Defence ministry still keen on private sector entry in transport plane

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    Sep 22, 2012
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    Defence ministry still keen on private sector entry in transport aircraft project

    NEW DELHI: The defence ministry is for now standing firm on its decision to promote private sector entry into the domestic aerospace arena through the proposed Rs 13,000 crore project to supply 56 transport aircraft to the IAF.

    The MoD, however, is also "examining the questions" raised by heavy industries & public enterprises minister Praful Patel and some government agencies last month about the decision to virtually keep state-run units out of the project.

    "It will take some time for the thinking to crystallize. The project was launched with the good intention to kick-start the private sector's entry into manufacturing at least transport aircraft, which involves relatively low technology as compared to fighters and helicopters," said an official.

    When the global tender or the request for proposal (RFP) for the project was issued in May, the MoD-IAF combine had then called it "a path-breaking step" because it specified the foreign aviation major eventually selected for the venture would have to tie-up with an Indian private sector company.

    Under the project, the first 16 aircraft are to be bought off-the-shelf, while the rest 40 will be manufactured in India to replace the ageing Avro fleet of IAF. The RFP was issued to global aviation majors like Embraer, Lockheed Martin, Airbus, Ilyushin, Casa, Saab, Alenia Aeronuatica and STE Ukraine, who were to choose their partner or the Indian Production Agency (IPA) based on eligibility norms stipulated in the tender.

    PSUs like Hindustan Aeronautics (HAL), which has a virtual monopoly in the domestic military aviation arena, could not be the "lead agency" in the project. Instead, they could be part of the joint venture or consortium set up to execute the project. In effect, unlike before, HAL "would not have controlling authority" in the project.

    The reasoning is that HAL's order books are overflowing with programmes ranging from production of Sukhoi-30MKI fighters, Tejas light combat aircraft and upgrades of MiG-29s and Mirage-2000s as well as proposed ones like the almost $20 billion MMRCA (medium multi-role combat aircraft) project to acquire 126 Rafale jets. Moreover, the entire endeavour revolves around helping domestic private companies enter into the aerospace sector, which is essential for the country to build a strong defence-industrial base.

    On November 18, the defence acquisitions council chaired by defence minister A K Antony gave the foreign aviation majors three months more beyond the December 3 deadline to respond to the RFP. "The additional time has been given for the JVs or consortia to be set up, even as the MoD studies the concerns raised about the project," he said.

    Defence ministry still keen on private sector entry in transport aircraft project - The Times of India

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