Rs 7,500 cr for making indigenous aircraft

The Centre has put on the fast track India’s ambitious plan to design and develop a 90-seater civilian aircraft a day after it received the nod of Prime Minister Manmohan Singh.

The cabinet secretary is likely to chair a meeting later this week to sort out several administrative and financial issues as the project required involvement of several agencies under different ministries as well as private companies like Tata and Mahindra, reliable sources told Deccan Herald.

The Rs 7,500-crore project aims at designing and manufacturing a 70-100 seater civilian aircraft with imported engines. A special-purpose vehicle involving government agencies and private sector and a project steering committee will be created to take it forward.

A preliminary design of the national civil aircraft was made by a high-level expert group headed by former Indian Space Research Organisation chairman G Madhavan Nair. The project marks military aviation major Hindustan Aeronautics Limited’s entry into civil aircraft market.

On Tuesday, at a meeting of national manufacturing competitiveness council, Singh said it was a strategic sector where there was a need to have a presence in the long term, particularly in view of the rapid growth of Indian aviation sector.

The new aircraft has been proposed anticipating a boom in the civil aviation market within a decade. An official estimate suggests India has the capacity to absorb over $100 billion worth of civil aircraft in the next 20 years.

The indigenous civil aircraft and the defence ministry’s Rs 12,000-crore plan to buy 56 tactical aircraft to replace Indian Air Force’s Avro fleet is viewed as the two initiatives to open up the aviation market for Indian companies. The defence ministry's global tender has a mandatory requirement of the involvement of an Indian firm.

Since the civil aircraft programme involved multiple agencies – department of defence production, HAL, National Aeronautics Laboratories of the Council of Scientific and Industrial Research, union ministry of civil aviation and the private sector, many business and financial rules are not clear.

The cabinet secretary will address these issues and streamline the programme, which aims to design and develop the aircraft in the next seven years.

The aircraft’s design and development is expected to cost Rs 4,355 crore and series production would entail further expenditure of Rs 3,200 crore. The first phase is slated to be completed in five years and there would be another two years for trials.

The defence ministry’s Tejas Light Combat Aircraft – the first indigenous aircraft – is still not ready, three decades after design and development and spending more than Rs 13,000 crore.