Saturday, October 20, 2018

Existential crisis for HAL: No new orders for fighter aircraft

Congress president Rahul Gandhi continued his barrage against the Modi government’s purchase of 36 Rafale fighter jets with a strategically-timed public meeting. He addressed over 100 workers of PSU monolith Hindustan Aeronautics Limited (HAL) outside their corporate headquarters in Bengaluru on October 12. Rahul’s public meeting came just a day after Union defence minister Nirmala Sitharaman’s trip to Paris for the annual India-France defence dialogue, where she was photographed at a Dassault facility assembling Rafale jets for India.

HAL is India’s strategic asset. The future of India’s aerospace industry has been destroyed by snatching Rafale from HAL and gifting it to Anil Ambani,’ he tweeted. At the meeting, Rahul called HAL a temple of modern India’, a line his great-grandfather coined for India’s public sector undertakings. Rahul was batting for the desi PSU giant while the government favoured foreign company Dassault and its Indian partner Reliance Defence, which he alleged was getting all the (offsets) business worth Rs 30,000 crore from the Rs 59,000 crore jet deal. The offsets are in fact being split between the four partners in the contract, Jet designer and integrator Dassault, electronics firm Thales, engine maker Safran and weapons maker MBDA, who will tie up with their Indian partners. HAL has partnered with Safran for the offsets, several of which are still being negotiated. (Dassault CEO Eric Trappier clarified on October 12 that Rel­iance would get only 10 per cent of the company’s share of offset contracts, estimated to be Rs 6,500 crore.)
HAL is now caught in a bitter political crossfire, with the Congress alleging the NDA had cut it out of the 126 Rafale deal it was negotiating with the off-the-shelf purchase. Sitharaman seems to blame HAL and the UPA when she told wire service PTI that the deal to license-produce Rafales (scrapped in 2015) fell through because if the aircraft were to be produced in India, a guarantee for the product to be produced was to be given. It is a big-ticket item and the IAF would want the guarantee for the jets. HAL was in no position to give it. The then (UPA) government could have come forward and pumped in resources into HAL, but they did not.
Balance sheets suggest that India’s aerospace giant is going great guns. The company recorded its highest ever turnover of Rs 18.284 crore this year, its Rs 2,070 crore profit (after tax) a modest 3.86 percentage points increase over last year. But these figures hide what one company official says is HAL’s existential crisis, there are no new orders for license-producing fighter aircraft. Its cash cow, the formidable Su-30MKI being license-produced since 2003, will cease production in 2020 when the last batch of 44 jets is delivered to the IAF.

The mismatch between the NDA and UPA years becomes evident when one looks at the orders placed between 2004 and 2018. Between 2004 and 2014, HAL received orders of Rs 1.06 lakh crore for Su-30MKIs, engines, Light Combat Aircraft (LCAs), Hawks, Dorniers, Jaguars and Mirage upgrades and advanced light helicopters (ALHs).

Between 2014 and 2018, it received orders of just Rs 26,570 crore. It has yet to receive orders worth Rs 62,900 crore for the 83 LCA Mark-1As, Rs 2,700 crore for the 15 Light Combat Helicopters and a Rs 10,200 crore order for 150 AL31FP engines for the Su-30MKI.
20/10/18 Sandeep Unnithan/India Today

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