A second Tejas assembly line - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Monday 12 October 2015

A second Tejas assembly line

By Ajai Shukla
Business Standard, 13th Oct 15

As this newspaper has reported, there has been a major breakthrough in one of India’s most ambitious and expensive weapons development projects --- the Tejas Light Combat Aircraft (LCA) --- with the Indian Air Force (IAF) now willing to accept 100 improved fighters. The Tejas Mark IA, as some call the improved version, will have air-to-air refuelling, improved radar, missiles to strike enemy aircraft beyond visual range and electronic jammers to blind enemy radar. For Hindustan Aeronautics Ltd (HAL), which is struggling to build even the first 20 fighters, the IAF’s acceptance constitutes an embarrassment of riches. Going by HAL’s current rate of assembly, delivering 120 Tejas fighters will take a decade.

The real Tejas numbers will, in fact, be well above 120. Given that the IAF has finally accepted the Tejas Mark 1A as a capable replacement for its 13 squadrons of MiG-21s and MiG-27s, it will need at least 250 Tejas fighters before the end of the decade, when the obsolescent MiGs must be retired. Furthermore, the IAF requires another 20 more Tejas Mark 1A for training. The navy, meanwhile, has declared it needs at least 56 Tejas Mark II (with more powerful engines) for its two indigenous aircraft carriers. That adds up to well above 300 Tejas fighters.

It should be obvious to planners in South Block that the Tejas cannot possibly be built in these numbers, in an acceptable time-frame, without establishing another assembly line to double the efforts of HAL’s current Tejas line in Bengaluru. This is the golden opportunity the defence ministry has been seeking for nurturing a private sector competitor to HAL. The ministry must select a private company, transfer to it the technology needed to build the Tejas, and order 150 fighters in short order.

The ministry is already attempting to build up a private sector aerospace manufacturer, but in a misconceived project. A Tata-Airbus consortium has been asked to build 56 transport aircraft to replace the IAF’s venerable Avro fleet. There are many problems with this proposal: It does not envisage building an indigenous aircraft; it makes no economic sense to set up full-scale production infrastructure, including an airfield, for just 56 aircraft; a multinational giant (Airbus) will hold disproportionate clout in the partnership, and most crucially, the Avro has never had an operational role beyond ferrying air marshals around the country. Neither will its replacement.

In contrast, a parallel Tejas production line would be a perfect launch pad for a private aerospace corporation. Unlike HAL, which has an aerospace empire sprawling across the country, a private sector aerospace entrant would per force have to develop a network of vendors and sub-vendors, upon which it would rely for systems, sub-systems and components, while reserving for itself only final integration --- assembling the parts and rolling out, inspecting and testing full-built Tejas fighters. In contrast, HAL avoids sub-vendors, keeping profits within the company by farming out manufacture to its own numerous divisions.

A parallel private sector production line would also create competition to make the Tejas cheaper. For this, the private company must be encouraged to partner an established western corporation like Saab, Eurofighter, Lockheed Martin or Dassault. Many have signalled interest in partnering India; Saab had even put forward a full-scale proposal that was largely ignored in New Delhi. The chosen foreign vendor should be incentivised to bring in contemporary aerospace manufacturing technologies and best practices.

While HAL’s single production line would not meet even the IAF’s requirements, adding a parallel line would open up exports. So far, with the IAF itself unwilling to accept the Tejas, there has been little prospect of exporting this excellent fighter --- buyers usually reason, “If the home air force is not interested, why should we be?” But, with the IAF now inducting the fighter in numbers, the Tejas can establish a presence in the global light fighter market. Even at its current cost of Rs 240 crore ($40 million), which includes the aircraft, ground equipment, test equipment and spares, it is reasonably priced, given its fourth-generation configuration --- a fly-by-wire fighter, built of composite materials.

The Tejas’ current price can be lowered, given that it is currently planned and built in the most uneconomical manner possible --- with little outsourcing, an inadequate assembly line and orders placed in penny-packets, which eliminates economy of scale. Instead of this, working on an assured order of 100-150 aircraft, with a vendor chain developed deliberately, and the incorporation of international best practices in assembly, would lower the Tejas’ cost substantially. This would boost the prospect of export, especially when backed by an international vendor’s marketing expertise and global marketing chains. This prospect of global export would be an added attraction for international vendors.

In sum, bringing in a private sector company to establish a parallel production line for the Tejas would do more than just create an aerospace alternative. It would also ensure the Tejas is inducted into IAF service at least twice as fast, filling up a worrying operational gap. Second, global standards and best practices would come into domestic aerospace manufacture. Third, modern assembly lines and competition would drive down the cost of the Tejas, benefiting the IAF as well as export prospects. Finally, the entry of the private sector into aerospace would spread dynamism and flexibility across the industry.

