Plans to acquire new aircraft, indigenise production

Ministry approves Rs 12,000-cr plan to procure planes

The defence ministry on Monday approved a Rs 12,000 crore plan to procure 56 transport aircraft for the Indian Air Force and indigenise manufacture of the metal birds in a phased manner.

The approval may open up doors of military aviation to Indian private sector. As the aircraft would be purchased under “buy and make” category under the defence procurement policy, the ministry has taken steps to involve Indian private sector in the manufacturing.

“The RFP(Request for Proposal), to be issued shortly by the defence ministry, will make it clear to foreign players that they will have to select an Indian partner for this project. The Indian partner can come from either public or private sector. The government is looking beyond Hindustan Aeronautics,” said a defence ministry official.

While the first 16 transport aircraft would be imported in fly-away conditions, the next 16 should have 30 per cent indigenous component. The quantum of indigenous systems and sub-systems would be further increased to 60 per cent in the final 24 aircraft.

The first aircraft may be delivered in the next four to six years from the day of inking the commercial agreement.

The plan – approved by the Defence Acquisition Committee (DAC) headed by defence minister A K Antony – may open up new business opportunities for Indian private players in the aviation market, which include Tata and Mahindra. There are unconfirmed reports of Reliance ADAG chief Mukesh Ambani toying with plans to launch his own aviation business.

“The DAC will boost manufacturing of transport aircraft in the country,”the official said.

These transport aircraft will replace IAF’s ageing fleet of Avros, used for ferrying cargo. Last year, addressing a business meeting, IAF chief N A K Browne had said the IAF was ready to back a private company to come out with a production line for a 15-20 ton class transport aircraft for replacing IAF’s Avro HS-748, which had outlived its utility.

Over the years, HAL has manufactured 89 Avros under licence from the original equipment manufacturer, out of which 72 were for the IAF and the rest for Indian Airlines.

Offset policy revamp

DAC has also sanctioned formation of a defence offset management agency to  replace the existing agency and incorporate new ideas like “critical technology” and “banking credit”, which will see an influx of billions of dollars with growing defence business.

Revamp policy

The decision to revamp the offset policy coincides with a suggestion to this effect by US deputy secretary of defence Ashton B Carter to benefit industry. “If offset requirements are too onerous or too narrow, they deter company’s interest,” he said at a seminar here.