One of the first steps that Prime Minister Narendra Modi initiated after coming to power was self-reliance. A few months after his government came to power, he introduced the ‘Make in India’ programme, visibly gave it his personal patronage and elevated it to a populist slogan that found widespread acceptance. Aerospace features in the 25 sectors that the programme encompasses and ‘Make in India’ was installed as the main theme of the 2015 Aero India Air Show. He went further to show his backing to the programme by inaugurating the Air Show personally, something that a Prime Minister had done only once before. However, despite his personal support and push, the programme produced only unremarkable accomplishments albeit insignificant projects were hyped up into major achievements with the aid of a pliant media. Five years after the launch of ‘Make in India’, possibly as a result of the diminishing steam of that programme, Prime Minister Modi introduced Atmanirbhar Bharat Abhiyan. The new slogan was announced in the context of onslaught of COVID-19 and was projected as the panacea for India’s economic problems and a renewed thrust to the economy. Predictably, Atmanirbhar was deployed as the core theme for the 2021 edition of the Aero India Air Show. Since then, Atmanirbhar has overshadowed ‘Make in India’, although the latter is also sighted in print and digital media.
The loud clamour for self-reliance in aerospace is sustained through frequent allusion to it. Prime Minister Modi and the ministers of his government have spoken of making India the global aerospace hub. This article examines the potential of India as a global aerospace industry hub and proffers some prescriptive courses of action that could help India realise that potential.
Perhaps ‘industry hub’ is a misnomer when applied to a whole nation of the size of India as the term connotates a clustering of allied industrial complexes. In India’s case, aerospace facilities are scattered over its geographical extent and the ’clustering’ is abstract and relates to the aggregate of India’s aerospace manufacturing wherewithal. The essence of the dream of making India a global hub for aerospace industry is the capability to produce, in huge quantities, leading edge aerospace products not only for India, but also for export to countries needing them. It would not do to produce large volumes of mediocre quality ware or insignificant merchandise.
Aerospace is a unique industry inasmuch as it is capital intensive, involves long gestation periods of Research and Development (R&D) and caters to a niche market. Defence aerospace in India operates in a monopsonic market, its only customer being the Government of India. This means that there has to be a firm commitment from the government for a new aircraft design to thrive. Moreover, even a firm assurance may not hold out the economy of scale needed for the final price to be competitive globally. Self-evidently, Indian orders must be supplemented by foreign ones contrived through foreign relations initiatives and not dependent on marketing by Indian OEMs. This would render the scale, so fundamental to competitiveness, viable for manufacturing endeavours. Only then could India turn into an aerospace hub with a share of the international market. In the civil aerospace domain as well, similar logic applies as the unit cost of aircraft is enormous.
Let us first examine the potential of the public sector to contribute to India’s dream of becoming an international hub. Hinustan Aeronautics Limited (HAL) was created in 1940 when it was formed as Hindustan Aircraft Limited. It produced the HF 24 Marut combat aircraft but failed to capitalise on the technological learning from that modest beginning. Its production business settled down thereafter to licensed production of foreign aircraft acquired for the Indian military. As a result, today, the Indian Air Force (IAF) has 39 types of aircraft on its inventory from six different nations. HAL’s second aircraft, the Tejas, is still not fully ready for combat after more than four decades of development. Meanwhile, the IAF’s combat aircraft strength has dwindled to 31 against a sanctioned strength of 42. To come up to the authorised figure and taking into account ongoing attrition/obsolescence, the IAF needs about 450 combat aircraft over the next three decades. Currently, that projection includes the 36 Rafale already inducted 114 Multi Role Fighter Aircraft (MRFAs) for which the procurement process is on, 100 Advanced Medium Combat Aircraft (AMCAs) from HAL and around 200 of Tejas variants from HAL. The IAF has 40 Tejas on order and another contract for 83 was signed during the Aero India Air Show 2021.
The Tejas is not yet operational while the AMCA is yet to fly although the IAF has given a green signal to it, possibly under pressure. These two are indigenous combat aircraft hopes, but it is significant to note that the Indian Gas Turbine Research Establishment (GTRE), a public sector enterprise in existence since 1959, has not been able to produce an engine for the Tejas so far. HAL is the only industrial complex large enough to handle the Tejas, AMCA, MRFA and any future orders of the Rafale. It is also a public sector enterprise with a history that is not very laudatory of its actual achievements.
