Khemkas key to deciding between HAL & Reliance in chopper contract - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Friday 28 August 2015

Khemkas key to deciding between HAL & Reliance in chopper contract

By Ajai Shukla
Kazan, Russia
Business Standard, 29th Aug 15

The Khemka’s of the Sun Group will be key arbiters in the billion-dollar decision on whether Russian Helicopters would partner Hindustan Aeronautics Ltd (HAL), or Anil Ambani’s Reliance Group, in building 197 Kamov-226T reconnaissance and observation helicopters in India.

Nand Khemka, whose Sun Group has done successful business in Russia for decades is close to Moscow’s power centres, including President Vladimir Putin. He is a member of the Russian prime minister’s “Foreign Investment Advisory Council”. His son, Shiv Khemka, is on the board of Russian Helicopters.

Business Standard learns that Shiv Khemka, who is advising Russian Helicopters on this proposal, has assembled a team of experienced Indian experts in helicopter manufacture. They are evaluating whether it would be better to go with HAL’s tried and tested record of working with Russia, or with Ambani’s new company, Reliance Defence and Aerospace (RDA), which has no experience, but enjoys the advantages of the private sector.

Contacted for comments about the role played by Sun Group, Russian Helicopters declined to comment, but did not deny its involvement.

Recent media reports in the Economic Times and Times of India have reported that Russian Helicopters --- an umbrella corporation that includes all Russian helicopter building companies --- has chosen Anil Ambani’s Reliance Group as its partner. In fact, no such decision has been taken.

Russian Helicopters has valid memoranda of understanding (MoUs) with both Indian entities. The MoU with HAL undertakes to partner the Indian aerospace monopoly in an earlier Indian enquiry for vendors to build 197 light helicopters in the “Buy & Make (Indian)” category. This required Indian vendors to bid, supported by a foreign technology partner.

Simultaneously, Russian Helicopters signed a generic MoU with Anil Ambani’s Reliance Defence and Aerospace, under which the Reliance Group is pursuing most of its defence ventures. This MoU is not directed towards any specific contract, but speaks of broad-ranging cooperation in helicopter building.

The Reliance MoU with Russian Helicopters is much like the shipbuilding MoUs that Anil Ambani’s newly acquired Pipavav Shipyard has signed with Russian shipbuilders. Defence industry experts point out that, while such MoUs are useful in generating a speculative media buzz, there is no certainty they would culminate in actual defence contracts.

Even as Russian Helicopters evaluates its options, advised by Sun Group experts, decision-makers in Moscow say New Delhi will have the final word on the Indian partner. Says Sergey Chemezov, Rostec CEO, who oversees Russia’s high-technology industry and is a close associate of President Putin: “We expressed our commitment to work with either of two companies – Reliance of Mr Ambani and HAL, and it is up to the Indian government to decide who to grant this project, who they feel is better suited for this. For us this is no different, we could work with either.”

Vadim Ligay, the deputy chief of Russian Helicopters says, while the contract is still being negotiated, “On behalf of Rostec, Russian Helicopters and Russia I believe we are ready to work with any company that will be chosen by the Indian side.”

Individuals close to the Russian evaluation indicate they are inclined towards HAL. They visualise the Bangalore-based company responsible only for assembly and final integration of the Kamov-226T, while a range of carefully chosen private sector Indian companies, identified as Tier-1 and Tier-2 suppliers, would build key components like the transmission, rotors, and cockpit. HAL would assemble these into a helicopter.

This would ease the path for HAL, which is already awash with Indian military orders for more than 200 indigenous helicopters, including the Dhruv, the Light Combat Helicopter and the Indian rival to the Kamov-226T, the Light Utility Helicopter.

Ligay of Russian Helicopters confirms that the Kamov-226T contract would include a provision for offsets, in addition to the “Make in India” aspect.

For now, the Reliance Group is powering ahead with its defence initiative. On Friday, the Maharashtra government handed over 290 acres for a facility that RDA intends to build near Nagpur.

The procurement of 197 light helicopters dates back to the late-2000s and was cancelled after Eurocopter was selected as winner in circumstances that were later deemed suspicious. It was re-tendered as a competitive contract, but then, in December 2014, at an Indo-Russian summit meeting in Delhi, President Putin asked Prime Minister Narendra Modi, and was granted the contract on an inter-governmental basis.

In May 2015, the apex Defence Acquisition Council approved the purchase on nomination of the Kamov-226T.

The Kamov-226T is a 3.5 tonne, two-pilot, light helicopter that is specially modified with a new engine for Indian requirements, primarily high-altitude operations along the Himalayan borders. Like all Kamov helicopters, the Kamov-226T has contra-rotating rotors --- or two main rotors that rotate in opposite directions. This does away with the need for a tail rotor, making the helicopter lighter, and improving manoeuvrability in the mountains.

Even as 197 Kamov-226T helicopters are built, HAL will build 187 Light Utility Helicopters. The IAF will, thereafter, be managing a two-type fleet of light helicopters, in addition to the existing Cheetah/Cheetal helicopters until they are phased out of service.


