Monday, 29 July 2013

Air Force at war with Hindustan Aeronautics; wants to import, not build, a trainer




In a letter to defence minister, IAF chief criticizes HAL’s proposal to design and build aircraft for rookie pilots

By Ajai Shukla
Business Standard, 29th July 13

Indian Air Force (IAF) chief, Air Chief Marshal NAK Browne, has assailed Hindustan Aeronautics Ltd (HAL), which builds most of the fighter aircraft that the IAF flies. Writing directly to Defence Minister AK Antony in the first week of July, Browne has savaged HAL’s proposal to design and build a basic trainer aircraft (BTA) for rookie IAF pilots. Rejecting the HAL proposal, Browne has urged Antony to import 106 PC-7 Mark II trainers from Swiss company, Pilatus. These will be over and above the 75 trainers already contracted for US $640 million (Rs 3,780 crore).

Business Standard has a copy of Browne’s five-page letter to Antony. Contacted for comments, the IAF and HAL have both chosen to remain silent on the issue.

At stake is an estimated $800 million (Rs 4,750) for Pilatus, if Antony accepts Browne’s recommendation to give the Swiss company, rather than HAL, the 106-aircraft order.

On Sep 29, 2009, the ministry of defence (MoD) had cleared the acquisition of 181 BTAs for the IAF. 75 were to be procured internationally, a contract that Pilatus controversially won. Meanwhile, HAL was to design and develop 106 BTA in India.

Now the air chief has requested Antony, “To meet the immediate flying training requirements of the IAF, the ‘Option Clause’ be exercised to procure 38 PC-7 Mk II from M/s Pilatus Aircraft Ltd, as directed by [the MoD] on 29 September 2009. The subsequent requirement of 68 BTA could be met through Repeat Procurement.”

Repeat Procurement is the simplified, swift procurement of equipment that is already in Indian military service. User trials are dispensed with.

Browne argues that HAL, in its detailed project report to the MoD, has underpriced the HTT-40. Rubbishing HAL’s projected cost of Rs 32.70 crore per aircraft, Browne says the HTT-40 will actually cost Rs 43.59 crore at 2011 prices.

The extra cost per aircraft, according to Browne, includes Rs 1.81 crore as the cost of production; and Rs 7.11 crore as the cost of design & development, of which the IAF must pay 80 per cent. A 16 per cent rise in the cost of the dollar will add another Rs 1.97 crore per aircraft, taking the price up to Rs 43.59 crore.

Then Browne adds 4.5 per cent annual inflation to these prices, which are on a 2011 base. That raises the HTT-40’s per unit cost to Rs 59.31 crore in 2018 (when the HTT-40 would start being delivered) and Rs 64.77 crore in 2020.

In contrast to this gloomy forecast, Browne paints a rosy picture for the PC-7 Mk II, stating that Pilatus costs just Rs 30 crore per aircraft, a price that will apply also to the “options clause” for another 38 PC-7 Mk II. “Hence the HTT-40 will be more expensive to the IAF when compared to the PC-7 Mk II by over 89% from 2018 onwards,” writes the IAF chief.

In fact, the Pilatus contract freezes the price only for the next 38 trainers under the “options clause”, but the final tranche of 68 aircraft would be negotiated afresh, subject to inflation and forex variations. Furthermore, since the forex component of the PC-7 Mk II is 100 per cent, compared to just 30 per cent for the HTT-40 (Browne’s figures), any adverse change in exchange rates would escalate Pilatus’ cost far more than HAL’s.

Surprising experts also is the IAF chief’s inexplicable oversight in omitting any mention of decades of heavy payout to Pilatus for maintenance, overhauls, spares and upgrades. With the MiG-21, MiG-27, MiG-29 and the Mirage 2000, these cost up to ten times as much as the initial purchase cost of the aircraft.

Amit Cowshish, former Financial Advisor (Acquisition) & Additional Secretary with the MoD says, “Over the service life of a foreign aircraft, its spares, maintenance, overhaul and upgrade from abroad could cost several times more than the basic cost of the aircraft, as we saw with many IAF fighters. It is impossible to contractually bind a vendor down to fixed prices for spares, upgrades and overhauls over the entire life cycle of the platform, which might stretch over decades. The actual cost incurred over years could be much more than what was anticipated at the time of purchase.”

Nor does Browne’s letter put a price on the design and manufacturing expertise that the HTT-40 would generate in India, and on the eco-system of vendors and sub-vendors that would be created, generating high-tech jobs and expertise.

HAL, usually on the defensive against the IAF, has reacted defiantly. Business Standard learns that work is underway on the HTT-40, financed by Rs 150 crore that HAL’s board has committed from internal funds. HAL says that foreign buyers would be interested in the trainer even if the IAF is not. So too would the navy and army, whose expanding aviation wings would lead to them training their own pilots instead of continuing to rely on the IAF.

