Thursday, 31 August 2017

On Friday, Saab to announce tie-up with Adani to build Gripen fighter in India

By Ajai Shukla
Business Standard, 31st Aug 17

The battle lines are becoming clear in the globally watched, multi-billion dollar contest to build 100-200 single-engine fighters in India for the Indian Air Force (IAF).

Business Standard learns that, on Friday, Swedish defence and aerospace major, Saab, will announce a partnership with the Adani Group to manufacture defence equipment in India, including Saab’s new Gripen E single-engine, medium fighter if that is chosen by the IAF.

On June 19, at the Paris Air Show, US defence giant Lockheed Martin had signed an agreement with Tata Advanced Systems Ltd (TASL) to jointly build the F-16 Block 70 in India, if the IAF selects the fighter.

Neither the Lockheed-Tata, nor the forthcoming Saab-Adani combines have any assurance yet that their fighter would be chosen. But both combines are positioning themselves and signalling intent to New Delhi.

Just as Ratan Tata personally attended the signing of the agreement in Paris, Saab’s president and chief executive, Hakan Busckhe, is flying into Delhi from Sweden to make the announcement along with Adani executives.

The competing combines are far ahead of New Delhi, which has not yet initiated procurement by sending vendors a “request for information” (RFI) or “request for proposals” (RFP). So far, the IAF has only sent out a one-page letter to foreign aerospace vendors, asking whether they are interested in building a single-engine fighter in India with an Indian private industry partner.

According to the defence ministry’s “strategic partner” (SP) policy, which will govern this procurement, the ministry is first required to prepare a short list of foreign vendors; and one of private Indian firms that are equipped to build such an aircraft. Then, the chosen companies are required to form partnerships and prepare proposals for evaluation by New Delhi.

While there is near certainty that both Lockheed Martin with its F-16 Block 70, and Saab with its Gripen E, would be selected as foreign vendors, there is less assurance that TASL or the Adani Group would be designated as strategic partners.

After okaying the strategic partnerships, the IAF would then evaluate and choose one of the fighters.

Lockheed Martin has pitched aggressively, stating in a company release that transferring the world’s only F-16 production line from Fort Worth, Texas to India “creates new manufacturing jobs in India, and positions Indian industry at the center of the most extensive fighter aircraft supply ecosystem in the world”.

Saab projects an equal confidence, based on its argument that the Gripen E is the world’s most modern fighter and that Swedish industry would transfer technology far more generously to India than Washington would ever permit Lockheed Martin to.

Defence ministry slashes army flab; 57,000 soldiers to shift to combat roles

Shekatkar Committee claims its reforms would shave Rs 25,000 crore annually from defence budget

By Ajai Shukla
Business Standard, 31st Aug 17

The army currently deploys more soldiers on non-combat administrative and supply chain duties than in the trenches in wartime.

On Wednesday, to increase what the defence ministry terms the army’s “teeth to tail ratio” by putting a larger percentage of soldiers on the frontline, Defence Minister Arun Jaitley ordered 65 reforms to the structure of the military.

Improving the “teeth to tail ratio” involves whittling down administrative and logistic units that support combat operations, and redeploying the manpower thus saved into combat units.

The defence ministry says the 65 reforms must be completed by December 31, 2019, involving “redeployment and restructuring of approximately 57,000 posts of [soldiers] and civilians.”

These reforms are part of 99 measures recommended by the Lieutenant General (Retired) DB Shekatkar Committee, which former defence minister Manohar Parrikar constituted in 2015. The Committee submitted its report to Parrikar on December 21, 2016.

The Committee discovered that the army’s “teeth to tail ratio” was an unsatisfactory 1:1.15. That means every 100 combatants directly fighting the enemy had 115 soldiers supporting them logistically and administratively. The Committee aims to improve the “teeth to tail ratio” to 1:1 or better.

The Committee noted in its report that accepting its recommendations over the next five years would shave Rs 25,000 crore rupees off the annual defence budget.