  1. Would prefer any other private entity other than Anil Ambani. The guy has made a mess of all the Reliance companies that came his way, fumbled with the Delhi Metro project (Airport line) so really should not count on him. Tata's, Mahindra, Kalyani, L&T should be a safer bet.

  2. Isn't it surprising that in a country with more than 700 million facing starvation, the country spends billions on 100s of unwanted over expensive imported "light" helicopters particularly when the country is building it's own Light Utility Helicopter. This only shows that India, whether under MaMo or NaMo is run pretty much like a despotic African country with scant regard for appalling poverty prevailing in the country for centuries.
    How is it that in terms of balance of payment with Russia or China, India is on the losing side? What does Russia purchase from India? With China, Russia purchases more than it sells to that country. In case of India, it is just the reverse.
    How can a country with the world's largest number of people living below poverty line come to economic aid of a country floating on oil and diamonds which happens to be Russia?
    When we already have LUH, why are we purchasing Kamov light choppers from Russia? Why our "presstitute" media do not raise any questions about this blatant theft by the political party in power in the name of "dephens"??

  3. Bravo! A Khemkaji of "Sun Group" will now decide who will manufacture imported choppers for our Imported Air Force. No prizes for guessing who will get the contract under the rule of Bharatiya Baniya Party.

  4. Tata, Mahindra, L&T or Bharat Forge more respectable name in defense sector. Reliance is very good to create lots of company and shut down the shutter when need diminished.diminished rule it seems few are getting favor like Adani who now jumped in defense fray.

  5. Col Shukla, what amazes me is that how everyone in this country allows such a drain of our money to support reliance or khemka...... When we speak about self reliance.... Why not just spend a fraction of the money to improve the ALH and the LUH or the Rudra. HAL will get a boost by making a quality product which can actually be sold and not gifted to other countries. HAL is never going to produce anything spectacular when it comes to fighters or transport aircraft..its a govt run organisation.... You need incentive or a pink slip to produce 'Results'. This can only be in organisations driven by profit.

    Why are we not investing in R&D? Why are we not identifying a few Indian companies like Tata and Mahindra. US did it with Boeing and Lockheed, USSR did with MiG and Sukhoi. Give them a contract, give them a couple of billion dollars to make an aero engine and you will get it.
    And please never give defence contracts to Reliance or Adanis.... They're thieves... And everyone knows it.

  6. @Anonymous

    Can you equate a Boeing or Lockheed with Tata or Mahendra? Can truck and jeep manufacturers be tasked with developing aviation technology?
    Mig, Sukhoi or Boeing are pure aviation companies, they are not "we also make steel, dal, namak and literally everything under the Sun" companies. Today's Tata is no different than Reliance.
    The DPSUs have a better track record in delivering than these few companies who in collusion with corrupt netas have complete monopoly over India's economy, the root cause for India's moribund economy and low jobs.

    1. This is the only way forward as there has to be a beginning. Mahindra is incidently making small airplanes. L&T also can do some justice. It seems like a freak idea but trust me, PSU's cannot produce world class products. What has HAL done in the last 50 years. Even with sukhoi, it just assembles. We all know what quality of 'indegenius' stuff it produces. It's not their fault as it is a policy flaw. When these PSUs were conceived in 50-60's, that was the only way forward. But now they aren't the best way forward. We have to privatise research and throw in loads of money as incentive with assured contracts. Boeing and Sukhoi couldn't have reached where they have had their respective countries not supported them.
      What India needs in self sufficiency in defence....its not an option , its the only way forward.

  7. @Anonymous

    PSUs have delivered dams, nuke reactors, nuke subs, sent probes to Mars and Moon, built IRBMs and ICBMs, tanks, fighter jets, destroyers, aircraft carriers, super computers,satellite launch vehicles, space shuttle etc etc and you say PSUs cannot produce world class products?? Sukhoi is a state owned institution whereas Boeing is a 100% commercial enterprise. They, whether Sukhoi or Boeing have to come up with their own product and compete before they can get a contract. To develop their product of course they are partly funded by the state for R&D but they've to invest a substantial sum of their own product to develop a prototype with no assured contracts. WHat you are suggesting is what mafia contractors demand in India's badlands ... assured contracts without competiton... these mafia contractors later on become our netas.
    You need to first ask whether our Pvt Companies been successful in building world class products?? These companies cannot even make decent soaps, toothpaste, detergents, jams, noodles etc let alone complex weapon systems. To know this you only need to look at the shelves of your local kirana store.

  8. Our private industry is useless.Just take the case of IT which India is known for.Which product is famous that is made by us? Where is our Microsoft,Google etc?We just do the IT back office work,coding some small stuff.Giving these useless companies any assured contracts will be suicidal and will only give rise to more oligarchs as already prevalent in the country who will continue milking the country under desi pretext while subverting the democratic institutions our country has.


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