HAL designers also claim that the HTT-40 will be far more capable and versatile than the PC-7 Mk II, which is a de-rated version of the PC-9 trainer. The HTT-40 will be a weaponised trainer that is also a light attack aircraft. For political reasons, Pilatus removed the weapons hard points from the PC-7 Mk II trainers that they sold the South African air force. The same is true for the BTAs sold to India.

The air chief’s letter cites HAL’s record of delays, specifically mentioning the Light Combat Helicopter and the Light Utility Helicopter. Browne charges, “HAL routinely seeks approval for a small project completion period… without achieving it.”

The IAF chief cites the MoD’s ruling in 2010 that more Pilatus trainers would be bought if the HTT-40 had not yet flown by the time the first Pilatus trainers were delivered to the IAF. Today, 14 Pilatus trainers have already been delivered, and Browne claims that Pilatus will deliver 30 trainers per year to the IAF.

On July 8, the first IAF batch of trainee pilots began learning to fly on the Pilatus PC-7 Mark II at the IAF Academy at Dindigul, near Hyderabad.

20 comments:

Anonymous said...

It goes without saying, HAL is leaderless and rudderless. What a pathetic organization being shielded by the MoD! For it to be great, it should be thrown to the wolves.

Anonymous said...

Well, there is a point to what Brown is saying, no? HAL's delays are legion. The user needs the aircraft now, not a decade later.

Also, the academy is at Dundigal. The text says Dindigul, which is a completely different place near Madurai.

Anonymous said...

Col. you seem to ignore a few very important factors in your analysis of the issue :
(i) Adding more PC-7s over HTT-40s would result in lower costs , not more from economies of scale achieved from one platform resulting in fewer maintenance stores, training and maintenance staff.
(ii) The HTT-40 remains a paper plane and given the track record of HAL with the horrendously botched and delayed delivery of the Tejas & the Sitara, the ACM cannot be faulted for wanting to ensure operational readiness of his forces by opting for a tried and tested platform that is available now !

(iii) I would be willing to bet that the HTT-40 platform if it is ever developed and delivered will cost a lot more than HAL's claiming at this point. HAL has a track record in this regard - of low balling cost figures during the planning & budgeting stages of the development cycle and then increasing cost estimates as time goes on often as in the case of the Tejas in orders of magnitude that are unheard of in the industrial world !

So let's give the ACM his due and give the forces the resources and tools they need to secure our national interests.

Anonymous said...

Age old debate.

The only solution is that, GOI should give separate funds to HAL & other Indian defense companies to try and build concepts first as is done in most nations who make their own systems.

Frustrating that we have been having the same debate over decades. On one hand everyone accepts the importance of home grown technology, but the military should not be asked to wait till Indian Defense PSUs catch up on the technology curve with the rest of the world. That will be building our Defense PSUs at the cost of military! Certainly not recommended.

Anonymous said...

Another VVIP chopper style scam which needs to be investigated. Why is Chief not telling that the payments for the
PC7 are in swiss curreny and not in Indian rupees. Also it is against each delivery in about half a ton installments.
So the correct price of the PC7 what we are paying today is 40 crores as the currency is RS 63 today. How shamelessly can he lie.
Well there is a commission involves even great men loose their integrity and intelligence...

Anonymous said...

Yes right...why is he so despo to close indegenous project even when HAL has decided to use its own money. Atleast the next trainer will not be imported. We want to make civil aircraft.s Stealth machines etc and import a trainer...shame...

Anonymous said...

Look at his tenure...VVIP, Boeing Apaches and C 130s, Embrarer, MMRCA ( conflict with Rafale), Jaguar re engine......why so many foreign deals.
What can the forces do when the heads itself are corrupt....Also what ajay does not mention is that he has got the Requirements document relaxed as well so that Pilatus could win....
The CBI should investigate this one...

Anonymous said...

Kill Indian industry and import everything...and mr chiddu keeps crying of outgo of foreign supplies....and fiscal defecit..
kudos to HAL who has stood up to this brazen arrogance of a corrupt man and decided to go ahead...the new head is showing balls....
did any one mention that the airchief also tried to bulldoze HAL when it was sanctioning money for its own project...they did not want this to happen as HAL will make a trainer sooner or latter....remember the IAF has flown HT2, HPT32, Kiran Mk I and MKII and the assembled HAwks. All done by HAL , then why is the fight here....Dollar mere bhai dollar...

Anonymous said...


COngress term is full of corrupt cases and it needs to be seen what the defence minister has to say on this....will he allow the corrupt chief to have his way or will stand up for the nation....Am sure the Modi camp is following this closely and will use this an opportunity to once again thrash the congress for corrupt practices

Anonymous said...