The defence ministry says it sent the Committee’s recommendations to the military for studying their feasibility and making an implementation plan. Business Standard learns the army recommended the implementation of 80 reforms. Now, in what the ministry terms “The first phase of the reforms”, 65 of those are being implemented.

The cuts announced on Wednesday are to signals units that handle communications; equipment repair echelons; supply and transport units including animal transport (mules); supply echelons for rations, ammunition and equipment, and the closure of military farms and army postal establishments in peace areas.

Enabling such cuts are technological advances in digital communications, improved road infrastructure across the country, the availability of transport vehicles with higher carrying capacities, and the availability through civilian wholesale markets of rations, fuel and equipment in border regions where the army needed to be self-sufficient in earlier times.

The army’s massive manpower – some 38,000 officers and 11.38 lakh soldiers – has been a drain on its budget, leaving insufficient money for equipment modernisation. The pressure to restructure manpower has increased over the last decade with the army adding 80,000 to 90,000 soldiers for two new mountain divisions and a mountain strike corps for the China border.

Now more personnel are needed to establish “new generation warfare” organisations like the proposed “cyber command” and “aerospace command”. With the prime minister making it clear to the top military command in December 2015 that increasing the military’s size was no longer an option, the 57,000 troops saved by the new reforms could be redeployed to these organisations, say military sources.

Senior military officers, speaking anonymously, point out the defence ministry has only picked the low-hanging fruit from the Shekatkar Committee recommendations, bypassing the deeper structural reforms that require political will. There is no move to introduce the recommended tri-service command, which would generate not just operational advantages but also savings by eliminating redundancies in the three services. Nor is there any move towards setting up tri-service “theatre commands” as China’s People’s Liberation Army has recently done. The ministry is silent too on the Committee’s proposal for more tri-service training establishments. 

Shekatkar reforms: what's done, what's not done

Reforms accepted
Reforms not accepted

Optimisation of signals (communications) units, by merging different types
Enhancing defence budget from current <2 2.5="" 3="" font="" gdp="" of="" to="">
Restructuring of equipment repair   workshops
Early appointment of four-star officer as tri-service commander
Restructuring of vehicle, ammunition and equipment depots for ordnance
Setting up tri-service “theatre commands” with units from army, navy and air force
Better structuring of supply and vehicle transport echelons
Setting up Cyber Command for new-generation warfare
Closure of military farms and army postal establishments in peace locations
Tri-service training establishments like Indian National Defence University (INDU)
Enhancing standards for recruitment of clerical staff and drivers
Institution of “roll on plan” for unspent budget to devolve to the subsequent year
Improving efficiency of National Cadet Corps (NCC)

Ministry officials, echoing a familiar refrain, say the deeper reforms have not been implemented “because they require discussions with, and consensus amongst, a larger number of stakeholders.”

Nor is there any move towards the Committee’s recommendation to institute a “roll-on plan” for capital expenditure, which would enable unspent capital allocations from one year to be rolled over to the next year to prevent it from lapsing due to procedural delays in concluding procurement contracts. Year after year, the military surrenders thousands of crores of unspent capital allocations – at the end of 2016-17, the military surrendered just short of Rs 7,000 crore.

Spending on manpower, running and equipment (BE 2017-18)

Share of personnel costs
Share of running costs
Money left for capital equipment

Air Force

Tuesday, 29 August 2017

Buy the Akash. It is ours

Not only would this help the defence industry, but also message that the govt is serious about indigenisation

By Ajai Shukla
Business Standard, 29th Aug 17

Amongst the holiest cows in our cow-loving land is the notion of defence indigenisation — which means designing, developing, and manufacturing our own weapons and defence systems, as major powers all do for strategic and economic reasons. Successive Indian governments, especially the present one, have paid lip service to indigenisation in public and in Parliament. But, to illustrate how much more needs to be done, there is the example of the Akash missile system, which already defends Indian airspace.

The Akash consists of a Rohini radar that detects incoming aircraft at ranges out to 120 km and relays the information to a command post. This categorises and priorities the threats and orders a well-positioned missile launcher to shoot down specified targets. Meanwhile, a “command guidance” radar locks onto the target and guides one or more missiles onto the aircraft. The Akash has already demonstrated it can shoot down enemy aircraft, flying at treetop height, at ranges out to 25 km.