Coming to trainer aircraft, the IAF has had to do away with the option to buy 40 more Hawk and 38 more PC-7 trainers due to financial pressures and the Atmanirbhar fiat and had decided to procure 106 HTT-40 basic trainers developed by HAL. An RFP was issued to HAL during Aero India Air Show 2021 for 70 trainers with an option for 36 more. As an aside, the aircraft will be powered, like the Tejas, by a foreign engine, the Honeywell turbo-prop engine TPE-331-12B. It may be mentioned here that HTT-40 is nowhere near the PC-7 as a trainer.
In the field of helicopters, India and Russia had entered into an inter-governmental agreement in December 2015 to manufacture 200 Kamov-226T Light-Utility Helicopters in India. HAL was to build the helicopters in a brand new facility near Tumkur near Bengaluru. The deal had run into trouble in the technical evaluation stage over the ‘low level of indigenisation’ being offered by Russia and is almost certainly going to be scrapped.
In September 2021, the Cabinet Committee on Security (CCS) cleared a Rs 11,000-crore project of the Defence Research and Development Organisation (DRDO) to develop six new Airborne Early Warning and Control (AEW&C) aircraft for the IAF. HAL will be the production partner. Israel Aerospace Industries (IAI) and HAL recently signed an agreement to convert Boeing 767 passenger aircraft into Multi-Mission Tanker Transports (MMTTs) and cargo versions to be used by the IAF.
As for Unmanned Aerial Vehicles (UAVs), HAL, Aeronautical Development Establishment (ADE), National Aerospace Laboratories (NAL) and Bharat Electronics Limited (BEL) – all DRDO establishments in the public sector have been working on projects, but are yet to produce noteworthy results. Private organisations such as Israel Aerospace Industries (IAI), ideaForge Technology Pvt. Ltd., and Edall Systems are involved in the development or part manufacture of these UAVs in collaboration with DRDO. Academic institutions such as the Indian Institute of Technology (IIT) Bombay and IIT Kanpur are also playing a role in the development of these Indian UAVs. However, indigenous progress has been very slow and the technology levels are low in contrast to the developments worldwide.
Recent news reports that the first ‘Made in India’ Dornier Do-228 has been flown by Air Alliance in the North East. It is not clear whether this was an intentional Make in India hype by HAL or a misperception of the media. HAL has been manufacturing Dornier Do-228 since 1983 under Transfer of Technology from Germany and has produced more than 150 military 19-seater Do-228 aircraft in addition to the civil version currently in the news. The Do-228 aircraft has the magic figure of 19 seats up to which civil regulations permit flying without a flight attendant thus saving on cabin crew salaries, overhead costs and a revenue seat lost to an attendant. An indigenous aircraft SARAS designed by NAL and planned to be produced by HAL will have 14 seats. The IAF has committed to procuring 15 with an option for 45 more later on. As can be seen, the ‘indigenous’ public sector capability in the transport space is limited to the 14-seater SARAS, which is yet to be operationalised.
So, is the public sector geared up to make India an aerospace hub? Considerable amount of money and real estate has gone into the infrastructure already existing for public sector aerospace. HAL has 21 huge complexes strewn over Bengaluru, Hyderabad, Nasik, Koraput, Kanpur, Lucknow, Korwa, Barrackpore and Tumkur (for the Ka-226T project, now under a cloud). Regrettably, the productivity of HAL as a whole is mediocre, as is the case with all our Public Sector Undertakings, as brought out regularly by the Comptroller and Auditor General (CAG) audit reports. HAL’s customers – the IAF and the aviation arms of the Indian Army and the Indian Navy – have never experienced the delight that Boeing or Lockheed Martin afford to the United States military. There is very little possibility of the work culture of HAL changing in an evolutionary manner to the desired efficiency levels. Privatisation could be one solution although it is unlikely that the strong lobby of HAL will permit that to happen easily. There is also the ugly hydra of formidable labour unions with their own dynamics which inhibit efficient work and will definitely resist privatisation. Government patronage has meant that the inefficient public sector has dominated aerospace while the much more productive private sector was largely kept out of that ambit. However, in recent years, with changes in some policies, that is changing.
The Private Sector
Private entities have achieved remarkable technology levels despite inadequate policy and government support. However, they lack the scale that public sector has. In recent years, they have produced important components and sub-components for aerospace – not so much for Indian use as for foreign OEMs.
