HAL and India’s future as an aerospace power are inextricable
Hindustan Aeronautics Limited (HAL), towers over India’s aerospace industry with a large number of complex and crucial fixed and rotary wing programmes due to take place over this decade and is in the spotlight like never before. HAL currently has programmes ranging from design and development of the 5th generation PMF (FGFA), indigenous Tejas Light Combat Aircraft (LCA) and HJT-36 Intermediate Jet Trainers (IJT), and helicopters followed by license manufacture of the MMRCA, Su-30 MKI, Hawk and finally upgrades for the Mirage-2000 and Jaguar fighters.
HAL must ascertain if they have the infrastructure to take on more projects and also man power requirements must be looked at closely to ensure the requisite strength of qualified personnel is present to execute these projects. HAL is currently looking at enhancing its manufacturing capabilities by sub-contracting and outsourcing many more components to private vendors. According to N.C. Agarwal, director, Design and Development, HAL (retd) “On a scale of one to 10, the Indian private sector’s capabilities in the aerospace sector are between one to two.”
HAL will ultimately emerge as a hub that facilitates the development of smaller aerospace companies so as to enable growth across the entire aerospace industry. It is here that the lack of a comprehensive and forward looking vision in the form of a National Aerospace Policy has lead to fragmentation of efforts. HAL’s main strength is the years of experience it has built up in the aerospace domain in processes, license manufacturing and design and development, etc. If HAL’s effort to involve the private sector is to succeed then, it must be empowered to identify suitable private sector companies and invest in them. Not only will this require greater investment from those who wish to enter the aerospace sector and a longer-term commitment from them but also hand holding by HAL to get them up the learning curve.
Currently, whatever work HAL has been able to outsource is only for manufacturing subcontracts and some modules, apart from this, they have not been able to handover projects on a turnkey basis to the private sector. On another note, the ministry of defence (Mod) has cleared an IAF proposal to look for a replacement for the HS-748 and it will be ‘Buy and Make’, with the ‘Make’ being given to a private sector partner. It remains to be seen as to what role HAL will play here
HAL is yet to establish a clear vendor base to help with the multitude of projects that the company is currently handling. Except for manufacture of components, a clear vendor base has not been developed for design and development, detail design, manufacture of full assemblies and units, has still not happened. A lot can be done in terms of outsourcing but this will not happen until long term agreements are signed with suppliers over larger periods of time.
For India’s aerospace sector to grow and become world class, a lot of investments from the private sector are needed and whether it is the government or HAL, that enables these companies to come up, has to be decided. The lack of an ancillary base also needs to be addressed and capability in the private sector must be built up. Part of the government funding in this sector must go to private sector companies to enable them to build the scale required in terms of skill and volumes. On the other side, when government funding is provided to the private sector then a robust monitoring mechanism must be put in place to measure the actual results of such funding and there must be adequate penalties built into this to prevent misuse of funding and track results. The aerospace industry unfortunately requires very high levels of investment and the return on investment takes a long time to come, typically take around seven to eight years.
HAL’s Helicopter Division, alluding to the role of the private sector says ‘Aerospace technologies call for constant upgrade of its infrastructure and facilities in the present market systems and equipment are usually very expensive due to their stringent technical conditions that are to be consistently maintained. The profit margins in the latest products are comparatively low due to high cost of development and global competition. These factors could be a disincentive for the private sector with a wide portfolio of products giving higher returns. Under these circumstances, sustenance of private sector in Indian Rotorcraft Industry with extremely high capitalisation, large cash flows, highly complex technologies with long gestation time for returns and relatively lower profit margins is a matter of concern. Despite this, HAL has built a credible and qualified Indian supply chain for airframe parts. More than 50 per cent of the detail parts are today from HAL’s supply chain’.
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