The koreans have been yelling at the top of their voice...the swiss deal was rigged by none other than the ACM....why not have a formal enquiry done...and check whats the funny tinkle about...why was he so despo to get it in aeroindia, fly it in op shakti and also make RRM fly it with all media glare...is he the air chief or the marketing head of Pilatus already before his retirment in Dec 2013../

well written ajay, proud to see you favour the tone of indegenisation...

victor raj said...

So they will do the same thing for the LCA Tejas. Don't say that HAl cannot build a trainer when they are trying to build 4 generation aircraft Tejas. After Tyagi, I don't believe anyone from IAF. IAF officers are the corrupted ones, change that, everything will get changed. I know our officers are the one that put mud in the Arjun MBT, So how can we believe them? This whole nation is corrupt, no one cares about anything other than their own.

rustom said...

on "Amit Cowshish, former Financial Advisor (Acquisition) & Additional Secretary with the MoD says"...
You mean advise from those that are actually responsible for the whole fiasco....Wasnt it the MoD who didnt pay heed to the IAF's foresight in the late 70s for a trainer..or in the 80s or in the 90s..isnt it the same organisation that let the army not have the Gun locating radar in 1997 and thus the army had to fight the kargil war without one..isnt it the same organisation that went on a full out shopping spree from Ukraine for cheap spare parts that increased attrition rate and loss of life(never theirs). I guess the financial wizard also got himself promotion!!

The same MoD that has stopped infrastructure projects along borders due to their negligence and apathy...the org that has chiefs who were heading Textiles and agriculture before and thus deny the armed forces their RIGHTFULL dues including OROP and disability pensions....isnt the MoD responsible for the usage of the Mig21s as a basic trainer due to non heeding the IAF's advise...isnt it responsible for the 21 to get a bad name( blame to be shared by HAL for its produces) .Isnt it the org responsible for the increase of life span of not only mig 21 but several naval vessels and army equipment due to its ill performance? MDL and cochin shipyard with their labor and union problems are the slowest in real world

On your statement of "User trials are dispensed with"

This confuses the civilian populous already confused due to DRDO/HAL's misinformation User trials are NEVER dispensed with.. User trials are for trying out new equipment...Not For already cleared equipment ( sounds ridiculous already - whoever is so stupid to try out not only already cleared equipment but also equipment in use effectively )
Thus RE trials for equipment already in used with effectively and pleased with is dispensed!!!i.e waste of time is dispensed with! especially as the IAF has been channelized to become the world's only training and fighter unit devoid and lack of trainers for young pilots due to HAL/DRDO and the MoD.
Kudos to the Air Marshall for calling a spade a spade. Such should be encouraged

Anonymous said...

Before we try to latch on the current debate of HAL maufactured aircraft vs imported aircraft, we have to keep in mind that the Air Force was FORCED to go for the imported variety because of the failure of the HAL to provide a valid replacement of the HPT-32 trainer. The failure of HAL to provide a safe trainer had an extremely adverse effect on the training imparted to the pilots of the Air Force. This is a point which Colonel Ajai should have also highlighted in his writings instead of being so flagrantly biased against the Air Force in this case and generally against the Armed Forces.

However, its good news that HAL has committed Rs 150 crores from its internal funds for the development of the HTT-40. Question, does this money come out of the Air Force's allotment by the Govt of India or is this separate from the defence budget? Colonel Ajai is requested to clarify.

HAL needs to be professionally competent and manufacture aircrafts instead of just surviving by making third-rate machines. Let it compete against other aircraft manufacturers and if its aircraft are good, then it will get its due.

Lastly, Colonel Ajai, the PC-7s are a propeller driven trainer aircraft. Do you really think that even if it given some weapons it can be used in any modern battlefield? After all it was the Vietnam war when propeller driven fighter aircraft was used the last time.

Overall, a sad, ignorant, motivated and completely biased post - becoming a trend now!

parthvader said...

Our system is trying to focus too much on trying to do as many things as possible rather than doing a few things well. This is because its focused on a meaningless 'indigenous' percentage figure of 70%.

In the end, it ends up messing up everything. Take the lower hanging fruit I would say. Shelve the LOH, Trainer programs, IMRH, LCH(useless once Apache comes) etc. and focus like Arjuna on Tejas, Rafale and Dhruv's evolution. Also focus on emerging disruptive tech like programmable matter, airborne directed energy weapons, carbon nanotubes, UCAVs. Stop tail-gating and start leading.

Also, about time ADA, CABS and some sections of ISRO, LRDE, ASL etc. were merged with HAL and HAL itself was at least 40-49% privatised..

Besides, 90% of research and development can be done in our universities like IITs, IISc, BHU and 30-40 other excellent country.