There are difficulties too, and the first is to select a private company that would benefit enormously from government largesse --- including access to airfield infrastructure, since demanding that the company establishes its own would raise the cost of entry unrealistically. Given the cutthroat competition between private sector aspirants in defence, the ministry would need a clear and transparent formula for selecting a winner, one that could withstand inevitably bitter scrutiny from the losers. This would naturally involve assessments of financial health, track records in manufacture, core areas of expertise, and past delivery records. Competition will be intense, given that the ministry would be giving the winner a leg-up into the ranks of global aerospace manufacturers, just as it spent taxpayer billions to make HAL what it is today. A clear public rationale will have to justify the decision.

A sceptical HAL unsurprisingly scoffs at the notion of a rival private sector assembly line. Senior executives point to what happened three months ago when HAL, already preoccupied with three simultaneous helicopter programmes (the light combat helicopter, light utility helicopter and weaponised Dhruv), issued a proposal offering the private sector full technology transfer to build the Dhruv advanced light helicopter in India. HAL officials say not a single private vendor accepted the challenge.

HAL also points out that the private sector Tejas line would run for, say, a decade, but the company would have to logistically support the fighter for the next thirty years. This is true, even if it betrays an unreasonable suspicion of the private sector that has a reasonable record of supporting products. What is true, though, is that if the private sector fails to respond to an invitation to build the Tejas, or does not support the fighter through its service life, this would be a black mark forever.


  1. Great article sir, completely agree that HAL/MoD should partner with private operators to expedite delivery, reduce cost and build private sector infrastructure in country for aerospace manufacturing.

  2. Given the Indian system of functioning selecting a pvt production agency is really a problem. If there is a production history criteria then none will qualify. The only way is for HAL to create a crack team of support specialists who will work with the pvt Industry. The selection process should be an auction of this crack team. This was HAL gets to make money and a new line can be set up under expert guidance. The pvt party will need to invest in people and infrastructure to demonstrate that they are a long term player. The purchase price per aircraft for IAF should be at cost plus basis. This is required to help the growth of the industry in India. In the long term HAL production facilities could be sold to the pvt industries and HAL Research and Design Centres can become like the design bureaus of Russia, concentrating on actual aircraft design activity.

  3. Avro not having an operational role beyond ferrying air marshals is a bluff. Avros were used for years in Yelahanka in Bangalore for multi-engine training for pilots. Now please don't say "pilot training" is not an operational necessity.

  4. spent money... buying an elephant... but not the... elephant goad (ankus)...

  5. Hi,

    Ref....your comments on the CN295 -

    The numbers will be much much more than 56 for the Air Force. Navy and Coast Guard will use them for maritime patrol (not to mention other special mission roles....the 295 is indeed a long horse, a modern one with much expanded capabilities than the Avro. The Avro replacement is just the face of what the 295 replaces. But it also brings additional capabilities to the table.

    For instance, consider the maritime surveillance a/c numbers / go through the 26/11 report on how many surveillance planes are needed by us. Will it even be possible to meet these numbers with the Indian produced CN295 production schedule? .....No.

    Effectively, with this project, we are buying strength through weakness, to use a phrase you used for the Chinese military industry in one of your blog posts a long time back (btw...that was a lovely article). So either we plug the gap with costly off the shelf purchases.....or we wait for the 295 to come in in numbers.

    Hope this of use.

  6. While the premise of privatization is right, the approach suggested by Shukla is wrong. These big conglomerates waiting on the sidelines waiting for government handout helping one of them get all setup almost "free-of-charge". It will just be another monopolistic player, who regardless of being private/public will spiral into the same decreasing performance and increasing price trap because of no competition. Better approach would be to slowly build up capability and capacity in the private sector by helping them move from Tier-3 to Tier-1 aerospace suppliers, who can build entire components like the fuselage or wings. This way you can create multiple Tier-1 suppliers, who can not only supply to Indian requirements but also compete for supplying components to foreign aerospace projects. Eventually, some of them would graduate into a true vertical integrator with their own full fledged assembly lines. It will take time ,but IMO, it would be a better approach than just trying to stand-up a "private HAL-like" entity.

  7. IAF should buy 200+ Tejas finally. Keep upgrading them in increments.
    It will be great if we have a second company to build aeroplanes : helicopters, transports etc.

  8. Well said! I totally agree Ajai. As a matter of fact, the lines of engagement should go straight from ADA to private industry and not through HAL.

  9. Somebody please print this article and read it to our babus...

  10. NSR says ---

    1. HAL manufacturing process is very outdated...no where near F-16, Rafale, F-35,etc assembly lines...People can google and check the pictures...HAL manufacturing looks like auto repair shops...Don't get offended at all...

