Boeing, EADS among eight firms invited to bid
The Ministry of Defence (MoD) today issued a request for proposal (RfP) to eight foreign aerospace vendors, inviting tenders for co-producing 56 medium transport aircraft to replace the Indian Air Force's (IAF's) ageing fleet of Hawker Siddeley 748M Avro aircraft. The deal could be worth about Rs 28,000 crore.
The proposal requires the vendor to deliver 16 aircraft in flyaway condition and build 40 in facilities to be established with an Indian partner that it can choose. This proposal has been driven by IAF, which wants to wean itself off a crippling dependency on the public-sector Hindustan Aeronautics Ltd (HAL). While HAL has licence-produced a series of fighter aircraft for IAF, including the high-end Sukhoi-30MKI, it has been afflicted with serious time and cost overruns and charged with sub-quality manufacture.
Among the companies invited to bid are Boeing of the US, Ilyushin of Russia, Antonov of Ukraine, Franco-German consortium EADS and Alenia Aeromacchi of Italy. MoD has given bidders five months to choose and tie up partnerships with an Indian Production Agency (IPA) and give their "techno-commercial proposals".
Air Chief Marshal N A K Browne, the IAF chief, has strongly backed this project, hoping it would create a badly-needed aerospace manufacture ecosystem within the private sector.
At a lecture organised by CII in New Delhi on September 1, 2011, Browne had told the private sector: "Once you start licensed production in partnership with a foreign partner, you will develop a basic aerospace ecosystem - the R&D, the jigs, tools and expertise that would work for the entire country."
MoD today said this deal "ensures inflow of production technology to the IPA in phases, wherein the value addition in the manufacture by the IPA will gradually increase from 30 per cent to 60 per cent. The IPA will also obtain the Transfer of Technology for Maintenance (MToT) which will enable the IPA to provide life time product support and maintenance up to Depot level (sic)."
The Indian partner will be selected by the foreign vendor based on a set of criteria that are specified in the RfP. These exclude small and medium companies and those that have not been consistently profitable. It is learnt Reliance Industries' aerospace venture, Larsen & Toubro and a Tata Group company could be interested in partnering foreign firms.
HAL has staunchly opposed this arrangement, lobbying with MoD to build the 56 Avro-replacement transport aircraft at HAL Kanpur, where the Dornier 228 aircraft is currently built.
Contacted for comment, HAL had not responded till the time of going to press.
The CEO of a reputed private-sector defence company says the number of aircraft to be built in India — just 40 — is too low to repay the investment that will be required to set up an assembly line and the flight infrastructure that would be needed.
However, MoD is looking at requirements beyond IAF’s. Today, it said: “The replacement for the Avro aircraft will have extensive requirements even in the rapidly expanding civil aviation sector, especially for flights between growing regional cities. Such combined requirements of IAF and the civil sector will provide large production orders.”
The IAF fleet of some thirty 748M Avro twin-engine aircraft, now over forty years old, was built under licence by HAL. The replacement aircraft now being built will have a payload of six-eight tonnes (the Avro carried five tonnes); a cruising speed of 800 kmph (the Avro flew at 450 kmph); and a range of 2,500-2,700 km (the Avro was 1,700 km).
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The decision preceded long hours of tense negotiations and last minute hiccups from Argentina and Pakistan