The simple and robust Akash was designed and developed by the Defence Research and Development Organisation (DRDO) under the Integrated Guided Missile Development Programme (IGMDP). The IGMDP was initiated in 1983 under Dr A P J Abdul Kalam when it became apparent that international technology denial regimes left India with no choice but to build its own missile systems by developing sophisticated technologies such as rocket propulsion and inertial navigation. The highly successful project birthed the Prithvi and Agni ballistic missiles that underpin India’s land-based nuclear deterrent; the Nag anti-tank guided missile and the Akash missile. While ballistic missiles are privileged children whose acquisition is guided by strategic considerations, and the Nag is only now coming to fruition, the defence ministry is sorely mistreating the Akash.

Consider the missile production eco-system that the Akash has created. After the DRDO developed the Akash’s foundational technologies, two defence public sector undertakings – Bharat Electronics Ltd (BEL) and Bharat Dynamics Ltd (BDL) – have functioned as “systems integrators” that put the entire system together. Numerous private sector companies, notably Tata Power (Strategic Engineering Division) and Larsen & Toubro, have developed crucial sub-systems like the missile launchers; while 330 smaller private firms feed into the Akash’s production as Tier-2 and Tier-3 vendors. Besides building the Akash systems that are already operationally deployed on the borders, these companies constitute a technology eco-system that continuously upgrade the existing system and will develop the next generation of missiles. This is the first time such a production eco-system has been built for an indigenous missile and nurturing such an eco-system is an obvious national interest.

But production eco-systems are nurtured with production orders. Today, the Akash production chain stands empty as the defence ministry haggles with BEL over the cost of its next order. Consequently, the induction of another eight Akash squadrons is held up by the ministry’s insistence that the Akash must match international prices. There is neither understanding nor acknowledgement of the difficulties that indigenous manufacturers face, nor of the benefits of an indigenous system.

From the start, the air force pooh-poohed the Akash, pressing instead for foreign-built missile systems whose complex electronics could easily be sabotaged with a kill switch that renders it ineffective against certain aircraft. In repeated trials up to 2004, the air force rejected the Akash for specious reasons, even as the missile repeatedly struck its targets. Eventually, in an incident in 2004 that has gone into DRDO folklore, the Akash project director, Dr Prahlada, readied the missile for a final do-or-die attempt to demonstrate its accuracy. A Nishant drone was flown, trailing a target sleeve that the Akash was to engage. But then, just as the missile was readying to fire, the sleeve detached itself from the Nishant and floated to the ground. With the air force evaluation team ready to declare the trial a failure and doom the Akash to oblivion, Dr Prahlada boldly designated the Nishant drone as the target. The Akash missile slammed into the tiny Nishant 20 kilometres away, utterly destroying the ~1.5-crore drone. Dr Prahlada had to field audit objections for years, but the Akash had proved its effectiveness against a target far smaller than a combat aircraft.

Why should the military buy more Akash, even if it costs more than equivalent foreign systems? There are at least five reasons. First, technology is generational and the current Akash will inevitably birth a more capable version. Already, the DRDO is developing a seeker head on a budget of just ~50 crore that will make the Akash more accurate and capable of longer ranges. Second, producing the Akash in India provides employment, a key aim of the Make in India programme. Third, buying Indian creates a multiplier effect at multiple levels of our economy, whereas buying a system from abroad puts the money into another economy altogether. Every company involved in defence production, every employee, is paying direct and indirect taxes into the economy. Fourth, facilitating the development of defence systems in India creates strategic intellectual property; the government needs to subsidise IP creation with orders, as is done by the countries from which India routinely buys. Fifth, Indian defence firms cannot be directly compared with foreign industry because the cost of doing business in India, especially working capital costs, are significantly higher — 14-15 per cent here, compared to 2 per cent abroad. Add to that the 33 per cent corporate tax levied on Indian defence firms and the cost of equivalent Indian products works out at least 30 per cent higher than an identical product built abroad.

