By Amit Cowshish
Prime Minister Narendra Modi will, on October 30, lay the foundation stone of the manufacturing facility being set up by Tata Consortium at Vadodara to manufacture 40 C-295 medium tactical transport aircraft in collaboration with the prime vendor Airbus Defence and Space.
These aircraft will be rolled out from the Vadodara facility between September 2026 and August 2031. Meanwhile, Airbus will supply 16 aircraft in a fly-away condition from its manufacturing facility in Spain between September 2023 and August 2025, bringing up the total number of aircraft to 56.
These fuel-efficient aircraft will eventually replace the aged fleet of Avro-748 inducted into service by the Indian Air Force (IAF) in the 1960s. Military aviation experts believe that C-295s could possibly also replace the Russian-origin turboprop twin-engine Antonov An-32 military transport aircraft currently operated by the IAF.
There are several reasons why the long-awaited Rs 21,935 crore project, greenlighted by the Defence Acquisition Council (DAC) way back in 2012, is significant. For starters, it is the first-of-its-kind facility to be set up in the private sector, breaking the monopoly of the state-owned Hindustan Aeronautics Limited (HAL).
Operationally, its significance lies in the aircraft’s capacity to carry up to 9-ton of payload (71 personnel or 45 paratroopers), achieve a maximum speed of 480 kmph, and operate from short or unprepared airstrips. It also has a rear ramp door for dropping troops and cargo.
From a commercial perspective, the project is significant not only because of the likely additional requirement of the armed forces, but also because the aircraft is eminently suitable for the fast expanding civil aviation sector in India and the international market.
It was probably because of these possibilities that Airbus had responded to the MoD’s Request for Proposal (RfP) and persisted with its bid for several years while the ministry took time in making up its mind, despite the tender being only for 56 aircraft -a number ostensibly considered commercially unviable by other aircraft manufacturers.
The cherry on the cake is the boost the project will give to Make in India in defence. The media reports indicate that the aircraft manufactured in India will have the highest ever indigenous content with 96% of the work Airbus does in Spain being transferred to India.
In a significant boost to the aerospace ecosystem in India, the project is expected to generate 600 highly skilled jobs, 3000 medium skill employment opportunities, and another 3000-odd indirect jobs. The significance of these numbers will not be lost on the youth in the election-bound state of Gujarat where the facility is coming up.
The Tata Consortium, comprising Tata Advanced Systems Limited and Tata Consultancy Services, along with more than 125 domestic MSMEs located across seven states, will be involved in manufacturing more than 13,400 parts, 4,500 sub-assemblies and all major components in India. Additionally, about 240 engineers, to be trained in Spain, are expected to bolster R&D in the aerospace sector in the coming years.
While the aircraft will be fitted with indigenous electronic warfare suite developed by the state-owned Bharat Electronics Limited and Bharat Dynamics Limited, the engine, landing gear and avionics will be supplied by Airbus, exposing the current limitations of the aerospace manufacturing sector in India and the areas which need to be focussed upon in the coming years.
While all this is heartening, it should not blind us to the way this project has played out over the past one decade.
It would be worth MoD’s while to let the entire process between the time the project was green lighted, and the conclusion of contract, be appraised dispassionately by a competent body, without disclosing the confidential details, to identify the reasons why it took so long in awarding the contract despite there being no major impediment.
Several reviews of the acquisition procedures in the last two decades have failed to deliver largely because these reviews were based on piecemeal inputs from the industry and the armed forces, and not on any empirical study of why the system had actually failed to deliver.
Not to put too fine a point on it, the project would have been nearing its completion had the contract been awarded after completing all the formalities, thus giving IAF what it needed and defence manufacturing a significant boost, much earlier. There can be no improvement unless there is willingness to identify and learn from the past mistakes.
The project made quick progress in the initial years because of the significant decision taken by the MoD not to ‘nominate’ an Indian Production Agency (IPA), as was then required under the rules, for making the aircraft in India. Instead, the foreign companies, to whom the RfP was issued for this ‘Buy and Make’ project, were permitted to choose the IPA on their own according to their judgment.
It saved MoD the hassle of having to identify the Indian private sector company for nomination and force the foreign vendors to tie with the chosen company, even if in their assessment the latter was not the right choice. This was out-of-box thinking by the MoD and it paid off.
This bold decision, which was generally referred to as the Avro-model, was later made a part of the Defence Procurement Procedure, but inexplicably it does not seem to have found favour with the armed forces or the MoD, or both.
Instead of mainstreaming the Avro-model in a bid to simplify the procedure, MoD complicated it by introducing the Strategic Partnership Model and replacing the old Buy and Make category with Buy (Global – Manufacture in India) category. Considering that all these categories can produce the same results, the need to merge them into Avro-model, which is the most uncomplicated of them all, needs consideration.
Lastly, this project would not have been possible but for the bold decision taken by the MoD first to keep the state-owned HAL out of the race and later to go ahead with it when only one bid was received in response to the RfP, creating the dreaded ‘single vendor situation’. It is important to bring this boldness back into the decision-making process, which is becoming more and more risk averse, resulting in indecision, delays, or worse, retraction of the RfPs.
The author is Former Financial Advisor (Acquisition), Ministry of Defence.
Disclaimer: Views expressed are personal and do not reflect the official position or policy of Financial Express Online. Reproducing this content without permission is prohibited.