Leading the private players pack is the Tata Group. The first whole aircraft project in India in the private space is the replacement for IAF’s HS-748 Avro – the C-295, to be produced jointly by Airbus and Tata for which a total of 56 are planned. This would be the first tangible ‘Make in India’ programme in aerospace manufacturing by a private player with Airbus installing manufacturing capabilities, the final assembly line and testing capabilities in India. Also of interest is the report that Tata may manufacture the Grob G180 SPn business jet in India for military applications such as border surveillance and intelligence. It would be the first time a private company could make a full grade military aircraft in India. However, a leading edge combat aircraft remains far beyond the reach of private sector although Tata Advanced Systems, Adani Defence, Reliance Defence, Mahindra Defence and Bharat Forge Limited et al have expressed an interest in doing so.
The Tata Group has been making Apache AH-64 fuselages in Hyderabad for Boeing and produced its first F-16 wing in October last year. Tata is a significant player in the global aerospace and defence market, becoming the premier manufacturing partner for global OEMs, including Boeing, Airbus Group, Sikorsky Aircraft Corporation, Lockheed Martin Aeronautics, Pilatus Aircraft Ltd., Cobham Mission Equipment and RUAG Aviation. Thus, it is in joint ventures with the leading aircraft manufactures of the world. Its facility in Hyderabad has hangars containing aircraft parts from all these big names and the wings and fuselage of the PC-12 aircraft are assembled here. Boeing and Tata have signed a framework agreement to collaborate in aerospace and defence manufacturing and potential integrated systems development opportunities including UASVs. Tata is already on contract to manufacture aero-structures for Boeing’s CH-47 Chinook and AH-64 helicopters. It is already producing UAVs for military use in India and is the lowest bidder for the Indian Navy’s Surface Surveillance Radar (SSR). Tata Advanced Materials Ltd. and TAL Manufacturing Solutions have delivered power and mission equipment cabinets and auxiliary power unit door fairings for the P-8I long-range maritime surveillance aircraft and floor beams for the Boeing 787-9.
The first set of doors covering the engines of Rafale aircraft have been produced by a joint venture between Anil Ambani’s Reliance Defence and Dassault. Reliance Group has obtained 27 industrial licenses for the defence subsidiaries of its company Reliance Infrastructure Ltd. (R-Infra) for making helicopters, aircraft, missiles and UAVs, among others. Through partnerships with leading international OEMs, it is working towards consummating ‘Make in India’ and has set up the Dhirubhai Ambani Aerospace Park spread over 400 acres at Multi-modal International Cargo Hub and Airport at Nagpur (MIHAN) planned with an aim to create a comprehensive eco structure through backward integration for indigenous manufacturing of aerospace components. The company has mooted a similar proposal for a long list of items to be made at an SEZ in Pithampur, Madhya Pradesh also. Other long term plans include creation of a centre of excellence in aerospace structures, engine design and manufacture, fabrication and platform integration, development of UAVs and an aerostat segment to meet military requirements. It has an agreement with Ukraine-based, state-run Antonov Company for cooperation on a 50-80 seater transport aircraft for military, para-military and civil use. The plan is to manufacture the aircraft at MIHAN, but the war in Ukraine has delayed that considerably. It is also setting up a joint venture company with Rafael Advanced Defence Systems Ltd. in India in the highly specialised areas of air-to-air missiles, air defence systems and large aerostats that will oversee projects worth $10 billion in the next ten years. The venture will have 51 percent holding from Reliance Defence and 49 percent by Rafael.
The Mahindra Group has been a player in the aerospace industry since 2008 through its company Mahindra Aerospace which had acquired Gipps Aero and Aerostaff, both Australian entities, in 2010. Mahindra Aerospace is manufacturing three small aircraft (Airvan 8/10 and C-NM5) but more recently, Airbus has shown interest in having the company forge aircraft parts in India for some Airbus aircraft. With manufacturing in Australia and India, it has entered into deals with aerospace majors such as Premium Aerotec and GE Aviation. Mahindra Aerospace has developed a 25,000-square metre facility outside Bengaluru to produce airframe parts and assemblies in India. The facility is delivering aerospace sheet metal parts and assemblies for global aircraft programmes. Mahindra Defence recently signed a ‘statement of intent’ with Airbus Helicopters for forming a joint venture to produce military helicopters in India. Both the companies already have a relationship to produce aircraft parts locally.
