Slow progress on India-Russia project to build Kamov-226T helicopter - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Saturday 15 October 2016

Slow progress on India-Russia project to build Kamov-226T helicopter

50.5 per cent stake for HAL, and 49.5 per cent for Russian Helicopters

By Ajai Shukla
Business Standard, 14th Oct 16

Much is being made of a forthcoming agreement to build the Russian Kamov-226T helicopter in India, as one of the highlights of the 17th India-Russia Annual Summit in Goa on Saturday. In truth, however, this will really be little more than a statement that both sides will continue working to realise what is turning out to be a difficult project.

The signing, on the sidelines of the summit, will be of a “shareholders agreement” for incorporating an Indo-Russian joint venture (JV) to build the Kamov-226T in India. It will grant a 50.5 per cent majority stake for Hindustan Aeronautics Ltd (HAL), and a 49.5 per cent stake for Russian Helicopters. HAL will also be permitted to co-opt another Indian vendor from within its stake.

The broad outlines of the billion-dollar Kamov partnership were spelt out in an Inter-Governmental Agreement (IGA), signed in Moscow during Prime Minister Narendra Modi’s visit for the 16th Annual Summit last December.

The “shareholders’ agreement” will constitute a step towards incorporating the JV. Sources in New Delhi say the cumbersome Moscow bureaucracy has still not cleared the JV, which awaits the Russian prime minister’s sanction.

The Kamov-226T is one of two helicopters that will meet India’s urgent need for some 600 light military helicopters, which is currently being met by dangerously old choppers like the Chetak, Cheetah and Cheetal.

Towards this, the defence ministry has undertaken to buy 200 Light Utility Helicopters (LUH), which HAL has developed and is flight testing. Meanwhile, the HAL-Russian Helicopters JV will deliver another 200 Kamov-226T helicopters, according to the IGA.

Another 200 helicopters would be ordered, depending upon how these two projects proceed.

As Business Standard first reported (January 18, “Make in India” challenge for Kamov helicopter”) the IGA permits Russian Helicopters to deliver the first 60 helicopters in flyaway condition. The next 40 helicopters would be shipped as kits from Russia to be assembled in India. Only after that would indigenisation pick up momentum.

The three-party signing in Goa on Saturday will feature the chief of HAL; the head of Russian Helicopters; and a representative of Moscow’s defence export agency, Rosoboronexport.

Both sides are already working to develop component and sub-component suppliers in India, which would allow Moscow to meet its offset liabilities. The Kalyani Group is understood to be in talks with French engine maker, Turbomeca, to part-build the Kamov-226T’s engines in India.

The IGA specifies that 200 Kamov-226T helicopters will be delivered within nine years of the signature of the contract. That amounts to just 22 helicopters a year.

Meanwhile, HAL officials say their LUH is powering ahead with flight trials, and will meet its deadline of 2018 for obtaining “operational certification”. Once that is done, HAL will begin production at a new facility in Tumkur, Karnataka, which was inaugurated by the PM in January.

India’s quest for 200 light helicopters dates back a decade. A competitive selection was cancelled in the late-2000s after Eurocopter was declared winner in suspicious circumstances. In December 2014, at the first summit meeting between President Vladimir Putin and Modi, the Russian leader requested for the contract on an inter-governmental basis. The request was granted.

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