That is why the General Financial Regulations mandate that, in government procurement, if a product with 50 per cent value addition in India is up to 20 per cent more costly than an equivalent foreign product, the Indian vendor must be given the contract at the lowest bid price. If the foreign vendor bids ~100 and the Indian vendor quotes between ~100 and ~120, the Indian vendor must get the option to supply at ~100. For defence products, with their strategic dimension, the Indian vendor must be given the option to supply at a rate that is up to 20 per cent higher.

Ordering more Akash systems is essential for the Indian defence industry. This is the first time an entirely Indian designed, developed, and manufactured product is being deployed in numbers. The Akash experience would teach us a great deal about the dynamics of mass production, maintenance and spares support and upgrading it to the next level. And it would constitute a clarion call that the government is serious about indigenisation. 

Monday, 28 August 2017

India and China announce end of Doklam standoff

Big win for India that will enhance its status with South Asian neighbours

By Ajai Shukla
Business Standard, 28th Aug 17

The 71-day military standoff at Doklam, on the tri-junction of the Indian, Chinese and Bhutanese borders, has been defused without armed confrontation and bloodshed.

In a coordinated announcement on Monday, the Indian and Chinese foreign ministries both announced that troops were disengaging at the Doklam bowl, where they have been in eyeball-to-eyeball contact since June 16, when the Indian Army moved hundreds of soldiers and two bulldozers into the disputed area to block road construction by China.

On Monday, New Delhi stated that, after weeks of diplomatic negotiations between the two countries, “expeditious disengagement of border personnel at the face-off site at Doklam has been agreed to and is on-going.”

Meanwhile, Beijing announced that “On the afternoon of August 28, the Indian side has pulled back all the trespassing personnel and equipment to the Indian side of the boundary and the Chinese personnel on the ground has (sic) verified this.”

Indian government sources say the challenge during the negotiations over withdrawal was to maintain Chinese “face”, while obtaining an assurance from Beijing that it would halt road building in the area, an activity that India’s military says compromises its defensive positions.

This issue was intelligently finessed with Beijing announcing: “China will continue to exercise its sovereignty and uphold its territorial integrity in accordance with historical conventions.” No mention was made of China’s right to build a road in Doklam.

Regional watchers have speculated whether the disengagement agreement provided for China to establish diplomatic relations with Bhutan, something that India has discouraged under the terms of a treaty between New Delhi and Thimphu. However, well-informed media sources in Thimphu deny any such quid pro quo.

India has never objected to China patrolling the Doklam bowl, which is disputed between China and Bhutan. A Chinese road, however, is regarded as an unacceptable change in the status quo, which is expressly forbidden by a 2012 agreement between Beijing and New Delhi.

In a marked change of tone from the hostility that had pervaded official Chinese statements and official media reportage since the Doklam faceoff began, Beijing’s foreign ministry spokesperson stated on Monday: “The Chinese government highly values its friendly relationship with India. We hope India can fulfill the historic agreement on the border and safeguard the stability of the border area with China.”

Even as soldiers built up on both sides towards the end of June and a barrage of strident statements emanated from Beijing, the Indian government maintained a discreet silence except for an official press release on June 30, laying down India’s version of events.

The release, entitled “Recent Developments in Doklam Area” stated that India had intervened to block Chinese road building activity after a Royal Bhutan Army patrol had tried to stop the Chinese, who were in violation of two agreements between China and Bhutan. Indicating that India had intervened at Bhutan’s behest, the release stated that Thimphu and New Delhi “have been in continuous contact through the unfolding of these developments.”

New Delhi also justified its intervention in terms of its own national interest, stating: “Such [road] construction would represent a significant change of status quo with serious security implications for India.”

This addressed the weak point in India’s argument, which was to explain why it had intervened in territory that it has no claim over. Since the crisis began, China has put pressure on Bhutan to ask Indian troops to withdraw from the Doklam bowl.

