Sunday, February 03, 2019

The descent into HAL: How the defence PSU got mired in controversies

Hindustan Aeronautics Limited (HAL) is currently in the middle of a PR nightmare. After a Mirage 2000 trainer aircraft, upgraded by HAL, crashed on Friday killing both pilots, the defence PSU has come under tremendous fire from all sides for alleged inefficiency corruption. Even Chief of Air Staff, Air Chief Marshal B S Dhanoa, speaking on the matter of HAL’s apparent delays in delivering the Light Combat Aircraft (LCA) to the Indian Air Force, also slammed the public sector undertaking. “I, as the service chief can make concessions to Hindustan Aeronautics Limited (HAL). Will the enemy make concessions to me when I go and meet the enemy?” he said.
HAL was also recently dragged into the Rafale row when Congress president Rahul Gandhi accused the NDA government of snatching the aircraft deal from HAL and giving it to Anil Ambani’s Reliance Defence – a company that has no experience in making military aircraft or even defence equipment.
To add to this, for the first time in the company’s history, it has recently borrowed money to pay employees. HAL chairman R Madhavan recently admitted that the PSU has been forced to take a loan of `1,000 crore to pay the salaries of some 30,000 staff. How did a company, that was once set up to make India self-sufficient in defence craft is concerned reach this point?
A walk through the HAL’s Hall of Fame Heritage Centre and Aerospace Museum in Bengaluru, provides more than a glimpse of how India’s largest defence Public Sector Undertaking has evolved over the years. The photographs adorning the walls chronicle HAL’s growth through the decades: From its birth in 1940, when industrialist Walchand Hirachand and the erstwhile Maharaja of Mysore started the institution with a capital of `4 crore, to its almost eight decades of existence. There are photographs of foreign heads of state and an assortment of royals from around the world visiting HAL facilities in the 1940s and 50s. There are photographs of US Army aircraft, deployed during World War II, being overhauled at HAL airport. And then there are more recent images showing politicians and bureaucrats posing in the cockpit of HAL-assembled aircraft or choppers. But none of these images, of a glorious past, provide any indication of the current troubles HAL is in – of losing out on contracts; of having to downsize staff or not being able to rustle up the funds to pay salaries, and of being deeply mired in controversy.
Laxman Kumar Behera, research fellow with the New Delhi based Institute for Defence Studies and Analysis (IDSA), says: “HAL is a PSU under the Ministry of Defence and has survived for this long largely because contracts were given to it on a platter by the ministry. But now, the scenario is
changing, The number of contracts it used to bag – like the order for over 200 aircraft at a time – is no longer happening. There are no mega orders coming, and that’s one of the reasons for HAL’s current [poor] health. HAL is like any other PSU in India; the inefficiency that we see, is because of
limited autonomy and the fact that they cannot take independent decisions and have to seek overnment approval to go ahead with any project.” A company must run on its own and be able to take its own decisions and have its own R&D, adds Behera. “But in case of HAL, everything is decided by the government and that is why one cannot fault the company. The current scenario is not entirely of HAL’s own making,” he adds.
Indeed, HAL’s dip in revenues has been attributed to unpaid bills of about `14,000 crore from the Indian Air Force (IAF), its primary customer. And also because the government dropped the Medium Multi Role Combat Aircraft (MMRCA) deal to procure 126 fighter jets (18 were to be manufactured by the French company Dassault Aviation, and the remaining 108 were to be manufactured by HAL in its Bengaluru and other facilities) and instead signed an intergovernmental agreement with France to procure 36 aircraft directly from Dassault.
03/02/19 Hemanth CS/Bangalore Mirror
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