once again! In the end, after wasting everybody's time,HAL will probably get the contract. In the meantime, the IAF will have to soldier on with the vintage Avro.
ReplyDeleteNothing really changes, does it?
It is nothing but a game plan by MoD and HAL. They both do not want any private player to start manufacturing unit in India , since it will expose incompetency of them as well as DRDO. Live examples LCA and other aircrafts.
ReplyDeleteIt still seems that the only competitor likely to match the requirements well would be Antonov, since (only) their product meets all the specs and already serves a civil aviation role, in fact the version with rear ramp is not yet in production. Antonov is already pimping themselves out to the Chinese besides depending on Russian MoD, so receiving money they would otherwise not get by transferring production to India is completely reasonable. The question is whether that really is a competitive tender, whether a de facto single vendor solution is acceptable, or whether transferring An-148 production to India really is a forward-looking goal.
ReplyDeleteIt should be noted that EADS has been making noise about future military airlifter products now that A400M is entering full production, they have floated the idea of a new C130 class replacement and of a C295 replacement. Where the funding for this would come is a mystery, although if a foreign partner (like India) emerged then it becomes much more viable. Albeit it seems highly likely that Brazil could get France to buy C390 and (crucially) not fund a competitor if they go for Rafale. Whether C295 actually needs to be replaced is an open question, but parallel with India's military/civil plan, it could find synergies with a civil turboprop... as is being researched in Europe (essentially for ATR to turn into a commercial product). That (civil) product looks set to have a great commercial future, so India getting on board should be an obvious move. But both that and a C295 replacement are not immediately available for production... Licence producing some parts of C295, with aim for synergies in future ATR 90 seater class would make sense... but C295 flat out does not meet the stated speed requirements of the tender, which only Antonov does. I'd say this tender is problematic on several levels. Not offering the RfP to local vendors who are supposed to participate is just another disturbing sign.