Chin had insisted throughout this crisis that Indian troops were “trespassers” into “undisputed Chinese territory”, and that they must withdraw from Doklam as a pre-condition for resolving the crisis. For most observers of Sino-Indian relations, the mutual withdrawal is a huge win for India that will significantly enhance its regional status and its standing with South Asian neighbours like Bhutan, Nepal, Myanmar, Bangladesh and Sri Lanka.

Another feature of this crisis is Bhutan’s remarkable and consistent demonstration of support to India. Thimphu first confronted Beijing through a demarche on June 20 and then a government statement on June 29, protesting China’s road-building in Doklam and, thus, allowing India to justify its intervention. Bhutan does not value Doklam greatly but, since India believes it controls the approach to the strategic Siliguri corridor, continues to rebuff repeated Chinese offers to settle its borders with Bhutan in exchange for Doklam being ceded to China.

Sunday, 27 August 2017

Jaitley inaugurates light combat helicopter manufacture in HAL

HAL prices the LCH at Rs 231 crore each, less than half the cost of the more capable AH-64E Apache

By Ajai Shukla
Business Standard, 27th Aug 17

On Saturday in Bengaluru, Defence Minister Arun Jaitley underlined the growing capabilities of Hindustan Aeronautics Ltd (HAL) by inaugurating the production of the indigenous design Light Combat Helicopter (LCH), which HAL has designed, developed and will now manufacture.

On November 7, 2016, the defence ministry had cleared a Rs 2,911 procurement of 15 LCHs as a “limited series production” (LSP) order – a little under Rs 200 crore per helicopter. But top HAL sources tell Business Standard the final cost would work out to Rs 231 crore per LCH at 2017-18 prices.

This is less than half the cost of the AH-64E Apache attack helicopters the Indian Air Force (IAF) has bought from Boeing, USA. The Apache is more heavily armed and armoured and has the sophisticated Longbow fire control radar. The LCH does not yet have radar, but HAL intends to develops one before mass production begins.

HAL is building the 15 LSP choppers at its Bengaluru helicopter complex. However, the army has committed to ordering 114 LCHs, and the air force another 65, which could be built at an upcoming helicopter production facility in Tumkur.

HAL has custom-designed the 5.8 tonne LCH to provide fire support to the army at mountainous deployment areas on the northern borders, which can be as high as 6,000 metres (almost 20,000 feet).

At these rarefied altitudes, where the shortage of oxygen prevents troops from carrying heavy weapons into battle, the LCH will provide crucial fire support with its 20 millimetre turret gun, 70 millimetre rockets and, to be incorporated later, a guided missile.

“The LCH has demonstrated capability to land and take off from Siachen Range (sic) with considerable load, fuel and weapons that are beyond any other combat helicopter”, stated HAL on Saturday.

Highlighting the LCH’s versatility, HAL stated: “The helicopter can carry out operational roles under extreme weather conditions at different altitudes from sea level, hot weather desert, cold weather and Himalayan altitudes.”

The superb high-altitude performance of the LCH, like that of its precursor in service, the Dhruv advanced light helicopter (ALH), stems from twin Shakti engines, designed for HAL by French helicopter engine maker Turbomeca (now Safran Helicopter Engines), and built in Bengaluru. While the Shakti’s performance at low altitudes is comparable to other engines of its size, it outperforms them significantly at altitudes above 5,000 feet.

The LCH has a narrow fuselage, in which two pilots sit one-behind-the-other in an armoured cockpit that can protect them from small arms firing. Like the Dhruv ALH, on which many of the LCH’s flying technologies were tested, the new attack helicopter has a hinge-less main rotor, a bearing-less tail rotor, integrated dynamic system, crashworthy landing gear and a smart all-glass cockpit.

The LCH’s weapons and sensors were developed and tested on an armed variant of the Dhruv, called the Rudra. HAL’s chairman, T Suvarna Raju, says this evolutionary approach drastically cut down on the LCH’s development time.

The current order does not include a provision for “performance based logistics” (PBL), which constitute an HAL guarantee that a specified percentage of the fleet is available at all times.