Bharat Forge is another company that Airbus is looking at to have some of its aircraft parts forged in India as the next logical step to expanding its supplier base and outsourcing activity in a fast growing market. Bharat Forge already has a similar arrangement with Boeing in which it is supplying titanium flap-track forgings for Boeing 737 NG, a first for any Indian company and will be supplying the same for the 737 MAX and the 777X. The company had also signed a strategic alliance with SAAB in 2014. Bharat Forge is also trying to build small jet engines for helicopters and UAVs, the latter being entirely indigenous.
Another company worthy of mention here is Dynamatic Technologies which partners the Ministry of Defence and HAL as well as major international aerospace companies. Its products include the wing and rear fuselage of the India’s Pilotless Target Aircraft – LAKSHYA, the ailerons and wing flaps for the Intermediate Jet Trainer HJT-36 and major airframe structures for the Sukhoi 30 MKI. It also works closely with European Aeronautic Defence and Space Company (EADS) and Spirit AeroSystems to assemble flap track beams for the Airbus A-320 family on a single source basis. This is the first time that a functional aero-structure of a major commercial jet is being manufactured in the Indian private sector.
L&T has a contract from Airbus India to manage its avionics software development, validation, verification and data analytics. It also has a joint venture with Thales, the French aerospace major. Besides the big players, there is a multitude of Micro, Small and Medium Enterprises (MSMEs) with astonishing capability, but lack of opportunity to contribute to the aerospace industry. The above is not an exhaustive repertoire of private aerospace players but is adequate to show the potential the private sector has to contribute to the hub ambition.
The basic problem is our dependence on the public sector and this is applicable to both, manufacturing activity and R&D. While the public sector’s performance in both areas has been very poor and very slow, the private sector has been wary of investing in the absence of enduring and incentivising policies. A big private player would take a decade or more to catch up with HAL; but after that, it will leave HAL far behind unless HAL also improves its productivity.
We can become competitive only if we invest in R&D. We need to increase it to at least two percent of GDP for India to innovate in aerospace to the extent that it approaches the leading edge of technology. It might be a good idea to include this as an expenditure head of R&D in annual budgets to ensure it is used accordingly. DRDO currently operates 51 laboratories and it is time to start privatising some of them so that their efficiency and productivity can be brought to acceptable levels and budgeted R&D funds utilised maximally.
Despite HAL’s long experience in aerospace manufacturing, its technology base is mediocre as most production has been under license. Thus, even if the offset policy brings in Transfer of Technology there are limitations to what and how fast it can be absorbed. At the higher end of technology it would, therefore, be a good idea to involve private players already engaged in aerospace manufacture as their absorption will be better than that of HAL. This can be done through joint ventures with the foreign OEM contracted with. The MRFA quest offers an opportunity to work towards attaining new technologies. All the MRFA contenders are vociferous about ‘Make in India’ content if their aircraft is selected. Lockheed Martin says the F-21, if selected, will be produced in conjunction with Tata Group in India. In fact, the company has offered that the F-21 will not be sold to any other country and has also offered to help in the AMCA and LCA Mk 2 projects if the F-21 is selected. Likewise, Boeing promises to set up manufacturing facilities in India if the F/A 18 is selected as the MRFA. Saab has a matching offer of building the 96 aircraft out of 114 that are required to be built from scratch in India.
The significant issue is what will be the tenor and texture of the Transfer of Technology that will come India’s way from the Indian production of the MRFA selected. While India would like to further its ‘Make in India’ and ‘Atma Nirbhar’ agendas by acquiring technologies to start developing and producing own designs, foreign OEMs would zealously guard their intellectual property not only because they have invested considerable time and money into it, but also to foreclose the possibility of India becoming a competitor in the near future. The technology transfer aspect should, nay must, be built into the selection process for the MRFA.
Moreover, if the technology being transferred is to be assimilated, it should be the private players who ought to get the benefit as they are more likely to put it to good use. It is time for the PMO to involve itself in the innards of our aerospace industry so that not only are the loud refrains about ‘Make in India’, ‘Atmanirbhar’ and ‘global aerospace hub’ consummated, but that India also achieves strategic autonomy in the aerospace sector.