Pilatus or HAL's trainer: Parrikar's first 'Make' decision

HAL credibly claims it can build the HTT-40 basic trainer but IAF wants to import from swiss company Pilatus

In his first television interview as defence minister, aired on November 14, Manohar Parrikar regretted the military's "craze for importing everything", including relatively low-tech weaponry that could be designed and built in India.

"First priority has to be to identify (equipment) for Indian Make and then for the imports, wherever required," stated Parrikar.

On Saturday, Parrikar's resolve will be tested at his first Defence Acquisition Council (DAC) meeting, which clears high-value military procurements. The DAC will decide on the Indian Air Force (IAF) proposal for importing 38 Pilatus PC-7 Mark II basic trainer aircraft, even as Hindustan Aeronautics Ltd (HAL) designs an Indian equivalent, the Hindustan Turbo Trainer - 40 (HTT-40).

HAL credibly claims it can build the HTT-40 basic trainer, having demonstrated design skills on the far more sophisticated Tejas Light Combat Aircraft. The first HTT-40 will fly next year, says HAL.

HAL presents the HTT-40 as a cheaper, better trainer than the PC-7 Mark II. It is built to Indian specifications, can be upgraded over its 30-year service life as technology advances, and maintained and overhauled more cheaply than a foreign trainer.

HAL also says it can fit sensors and weapons on the HTT-40 to make it a "light attack aircraft", prohibited by the "end-use conditions"on foreign trainers like the Pilatus.

Arming the HTT-40 would facilitate export to countries like Afghanistan, which desperately wants light attack aircraft to support Afghan soldiers combating the Taliban. Currently, Brazil is building 20 light trainers - the A-29 Super Tucano - for the Afghan Air Force, at American cost.

The MoD acknowledges HAL's logic. On September 29, 2009, the ministry decided to procure the IAF's requirement of 181 basic trainers from two sources - 75 bought off-the-shelf from the global market so that IAF training could continue; while HAL would develop and build 106 HTT-40s under the "Make" procedure.

The IAF, however, has consistently undermined this arrangement since May 24, 2012, when it signed a Swiss Francs 577 million (Rs 3,727 crore) contract with Pilatus for 75 trainers. As Business Standard reported on July 29, 2013, former IAF chief, Air Chief Marshal N A K Browne, wrote to then defence minister, A K Antony, asking him to exercise an "Option Clause" in the contract with Pilatus to procure 38 more PC-7 Mk IIs; and then also buy the remaining 68 trainers from Pilatus as a "Repeat Procurement", which requires no trials.

For Pilatus, that would have amounted to a windfall of some Swiss Francs 700-800 million (Rs 4,500-5,150 crore). For HAL, and for India, it would mean the doors being slammed on the indigenous HTT-40 project.

Browne told Antony the HTT-40 was too expensive, claiming it would cost Rs 43.59 crore at 2011 prices. In contrast, said the IAF chief, a PC-7 Mark II costs only Rs 30 crore.

Incredibly, the air chief deliberately understated the rupee cost of the PC-7 Mark II. In fact, its price of Swiss Francs 6.09 million amounted to Rs 40 crore, because of the depreciating rupee.

With the MoD refusing to oblige Pilatus with an order for more trainers, the IAF then approached HAL to build the PC-7 Mark II with technology from Pilatus. HAL, which was making headway on the HTT-40, flatly rejected the IAF proposal.

A rattled IAF then decided to go it alone. On October 8, 2013, Browne bizarrely stated that the IAF's base repair depots (BRDs) - which are meant to overhaul aircraft and engines - would build the PC-7 Mark II in partnership with Pilatus. The MoD simply ignored that proposal.

Rebuffed, the IAF then looked towards the private sector. In March, with elections impending, the IAF floated a "Request for Information" - a pre-tender enquiry - inviting Indian companies to partner Pilatus and submit preliminary bids to supply the IAF with 106 PC-7 Mk II trainers. In the MoD's procurement rulebook, this is termed a "Buy & Make (Indian)" acquisition.

In all this, the IAF apparently lost sight of the fact that the DAC had cleared two procurements in two separate categories -75 trainers in "Buy Global" and 106 in "Make Indian".

Parrikar will make a far-reaching decision in Saturday's DAC meeting. Sanctioning the purchase of 38 more PC-7 Mark IIs from Pilatus will whittle down HAL's "Make" project from 106 HTT-40s to just 68, undermining the business case for an Indian production line.

"Pilatus is waiting. If India exercises the option for 38 more PC-7 Mark II, the remaining 68 trainers will probably also be built in Switzerland. The HTT-40 project will suffer a mortal blow," says respected aviation expert, Pushpindar Singh.