    2. India must hold its technology in DRDO and ADA like organizations and to let private manufacturers to build to the specifications...

    So it requires privatization of semi-privatization of government PSUs and giving them power to collaborate/ partner with foreign companies for manufacturing and design and development of sub-assemblies...

    3. IAF behavior of not taking responsibility in the waking of dwindling fighter numbers is a grotesque behavior...

    IAF behavior of asking for a completed aircraft is very unprecedented...
    Even Mirag-2000 and Migs flew and got upgraded later...
    Even western fighters gets staggered upgrades...

    4. IAF should be flying as they come out of assembly and give feedback to improvements in Block upgrades...

    5. IAF must not base them in TN at all...They must base them at the western and northern fronts...

    6. Tejas must fly with Mig-21 and 27's to benchmark its performance near the actual border areas...

    7. I think rolling some heads in HAL and IAF will give them a stern lesson...

    I read that they even import micro-light airplance...very laughable scenario...

    Hope India cleans up its system quickly...

  11. Ajai, add to this the helicopter needs of the Armed Forces - ALH, ALH(WSI), LCH and LUH(?). The fleet is expanding exponentially, bot fixed and rotary wings, while HAL is tardy even for the current needs. Need expansion with private sector urgently, for both types!!!

  12. Dear Ajai,

    Now that the Tejas is nearing "something", can you please do a detailed review on some of the areas of improvement that HAL/ADA had been working on. Notably-

    - Angle of Attack: Has 28 deg AoA been achieved?
    - Maintenance issues: Have any updates been made to achieve higher availability?
    - New Nose cone: Has Cobham supplied the new nose cone and has it been integrated?
    - EW Jammer: Will this be installed in the new variant or the existing variant?
    - Weight Reduction: Has any weight reduction been achieved in this variant?

    Also, a review of HJT-36 (was to be inducted in 2013) and LOH (first flight was expected in 2013) is long overdue from your blog...both platforms have crossed various "deadlines" to be inducted.

  13. Col. Shukla, the Indian private sector MUST necessarily come forward to manufcture the Tejas, because HAL is simply too overburdened. In any case, a large fast growing economy like India must not have a state-run monopoly in aerospace! It also makes economic sense because more jobs can be created by spreading the nation's aerospace needs to the private sector.

    The private sector must be given some lollypops to agree to manufacture the Tejas. Tejas can also be exported to foreign nations with tax-subsidies (effectively, the private manufacturing plant can be given an SEZ status).

    Just as how spectrum and coal were auctioned, let there also be an auction for the ToT of setting up an aseembly line for the Tejas. I'm sure many deep pocketed giants, who're looking for the next avenue of growth will live up to the challenge.

  14. Why not just expand the existing facility to 4 times the size, can't MOD/HAL directly invest in the existing factory? If the current max rate is around 12 fighters per year, can't factory just be expanded in size to have capacity for 24 to 28 more per year? I am sure IAF won't have any issues if they can accept 2 sqds or 32 fighters per year while 4-8 can be slated for export deliveries?

  15. Dear Ajai,

    The HAL SU-30 MKI assembly line is scheduled to become idle in 2018 when the contract for the 272 SU-30 MKI's is completed. Why can't HAL use/modify the SU-30 MKI assembly line to produce the Tejas which will create a second assembly line?

    Current production capacity of SU-30 MKI line is 16-18 aircraft/year. Given that Tejas is a much smaller aircraft/lesser number of LRU's, it can easily manufacture 20-24 Tejas/year. Given that the Tejas 1A will not be ready before 2017 (HAL's 2017 might come in AD 2018-19), it is a perfect fit.

  16. One of the most hare brained suggestion. Tejas has been developed with taxpayers' money and it cannot become a means for some business house to mint millions without putting in anything of theirs'. To make more Tejas all HAL has to do is put up couple of more Tejas production lines in it's facilities in Kanpur and Koraput.
    Of late there's a trend to "privatize" everything developed with taxpayers' money. What you are suggesting will not only be like reinventing the wheel but costing the nation almost twice if one goes by the cost of defense contracts being awarded to pvt companies who can't even make a decent screw let alone complete complex defense systems.

  17. This is easier said than done. Where are the vendors who will provide most of the components, their capacity will need to double too.

  18. Inducting Tejas will boost
    Pilot safety in comparision to still capable but fast ageing Migs
    Quality of interface in comparision to older versions operated by IAF
    Patriortic energy as it is swadesi, this will lead into more input coming HAL/ADA way to make it more capable in future.

    So my full marks to all involved. sweet :)

  19. I made. A mistake probably old age but I meant the air intakes of textron scorpion and not the propellor. Trainer Texan.



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