As Business Standard reported on March 30 (In a first, HAL assures 75% availability of Dhruv fleet) HAL signed its first PBL contract for the Dhruv, requiring it to position maintenance teams in up to 40 army aviation bases and two maintenance, repair and overhaul (MRO) hubs in the north and east, from where repair teams could respond to maintenance requests from aviation bases.

Hawk trainer upgrade

Jaitley also inaugurated an HAL-BAE Systems development programme that aims to enhance the Hawk trainer aircraft from an advanced jet trainer (AJT) into a combat-capable platform that “is capable of delivering precise munitions, including air to ground and close combat weapons”, according to HAL.

Unlike most fighter aircraft, including the Tejas, the Hawk cannot fly at supersonic speeds. Yet, there is a need for lower-performance combat aircraft that can fly and manoeuvre in valleys to support army soldiers in an environment where there is no major enemy air threat.

While the IAF has not yet committed to buying the so-called “combatised Hawk”, the presence of Jaitley at the dedication ceremony is significant. 

Saturday, 26 August 2017

Supreme Court takes up petition, will examine new govt rules to control Armed Forces Tribunal

By Ajai Shukla
Business Standard, 26th Aug 17

In an important move towards reforming departmental justice across the board, but especially for the military, the Supreme Court issued the Central Government a show-cause notice on Friday, asking why its recently promulgated rules for the Armed Forces Tribunal (AFT) should not be struck down.

The apex court was responding to a writ petition, filed by Punjab & Haryana High Court lawyer and founding president of the AFT Bar Association, Navdeep Singh, through Supreme Court lawyer Aishwarya Bhati, seeking reforms of the AFT and a check on “excessive tribunalisation”.

The AFT was set up in 2009 under the Armed Forces Tribunal Act, 2007. Soldiers, sailors and airmen are required to petition the AFT for justice, rather than civil courts. The AFT was intended to reduce military related cases in civil courts. Instead, as the Singh-Bhati petition points out, the backlog in defence-related cases has increased from 9,000 to 16,000 after creation of the AFT.

Legal experts have assailed the government’s creation of more and more departmental tribunals and the concentration of powers in their hands, as a ploy to bypass the independent judicial system. “A departmental tribunal takes a large number of cases out of the courts and places them under a quasi-judicial departmental body. Next, the government takes control of the appointment and functioning of the judicial officers who sit on the tribunal, keeping them under the government’s thumb”, explains a prominent legal expert.

The petition says this is evident from the new AFT rules, which were promulgated by the Finance Ministry on Jun 1, based on an enabling provision in the Finance Act, which Parliament passed as a money bill in April. The new rules decrease the tenure of AFT judges from four years to three; do away with the need for consultation with the Chief Justice of India before appointing AFT judges; and tweak the rules for the selection procedure, effectively permitting two secretary-rank officers on the Selection Committee to choose the judges they want.

There were already grave questions over the AFT’s independence, since it functions administratively under the Ministry of Defence (MoD), which is the first respondent in most cases filed by soldiers, sailors and airmen before the AFT.

Further, as Business Standard reported (April 2, 2013, “RTI reveals MoD largesse to Armed Forces Tribunal”) Right to Information requests have highlighted the MoD’s patronage of AFT judges. The MoD admitted spending over Rs 67 lakhs for “official foreign visits” by AFT chairperson and members, and providing judges with unauthorized canteen cards to shop at subsidized military retail outlets. Apparently hoping to influence judgments, the ministry admitted to inviting AFT judges to army units to “sensitise” them about cases before them.

In November 2012, the Punjab & Haryana High Court ordered that the AFT be placed under the Ministry of Law & Justice. The MoD has appealed this verdict in the Supreme Court, but bypassed the process by promulgating new rules this year.

The petition heard today notes that the government had itself termed departmental tribunals a “stopgap arrangement”, and sought a roadmap for reforming tribunals and returning certain jurisdictions back to the regular courts. The petition also questions why the regular judiciary is not being strengthened instead of resorting to excessive tribunalisation. 

