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IAF plans consortium of domestic companies for Rs10,000 cr contract

IAF plans consortium of domestic companies for Rs10,000 cr contract
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First Published: Thu, Jul 07 2011. 12 15 AM IST

Exploring alternatives: The IAF is already upgrading Russian-origin Antonov An-32 transport aircraft. Photograph by Bloomberg
Exploring alternatives: The IAF is already upgrading Russian-origin Antonov An-32 transport aircraft. Photograph by Bloomberg
Updated: Thu, Jul 07 2011. 12 15 AM IST
New Delhi: The Indian Air Force (IAF) is trying to bring together a consortium of domestic firms to compete for a Rs10,000 crore contract to manufacture 45 medium transport aircraft (MTAs).
If the consortium is formed, it will be the first example of Indian companies partnering to bid for a defence aviation contract, a domain in which they do not have proven capability.
MTAs are used to carry personnel and equipment.
Exploring alternatives: The IAF is already upgrading Russian-origin Antonov An-32 transport aircraft. Photograph by Bloomberg
On 1 July, IAF officials met the industry bodies Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry and Associated Chambers of Commerce and Industry of India to discuss the proposal, said a person who attended the meeting, asking not to be named.
A follow-up meeting is scheduled for 7 July, said an IAF official, requesting anonymity.
“This is a preliminary step,” said a CII executive, who also did not want to be identified. “We are just exploring the possibility of coming together, but it is still some way off.”
Tata Advanced Systems Ltd and Larsen and Toubro Ltd are among the companies that can participate in such a consortium. Their executives confirmed the meeting between industry bodies and IAF, but declined to comment further.
IAF publicized its requirement for MTAs in January 2010. It needs the aircraft to replace an ageing fleet of Hawker Siddeley HS 748s. The force is already upgrading Russian-origin Antonov An-32 transport aircraft.
IAF’s effort to form the consortium follows the publication of India’s defence production policy in January this year, which obliges the defence ministry to exhaust all possibility of indigenous manufacturing before turning to overseas vendors.
The contract is still likely to go through open bidding in which foreign defence firms may participate, said another person aware of the development, who also did not want to be named.
Industry executives and analysts are not upbeat about the prospects of an Indian consortium meeting IAF’s requirement.
“Indian industry does not have the expertise to build such a complex machine,” said an industry executive, requesting anonymity. “This might as well turn out to be a futile exercise. So, in all likelihood, the contract would still go to a foreign bidder.”
Retired colonel Rajiv Chib, who works as defence analyst with the audit and consulting firm PricewaterhouseCoopers India, said the invitation to Indian industry to participate in the project is a positive step.
“But the government should first explore possibilities in the civil aerospace sector, as there are no foreign direct investment caps there,” he said. “Once sufficient capacities are developed in civil aerospace, Indian companies can seriously consider making aircraft for defence use.”
Separately, India is planning to develop a multi-role transport aircraft with Russia.
In September, the two nations announced plans to design and develop the aircraft through a joint venture between Hindustan Aeronautics Ltd and Russia’s United Aircraft Corp. and Rosoboronexport. Both countries have earmarked a combined $600 million (Rs2,664 crore) for the project.
aman.m@livemint.com
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First Published: Thu, Jul 07 2011. 12 15 AM IST
More Topics: India | Defence | Aviation | MTA | IAF |