Antony orders look into ‘private-sector-only’ aircraft contract - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Thursday 10 October 2013

Antony orders look into ‘private-sector-only’ aircraft contract

By Ajai Shukla
Business Standard, 10th Oct 13

On Oct 7, Praful Patel, Minister of Heavy Industries and Public Enterprises, wrote to Defence Minister AK Antony, demanding that the defence ministry (MoD) tender to build 56 transport aircraft for the Indian Air Force (IAF) be opened to public sector undertakings (PSUs), and not just to the private sector. Today, Antony has asked MoD officials to “examine the issues raised by Shri Patel.”

It is unclear what the MoD will re-examine. On Aug 13, 2012, Antony had told parliament that this contract, worth Rs 11,897 crore, was specifically intended to “encourage development of the Indian private sector in aircraft manufacture.”

The IAF too is eager to develop private sector alternatives to Hindustan Aeronautics Ltd (HAL), which is struggling to manage several production lines, including the Sukhoi-30MKI; the Hawk trainer; the Tejas light combat aircraft (LCA); the Dornier 228 light transport aircraft; and a range of helicopters for the IAF and army. HAL will also be required to build the Rafale medium fighter, when that contract is concluded.

Given HAL’s full order book, the MoD issued a Request for Proposals (RfP) on May 9, inviting eight foreign aerospace vendors to submit tenders for 56 medium transport aircraft to replace the Indian Air Force’s (IAF’s) aging fleet of Hawker Siddeley 748-M Avro aircraft. The MoD specified that the vendor would have to build 40 of those aircraft in India, in partnership with a domestic private company.

But several quarters fear that an emergent private sector would threaten longstanding public sector monopolies. Business Standard has learned that HAL and Bharat Earth Movers Ltd (BEML) have approached Patel to take up cudgels on their behalf. HAL wanted the Avro-replacement aircraft to be built on its Dornier 228 production line in Kanpur. But the Dornier line now has a lease of life: Swiss-German company, RUAG, is considering buying 40 next-generation Dorniers off the Kanpur line. The Indian military, too, could buy some next-generation Dorniers.

Asked to confirm whether he had interceded at the behest of HAL and BEML, Patel responded only with an SMS saying that “Antony has asked Def(ence) Sec(retar)y to examine urgently.” HAL has chosen not to comment.

The other 800-pound gorilla in the medium transport aircraft game is Russia’s United Aircraft Corporation (UAC), which is partnering HAL in a $600 million project to co-develop and build a Multirole Transport Aircraft. The MTA will carry 15-20 tonnes of payload; or 80 paratroopers; or 60 stretchers, and be capable of operating from high altitude airfields in Ladakh, J&K. Russia and India plan to co-manufacture 205 aircraft --- 100 for Russia; 45 for the Indian Air Force (IAF); and 60 for the export market.

While Russia has never openly pitched for the MTA to replace the Avro (the MTA is significantly larger and more powerful) but a disruption of the Avro-replacement programme would open possibilities for the MTA.

The vendors that were issued the MoD’s RfP of May include US companies Boeing and Lockheed Martin, Ilyushin of Russia, Antonov of Ukraine, Franco-German consortium EADS, Embraer of Brazil and Alenia Aeromacchi of Italy. By Oct 8, they were to select an Indian partner and submit their detailed proposals. The winning vendor would be required to commence delivery of the Dornier-replacement aircraft within 24 months from the contract signature; all 56 aircraft would have to be delivered within eight years.


  1. Under normal circumstances an organization is blacklisted at the smell of a rat and scam.
    How come BEML not only survives but also has started trying to dictate terms after the Tatra truck scam?

  2. It is a very sensible condition to ensure infusion of new technologies and development of another aircraft maker in the country. BEML has quit the field after wasting five years. It is an unfortunate development.

  3. Pakdo. Mil gaya murga. Catch him for the delays by the PSUs.

  4. no issues... tortoises... rabbits... easily out run... white elephants...

  5. "The winning vendor would be required to commence delivery of the Dornier-replacement aircraft within 24 months from the contract signature"

    Don't you mean Avro-replacements?

  6. the last line reads - dornier-replacement. It is the Avro replacement.

  7. One solution can be that the clause that the existing Indian aircraft makers can't participate. It will eliminate HAL. from the process. HAL. is the culprit. There is blood on their hands. Not all Public sector firms are bad. Actually there are very good private sectors are there like " BHEL " Bharat Dynamics" Etc. We should allow them to participate in the process. Competition is healthy. We need few more aircraft manufacturers.

  8. Why shoe-horn MTA/Il-214 into replacing Avro?
    How could a C-295 class requirement ever be formulated if a C-130/MTA would adequately and economically fulfill the requirement?
    It's not like MTA is UAC's only card to play,
    Russia's MoD seems to be again backing UAC's Il-112,
    which actually fits in this class of aircraft.
    (although the speed requirement as reported only allowed An-148 strangely)
    UAC also seems interested in regional prop market vis-a-vis their assembly deal with Bombardier,
    which could be extended to an Indian private partnership,
    and they have also offered the SSJ-100 assembly,
    as well as their future SSJ-130 (competitor to CS100).

  9. HAL has failed to meet Deadlines for its any of its projects. India has some world class PSU , however HAL is not one of them. Its lackadaisical attitude has really hurt defense preparedness. Wish India held HAL accountable


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