Wednesday, 23 August 2017

Indian F-16 line will build at least three Block 70 fighters every month, claims Lockheed Martin

Fort Worth line moving to Greenville for now. But early decision would let India build F-16s for future international customers

Ajai Shukla
Business Standard
August 22, 2017

Lockheed Martin, the world’s biggest defence vendor, which is pitching strongly to sell the Indian Air Force (IAF) its new F-16 Block 70 fighter, told Business Standard on Tuesday that, if India chose its fighter, an Indian production line would churn out three-to-four F-16s every month.

“We want to create the capacity to build three or more aircraft per month; we could do four. It depends upon how many aircraft India needs and when it will buy those”, said Randy Howard, who markets the F-16 globally for Lockheed Martin.

For the IAF, which is making do with just 32-33 fighter squadrons instead of the 42 squadrons it wants to defend two borders with China and Pakistan, inducting 36-48 fighters per year would correct the shortfall quickly.

The Tejas production line in Bengaluru will build just eight fighters this year. It will take another two years to scale up to 16 Tejas annually.

Last year, even before the IAF solicited interest from multiple global aerospace vendors in building single-engine medium fighter aircraft in India, with transfer of technology to an Indian partner, Lockheed Martin announced a partnership with Tata Advanced Systems Ltd (TASL) to manufacture the F-16 in India by shifting its production line from Fort Worth, Texas.

That mammoth, one-mile-long manufacturing line was once regarded as an industrial marvel on which 13,500 workers churned out one new F-16 every day. But after the US Air Force bought its last F-16 in 1999, production tapered off to just 12 fighters per year. Next month, after having built 4,588 F-16 fighters, the Fort Worth line will transition to building the fifth-generation F-35 Lightening II fighter that America and its allies have ordered in the thousands.

But with India undecided about buying the F-16, and uncertainty over the proposed India line, Lockheed Martin is re-establishing F-16 production in Greenville, South Caroline. Countries like Bahrain and Indonesia are evaluating the acquisition of 19 F-16s and Lockheed Martin needs to keep the line alive.

On Tuesday, Howard indicated to Business Standard that, if India decided quickly to buy the F-16 Block 70, the Indian line could begin building fighters not just for the IAF, but also for other global F-16 orders.

Lockheed Martin has aggressively marketed the F-16 in India against its key rival, Saab’s new Gripen E fighter. The Swedish company is believed to be formalizing a partnership with the Adani Group.

There is another dark horse contender amongst Indian companies: Hindustan Aeronautics Ltd (HAL). With HAL no longer establishing a production line for licence producing Rafale fighters in India, the public sector aerospace giant has pitched for building whichever single-engine medium fighter the IAF chooses.

The defence ministry has reserved the production of the single-engine fighter for the private sector under the “strategic partner” policy, which aims to build private defence industry. Even so, it is not inconceivable that the government rules in favour of HAL, given the lack of experience in the private sector.

The “Make in India” programme demands indigenization of over 50 per cent of the production of defence equipment. Lockheed Martin executives claim they are ready to meet that target, having developed over 60 Indian suppliers in the Bengaluru-Hyderabad-Chennai area that will feed into F-16 manufacture.

Both Saab and Lockheed Martin claim they are offering India the better aircraft. Saab points to the brand new technology on its Gripen E fighter, which is still being flight tested, while Lockheed Martin claims it is offering the world’s most battle-tested combat aircraft.

With both aircraft likely to meet the IAF’s performance requirements, the winning bid could be the one that offers the lowest cost and the best industrial proposal.

Monday, 21 August 2017

As Sukhoi-30MKI production nears end, HAL worries about future orders

The Sukhoi-30MKI line at Nashik, which will complete delivery of its last 35 fighters by early 2020

By Ajai Shukla
HAL Bengaluru
Business Standard, 21st Aug 17

Hindustan Aeronautics Ltd’s (HAL’s) most lucrative cash cow, the Sukhoi-30MKI, is running dry. With only 35 Su-30MKI fighters left to deliver to the Indian Air Force (IAF) out of the 222 that HAL has been contracted to build, its Nashik production line, which builds 12 Su-30MKIs per year, would fall idle by March 31, 2020.

