Neelam Mathews

Few coompanies can lay claim to having as many as 10 aircraft planned or under development simultaneously, but India’s state-owned <a href="http://www.ainonline.com/aviation-news/ain-defense-perspective/2012-06-01/india-and-russia-move-ahead-new-airlifter">Hindustan Aeronautics Ltd. (HAL)</a> is doing just that. However, while the Bangalore-based group’s ambitions may be laudable, it remains to be seen how it will face the formidable challenges of its current and planned projects. 
To achieve its goal of being a global defense firm with revenues of $6 billion within the next 10 years, HAL is planning to produce a light combat aircraft (LCA), a light utility helicopter (LUH), <a href="http://www.ainonline.com/aviation-news/singapore-air-show/2012-02-14/india-chose-rafale-cost-britain-demands-second-chance-eurofighter">a medium multi-role combat aircraft (MMRCA),</a> a fifth-generation fighter, a multi-role transport aircraft and a basic trainer. It has 19 production facilities and 10 research-and-design centers at eight locations in India. The company also has manufactured numerous aircraft under license.
However, recently there have been indicators that the Indian industry isn’t managing to join up the dots in its aerospace and defense plans. For instance, in May, defense minister A.K. Antony acknowledged problems with plans for an indigenous engine to power the LCA, when he reported that the Defense Research Development Organization (DRDO) has conceded that the unit proposed by Kaveri Aero Engine company does not deliver enough power for the fighter. Instead, the Kaveri engine is going to be reapplied for possible unmanned air vehicle programs. The DRDO remains undecided as to when and how a more powerful version of the Kaveri engine might be developed for the LCA, or whether the GE F414 will be retained.
This seems to be an all too familiar predicament for India’s main defense manufacturer, for which program delays are commonplace. While HAL manufactures the Sukhoi Su-30 fighter and BAE Systems’ Hawk Mk 132 advance jet trainer under license with materials, parts and support services provided by the original equipment manufacturers, analysts say India’s industry will need transfer of technology instead of transfer of production to put the country at the forefront of new developments. 
HAL itself has declined to publicly comment on the doubts now being raised over its business strategy. Behind the scenes, company insiders, industry analysts and government officials expressed candid concerns in interviews with AIN done on condition of anonymity.
“HAL, in 70 years, has been unable to manufacture a basic trainer. How it will move on the fifth-generation fighter aircraft currently being developed with Russia remains to be seen,” said a senior Indian Air Force (IAF) officer. 
The Pilatus PC-7 MkII recently chosen as India’s new basic trainer has a 30-percent offset clause. The contract with the Swiss manufacturer for 75 aircraft, for which deliveries are to begin in the last quarter of thisyear, includes an integrated ground-based training system and logistics support, as well as an option for HAL to license-build an additional 106 turboprops. 
TheIAF’s new purchase follows the grounding of the 114HAL-builtHPT-32 piston-engine basic trainers in the wake of a spate of crashes. Pilots are currently being trained on 81 Kiran MkIIintermediate jet trainers (IJT), due to be retired at the end of this year, to be replaced by thenew HJT-36IJT, which also is behindschedule.
While HAL is known to be moving in the area of helicopters, even its flagship advanced light helicopter (ALH)–a 5.5-metric-ton-class multimission helicopter, which it claims is designed and developed entirely in-house–effectively started life 28 years ago at what is now Eurocopter Deutschland. “One thing is clear. Though it is India’s, if not Asia’s, first designed helicopter, it is not ‘indigenous’ in the true sense,” said a former HAL engineer. The powerplant of the ALH consists of a pair of two 1,000-shp Turbomeca TM 333-2B turboshafts. India’s navy has decided against buying additional ALHs and has hinted it will turn to foreign vendors for both its utility and antisubmarine warfare requirements. 
HAL Goes It Alone?
A second-time-around RFP for 197 light helicopters for the Indian military that was first released in 2008 is now stuck and awaiting clearance from the government technical oversight committee. Even then, further clearances will be required before the commercial bids are opened. 
All this wasted time has many in the business speculating whether the government really wants to make a decision between the two contenders: Eurocopter’s AS550 C3 Fennec and the Russian Kamov Ka-226. The thinking is that HAL may have abandoned hopes of licensed production of these imports, having decided to go it alone with its LUH, for which it has an order for 187. 
The LUH project was government-sanctioned in 2009 with a mandate to develop it by 2017. It is now being debated whether the 197-ship Indian military order should be given to HAL instead. For the military, this is just another delay for a product needed yesterday. While HAL has a better record in the arena of helicopters than fixed-wing aircraft, there is doubt whether this project will move ahead effortlessly. 
Defense minister Antony recently said in parliament that the delays to HAL projects do not help. They have included reworking of Hawk jigs, problems establishing production of complex engine components and radar software for the Su-30 MKI, certification delays with the Shakti engine, changes in design standards for the LCA and engine delays for the HJT-36 IJT.
At the same time, HAL is developing its planned multi-role transport aircraft and fifth-generation fighter jointly with Russia, while also looking to codesign and coproduce a 10-metric-ton-class medium-lift helicopter. However, it now seems likely that a private company will handle the latter program.
Time for a New Approach?