Praveen kumar Singh said...

well! HAL has its problems but if we take a look at the follow up article of diluted requirements... Its a clear case of kickbacks and bribes influencing IAF decisions since here not only the bribe is in dollars but IAF personnel prefer travelling to a foreign destination for a work cum holiday tour rather than have a tiresome journey to an Indian city....

This argument is not baseless since earlier this rotten mentality of IAF was displayed in anti-maoist operations.. where they made the drones useless (by operating them from far city of Hyderabad rather than a nearby place) citing "living conditions" clearly preferring their comfort over national security.....

Anonymous said...

It doesn't make any sense why the air chief is time and again trying to snub HAL. They are developing the trainer on their own now. Its ridiculous that he is so shamelessly flaunting the pilatus trainer at all events. Free marketing for pilatus(free?). You sir have snubbed HAL when they proposed the htt34 and the htt35 in the 80s and 90s respectively. Now you cry there is no basic trainer.

Anonymous said...

HAL needs competition. They claim to do everything that can fly having technical depth or management breadth.
after all what HAl delivered in last 2 decades ? Looks like stagnation set in after original designers/engineers retired.

Anonymous said...

HAL has already developed long-forgotten HTT-35 advanced turboprop trainer, in a full-scale mock-up, which was designed and fabricated in-house by HAL in the late 1980s and rolled out in the early 1990s
within four years a four-year effort.

The objective at that time was to team up with a global avionics supplier (most probably THALES) and co-design the semi-glass tandem cockpits and offer the aircraft for evaluation by the IAF by 1998.

However, after 1994 the HTT-35 vanished, no one knows what happened to this full-scale mock-up, or on why did the MoD or IAF HQ develop a coordinated ‘memory loss’ on the need to series-produce the HTT-35 almost a decade ago!


For it was realised as far back as 1998 that the induction of fourth-generation combat aircraft such as the Su-30MKI, and the impending induction of Rafale medium multi-role combat aircraft (M-MRCA), Tejas Mk2 MRCA and the fifth-generation fighter aircraft (FGFA) would force the IAF sooner than later into undertaking a critical revision of its flying training practices that included primary/basic flying training, advanced flying training, and lead-in fighter training (LIFT).

Despite this, the HTT-35 BTT was scrapped, and instead of calling for the development of the HJT-36 as a swept-wing advanced jet trainer, the IAF in its all-knowing wisdom wrongly decided 14 years ago to have the HJT-36 as an intermediate jet trainer (IJT), a decision it is now regretting and that perhaps explains why the IAF has, since 2008, been maintaining sustained silence over HAL’s inability to develop the HJT-36.

Anonymous said...

HAL is a wholly-owned MoD entity,which cannot undertake any R & D project aimed at producing an indigenous weapon system or sub-system without receiving authorisation from the MoD.

What this means is that HAL’s management has neither the financial nor managerial autonomy to develop even a single product that is not required by any Indian end-user.


Therefore, when HAL took up the task of developing the HTT-35 BTT, it was only after being instructed by the MoD to do so at the IAF’s behest.

For it was a fairly well-known fact since the early 1980s that the HAL-developed piston-engined ab-initio primary HPT-32 ‘Deepak’ was not what the IAF wanted and HAL consequently had been mandated to develop the HTT-34 turboprop trainer with side-by-side seating, and a flying prototype was indeed built.


The IAF then changed its mind and asked HAL via the MoD to develop a tandem-seat BTT (probably after watching the advent of Pilatus PC-7As and PC-9As, and Embraer/ShortsTucanos since the mid-1980s), to which HAL responded with the HTT-35.

What happened next is that sometime in 1995, HAL was instructed by the MoD at the IAF’s behest that this project was not a priority and was told to cease all further R & D activity, probably due to India’s reduced defence spending-levels in the period 1989-1999 (the so-called ‘lost decade’) as a result of the 1990 financial crisis

Anonymous said...

To all the people who comment on IAF topman to be corrupt, and are in favour of denying the rookie pilots a trainer worth be trained upon rather than waiting for eternity for HTT-40 as they are doing for LCA and other aircraft being developed by HAL.

Well very respectfully i must say that such hypocrites are not worth their salt. Obviously it is not their lives which are being lost in the entire ball game. They are just worth electing a rampantly corrupt family into power and do nothing about the utterly shamless PM who elects to keep quite inspite of five daring soldiers loosing their lives in the line of duty.

For if they care so much about corruption, point a finger at ACM and the better deals which brings life to otherwise becoming obsolete IAF inventory, they must first bring some kind of governance into this country. Kudos to ACM for making the guardians of the air feel that IAF is not spineless to put the lives of their men juxtaposing to the disastraous delays by HAL and the magnanimously corrupt family politics ruling India.