In better days, HAL has enjoyed order book backlogs of Rs 150,000 – 200,000 crore ($23.4 – 31.2 billion), with assured orders for Jaguar fighters, Hawk advanced jet trainers, Dhruv advanced light helicopters (ALHs), Tejas light combat aircraft and, most profitably, the Su-30MKI. Today, the company stares at a bleaker order book.

“I have just Rs 61,000 crore ($9.5 billion) of orders, including 35 Su-30MKIs and 73 Dhruv ALHs. That is just three years work, at our current turnover of Rs 20,000 crore ($3.1 billion per year). What lies ahead for HAL’s 20 manufacturing divisions built on 12,000 acres of land, and 30,000 skilled employees? Over the years, the government has invested Rs 50,000 crore ($7.8 billion) in HAL”, says T Suvarna Raju, the company’s chairman and managing director.

This uncertainty is an operational concern for a company that needs to plan its production years in advance, including placing orders for “long lead items” on ancillary suppliers.

While there are prospects in the defence ministry pipeline, few concrete orders are at hand. HAL once expected that the Nashik manufacturing division could, after delivering the last Su-30MKI, be used for building the Indo-Russian Fifth Generation Fighter Aircraft (FGFA). But New Delhi is dragging its feet in concluding a contract with Moscow, even after an okay from a defence ministry expert committee. The FGFA’s future and timelines are uncertain.

To keep the Nashik facility occupied, HAL hopes to overhaul the entire Su-30MKI fleet there. The fighter must be overhauled after completing 1,500 flying hours or 14 years in service, whichever comes first. The IAF calculates that its fleet of 272 Su-30MKIs would, at its peak, require 30 fighters to be overhauled each year.

It was planned that HAL Nashik would overhaul 20 fighters per year, while the IAF’s 11 Base Repair Depot, also located at Nashik, would overhaul the other ten.

“Now we are thinking differently. Rather than have HAL Nashik lying idle – with its 7,000 employees and 4,000 acres of real estate -- we should enhance our capacity and overhaul all 30 Sukhois ourselves”, says Raju.

Overhauling a fighter involves stripping it to its bare bones, checking each system and sub-system, replacing worn-out components, and then reassembling the rejuvenated fighter.

Over each fighter’s total service life of 6,000 flying hours or 30-40 years, it would be overhauled thrice – adding up to 816 overhauls for the 272-strong Su-30MKI fleet. Doing this in India is significantly cheaper than flying each fighter to Russia.

Meanwhile, in Bengaluru, HAL is ramping up the production line for building the Tejas Mark-1 fighter, but has orders in hand for only 20 aircraft. The defence ministry has cleared the purchase of another 83 Tejas Mark 1A, but an actual contract would most likely be years away.

Consequently, HAL is staking a claim to manufacture a “single-engine fighter”, for which the IAF has sent out “requests for information” (RFIs) to global vendors. It is proposed that the selected fighter be built in India by a private Indian firm that the defence ministry nominates as a “strategic partner” for fighter aircraft. Lockheed Martin’s F-16 Block 70 and Saab’s Gripen E are considered frontrunners in this contest.

HAL’s Raju says: “It is hard to understand the logic of giving the ‘single engine fighter’ contract to a private sector ‘strategic partner’, when so much of HAL’s capacity will soon be lying idle.”

Raju points out that the new policy on Strategic Partners (SP) requires the defence ministry to satisfy itself that the capacities of defence public sector undertakings are being adequately utilised before allocating production to a private sector strategic partner.

Both Lockheed Martin and Saab have tied up with private Indian firms to build their fighters in India, if it is chosen by the IAF. In June, Lockheed Martin and Tata Advanced Systems Ltd (TASL) announced a partnership to build the F-16 in India; while Saab has an unannounced agreement with the Adani Group to build the Gripen E. Yet, sources confirm that both foreign vendors would much rather work with HAL, which has decades of experience in building combat aircraft.

In contrast the Adani Group has no experience in building even an aerospace grade component. TASL has recent experience in building aerospace assemblies under licence, but has never assembled an aircraft or designed a significant component or assembly.