Risky Take-Off

There are two ways of viewing Mr Deve Gowdas remark. One is to write it down to a typical Gowda-ism, whereby you say things only to please someone, just as he did in the case of Uttarakhand, the still-born idea of a commission to see if jats could become OBCs, the laughable idea that 10 per cent of the Ninth Plan funds would go to the north-east, and so on. If this is the correct view, the question arises: will the prime minister then please tip the wink when he wants to be taken seriously?

The other way is to regard his interest in the matter as being completely serious, not least because HAL is located in Karnataka, his home state. This factor, taken along with the fact that if HAL persists sufficiently, it will eventually have its way in securing government funding, must lead to some questions being asked about the advisability of the project. This is not to suggest that HALs engineers are not up to the job. Given time and money, they are and will probably come up with a plane that is as good as any in the world. However, as the experience of Airbus Industrie shows, the development of an aircraft is a costly business. Airbus swallowed up more than $500 billion in subsidies from Germany, Britain and France over 35 years before it finally made a profit in the early 1990s. There is no special reason to believe that HAL will have an easier time, even if low local costs dont lead to such a massive subsidy and better expertise cuts down the development time.

 

In other words, 7-10 years and around Rs 3,000-5,000 crore could deliver the aircraft. To hope for less would be unrealistic on the current record of the public sector.

There is also the commercial angle. The world over, small aircraft makers are shutting shop because of the dominance of Boeing and Airbus.

To enter the passenger aircraft market in the hope that Indian firms will place bulk orders is inadvisable. They may buy a few under duress from the government but that will not be anywhere near what is required to break-even, let alone turn a profit. The experience of some of the smaller European firms is worth studying in this context. All things considered, it would be far better for HAL to turn its energies and talents to the development of avionics, which are cheaper to develop, easier to sell and provide higher value-addition.