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Depending just on HAL and ignoring private players will lead to setback in the possible manufacturing of fighter planes, says Prakash K Singh
PRAKASH K SINGH | Issue Dated: November 5, 2016, New Delhi
Tags : National Progressive Alliance | Prime Minister Narendra Modi | MMRCA | SAAB |

The ruling National Progressive Alliance government led by Prime Minister Narendra Modi has reached out to private defence players under the Make in India campaign, with lucrative offers to build fighter jets.

Boeing, Lockheed of USA and SAAB of Sweden have offered their fighters in the Make in India category. Interestingly, all these companies were eliminated at the technical evaluation stage in the mother of all defence deals, the famous Medium Multirole Fighter Aircraft (MMRCA) tender of 2007.

Boeing has repeated its offer of the F/A-18E/F Super Hornet whereas SAAB and Lockheed have offered improved versions of their respective fighter jets.

SAAB has offered the Gripen NG and Lockheed has offered the F-16 Block 70 - improved variants of the fighters.  SAAB's offer includes setting up of a full manufacturing facility; transfer of state-of-the-art technology; setting up of an aerospace eco-system in India; creation of a local supplier base of ancillary systems; employment of a well-trained Indian workforce.

Lockheed Martin's offer made through the Indo-US Defence Trade and Technology Initiative (DTTI), is to shift its F-16 production line from Fort Worth, Texas to India. Boeing too has offered to build the heavy, twin-engine F/A-18E/F Super Hornet in India. Boeing is offering a fighter that will remain in service through the 2040s, and possibly the 2050s, far longer than the F-16, and offering to build it on a brand new Indian production line.

Russia, which was also one of the runners in the MMRCA tender, has so far not offered its bid in the Make in India category; and Eurofighter, which was shortlisted along with Dassault of France, is still studying the environment on fighter production in India.

India is planning to produce another fighter in the Make in India category in addition to the home made single engine Light Combat Aircraft (LCA). Defence Minister Mahorhar Parrikar has openly stated on many public forums that the indigenous fighter plane is a replacement for the outdated MiG 21 fighter aircraft and that there is room for another fighter aircraft in the Make in India category. In addition, the IAF has also expressed its desire to induct a modified version of LCA and from 2019 onwards, the sole military aircraft producer Hindustan Aeronautics Ltd (HAL) will manufacture modified the LCA Mark-1A with technical support from Aeronautical Development Agency (ADA), which is the design agency of LCA.

However, IAF officials say in private that HAL targets are very ambitions and given their past track records, they will need a minimum of five years to bring in new improvements in the existing aircraft and convert the same into the LCA Mark-1A aircraft. The existing LCA still faces flaws in combat performance, turnaround time and weaponisation; fine tuning these limitations will not be an easy task.

The ruling NDA government wants another private fighter production facility in India to bring efficiency, innovation, cost cutting and has advocated that there is a strong need for one or more players in the military aircraft manufacturing arena.

At present, HAL is into the design and contemporary manufacture of fighters, transport, trainers and helicopters, as well as avionics and engines. It is possibly the only company in the world to be so diversified.  HAL has been bestowed with a monopoly in the field of military aircraft in India.

It's a billion dollar question whether the private sector can or will be allowed to become an alternative to HAL? The private sector today can carry out basic aircraft manufacture such as airframes but the industrial aviation R&D and design base is non-existent outside HAL. If engineering drawings are provided by foreign military aircraft producers, several private Indian companies would be able to produce quality aircraft.

However, competition by rivals with similar capabilities will force the existing and new entities on a steeper learning curve, thus reducing the time spent in achieving higher goals.

There are two major advantages of building military aircraft in India—namely, cost of labour and manpower skilling. But the reality is somewhat different with regards to the first point. Our experience with HAL shows that while individual manpower costs are lower in India, the poor average labour productivity converts this factor into a 'non-advantage'.  The military aircraft production facilities in USA, UK, France and Australia where workforces a tenth of the size of HAL  produce more new and re-manufactured aircraft. Therefore, on this front, larger manpower requirements offset the advantage of lower per head cost to the company.

However, with some effort at improving productivity and large scale automation, this factor alone need not be a deal breaker.  As indigenous workers gain skills and insights into aircraft manufacture, other players (preferably home-grown), will be tempted to join the bandwagon.  Take the example of the auto industry and compare the skill levels in 1983 when Maruti started manufacture of the first 'modern' car, to the present, three decades later, and where Indian R&D engineers, designers, skilled labour stand. The same could and will happen if aircraft manufacture is encouraged in India - not just in HAL but across the private defence industry.

If the laws and regulations in India give the necessary clearances and benefits, there are bound to be several huge advantages in the long term if ancillary industries are allowed to grow alongside. As a part of the regulatory framework, there has to be scalability through expanding markets by export of defence products.

The policy and State must encourage foreign companies to eventually exit, leaving behind a self-sustaining company, which is capable of not only continuing to provide India's defence forces with the aircraft, sensors, weapons and power plants that it needs, but also become a hub for export to other parts of the world.   

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Issue Dated: Feb 5, 2017