Given delays in completing projects, HAL’s effective monopoly over state-backed programs is increasingly being questioned. For instance, some industry observers have suggested that the LUH program should be reassigned to one of India’s growing body of private aerospace companies, such as Larsen &amp; Toubro and Mahindra &amp; Mahindra, which have secured previous licenses to manufacture defense equipment.
This change may now be getting under way. U.S.-based Sikorsky Aircraft and India’s Tata Advanced Systems Ltd. (TASL) have applied for a defense license to manufacture components and assemble helicopters for use by the Indian navy. “The license will pave the way for us to set up an assembly line in this country,” Steve Estill, Sikorsky’s vice president of strategic partnerships, said during a recent visit to India. “We will decide on our plans once we hear from the ministry of defense. We expect the ministry to clear our application in the second quarter of this financial year.” 
This statement is in line with India’s soon-to-be released, but delayed, 2012 defense procurement policy, which, for the first time, is expected to countenance the active participation of private industry. Industry sources have told AIN that a pilot project for each of the three armed services will be open to the private sector only as a measure to boost the industry. 
The first project is expected to be the replacement of the IAF’s 56 aging Avro transports. Bids will be invited from OEMs willing to fully transfer technology to an Indian company to develop the platform in India. “The whole line will have to be shifted,” said a defense ministry official. The project will have active participation from the air force and the ministry in the design and development phases. 
Offsets and MMRCA
All eyes are on HAL for the production of the MMRCA, for which Dassault’s Rafale was declared the selected, lowest bidder earlier this year, though no contract has been awarded yet. There is concern with the Indian rupee currency having depreciated in recent months that the cost of acquisition could be much higher than projected, as could be the scope for the 50 percent offsets. 
Under the terms of purchase, the first 18 of the 126 aircraft will come in a “fly-away” condition, while the remaining 108 will be manufactured under transfer of technology by the prime HAL, which recently announced an intent to establish, on 40 acres of land that it recently acquired as part of its expansion program, a separate unit for manufacturing the MMRCA airframe and engine. 
“HAL currently has an order book of $18 billion...Its ability to absorb additional orders remains uncertain, given the historical structural issues, even after adjusting for complexity for the order pipeline, currently faced by HAL,” concluded a report by consultancy Aviotech. HAL’s order book equates to about three years’ worth of backlog at Embraer and a year at Lockheed Martin.
With concerns that HAL will find it difficult to honor its commitment for manufacturing the Rafale, a memorandum of understanding has already been signed between Indian industrial giant Reliance Industries and Dassault Aviation for pursuing possible strategic opportunities for manufacturing and support in India. A suppliers’ meeting held in New Delhi recently was arranged to network and identify tier-two and -three suppliers. 
However, it remains to be seen if deep-pocketed Reliance will be willing to invest in such a large venture without an organized supplier base in the country. “Reliance will possibly be the tier-one partner to HAL. There can be a thin prime and very thick-tier one,” predicted a ministry of defense official.
Some Progress at HAL
Not all efforts are in vain. HAL said its achievements in the past year included flight trials for the turret gun and rocket it completed for the ALH-WSI (weapons systems integration), and conducting the maiden flight of the limited series production version of the Tejas LCA, which will be offered to the air force for evaluation trials. HAL also has conducted the first flight of the technology demonstrator version of its light combat helicopter built with lighter parts and an optimized transmission system and incorporating several improvements based on flight evaluation of an earlier demonstrator, while the detailed design and analysis of structural parts of the LUH have been completed.
Government support given to HAL in the past has resulted in its expansion, but now reality is setting in with growing acceptance that the group is simply overloaded. A restructuring plan is in the offing, which will enable the giant conglomerate to synergize its strengths and focus on systems integration. 
Enough work is in hand to last HAL for the next decade, including upgrades to the Mirage 2000 and the Jaguars to be completed by 2021 and 2017, respectively. Indian Air Force orders for 40 LCA Mark Is to be followed by 80 LCA Mark IIs are also on hand. The navy has ordered 46 of its own version of the LCAs expected to be ready for sea-trials by 2013.
In the next two decades India expects an investment in the military and aerospace sectors of $200‑ to $300 billion, for which offsets will be substantial. “The new defense procurement policy aims to achieve substantial self-reliance in design, development and production of equipment, weapon systems and platforms for defense in as early a time frame as possible,” said junior defense minister M.M. Pallam Raju. 
But a major issue for the country’s industry is the lack of program-management skills. “[Improving the skills] is a painful process. It will take some time to gather the requisite skills as programs mature gradually,” said Raju, adding that the government is committed to encouraging private participation in defense production, with the ministry focused on strengthening and widening the defense industrial base.

Delays To HAL Programs Prompt India To Turn To The Private Sector

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