The Defence Acquisition Council (DAC) has taken a bold decision on Monday which tilts in the favour of the private sector players in the Defence sector. The DAC has decided to issue a global tender worth roughly $ 2.4 billion for 56 aircraft which will replace the ageing fleet Of Avro aircraft with the IAF. The decision will enable foreign vendors to enter into a tie-up with a private or public sector company in India.
The current decision by DAC has definitely sidelined traditional PSU’s like Hindustan Aeronautics Ltd (HAL) and is seen as a bold move. As for the international vendor who wins the tender, it will be working with a private sector Indian firm company, thereby ruling out state-run HAL as a contender.
The DAC decision certainly offers wider number of options for the IAF and creates a level-playing field for the private sector. The IAF has welcomed the DAC’s decision since the proposal was forwarded Air Chief Marshal N A K Browne.
As for details of the project, the DAC’s go-ahead will lead to the issuance of a global tender to procure the aircraft, of which the first 16 will be bought off the shelf from a foreign manufacturer. The remaining planes will have to be built in India through a partnership deal with indigenous aviation manufacturers. The next 16 aircraft will have to have 30 percent indigenous components while the remaining 24 planes will have 60 percent locally procured and produced items.
As for HAL who have been favorites for aerospace-related projects for Armed Forces, it has been a turnaround of events. While HAL may not be disappointed with the government’s decision and is bound by it, it is skeptical about the private sector carrying out the $ 2.4 billion project for acquiring 56 aircraft with its limited experience in the Defence sector.
The Indian government’s decision to favour the private sector over HAL and other PSUs has also been criticized by former IAF officers. According to media reports, IAF chief Air Chief Marshal (retd) S Krishnaswamy has defended HAL and indicated that a lack of coherence in the government policy and a national vision on aerospace has taken its toll on PSUs like HAL. Also, the rise in imports of aircraft has been demoralizing for PSUs like HAL and its engineering capabilities.
On the other hand, the DAC decision to move beyond HAL for acquiring 56 aircraft for the IAF is seen by the IAF as a promising move for the private sector. With PSUs getting the lion’s share of projects and causing time and cost overruns consistently, the private sector can prove its worth by timely execution of projects in the country.
According to analysts, the DAC move will surely open up much better venues for the Indian Military to choose good local products from. It will create an opportunity for the private players and will ensure greater competition besides boosting the quality of the products and reducing costs.
In July last year, the IAF had shortlisted five foreign transport aircraft in the weight-class of six to eight tonnes to replace its fleet of Avro aircraft. The companies in the fray included Russian Ilyushin, Ukrainian Antonov, European EADS Casa C-295 and Italian Alenia C-27J Spartan. The twin-engine aircraft is planned to have a six to eight tonne payload capacity, cruise speed of 800 kilometers per hour range of 2,500 kilometers to 2,700 kilometers and should be ready before the end of 12th Plan.