IAF Rafale News and Discussions - 26 May 2015

[ramana]

Philip, Its AM M^2. A well known proponent of imports!!!!

[Philip]

But facts are facts aren't they? The proof of the pudding is in the manufacturing. I think that the GOI is really shining its torch into every dark corner of the DPSU sector to improve performance.Why would the PM have wanted a weekly report from the DPSUs? They've agreed to a monthly report,something that never happened earlier under Cong/UPA regimes.

I don't think that this report is a free ride for imports.It goes against the "make in india" mantra.If the report is true,then the pvt. sector has to take up the slack.From the wording about HAL,etc. enjoying a "monopoly",I think that this report will tilt future defence orders into the (favoured) pvt sector giants!

[deejay]

AM^2 now works for Reliance Anil Ambani group, doesn't he?

[Karan M]

Lol what business is it of AM how HAL makes money off of the parked money? Thats common sense based on how MOD structured the allication and as if IAF doesnt do something similar for its furren suppliers? Would he rather HAL overcharged its customers a premium for value addition even on licensed products? If not where would it get money for core R&D? M2s report is the usual slanted crap one has come to expect. If his point is that HAL should change its entire cost allocation and funding model then let him ask MOD to finance the capex and RD heads separately. And that rubbish about HAL shouldnt do this or that? IAI has been scouting real estate in India. LM was in energy. If GOI is short on funding Its best HAL look for best asset utilization. It needs funding to even improve its operations and capex to deliver mire per year. In the meantime he is cribbing about HAL not making money from MRO wherein the current chief is openly asking IAF to commit to PBL contracts with fixed financial agreements but IAF is demurring. Of course M2 was busy trying to run down the LCA because some raw marterial was imported and of course Rafale was the answer which would be shuddh desi. One can only wonder at gents who want to fix how everything should run in other folks houses but stay completely silent on how an IAF which could not afford enough spares for existing fleet should opt for fancy toys from abroad which would nearly max out the budget for a decade! Minor issue onlee...

[Kakkaji]

squadron numbers are a total red herring
that number was devised in the days of MiG21FL's and Su7's and has persisted ever since.
1 Su30 == 12 MiG21's or maybe even more

the adversary's aircraft are also 12 times more potent than what they were then. So the squadron numbers csannot really come down.

[Cain Marko]

@ Philip.

Actually the MiG-35 would indeed be an excellent buy IF (and this is a BIG if) the russians and HAL can get their support system in order). The 35 has a lot more potential unlike the teens, which are now fatter than ever before and will suffer in terms of performance. The solah has a powerful engine but internal fuel continues to be the same as the original. The 18 can get an engine upgrade but never was an air superiority bird to begin with. And to upgrade these, it will cost a terrible fortune that only sheikdoms could afford.

The fulcrum otoh, gained weight only marginally while improving thrust by a good 15%, bettering maneuverability via possible TVC options, and all this while increasing internal fuel by a solid 40%. A MIG-35 purchase with entire production line being transferred to India - upgraded suitably with Israeli systems that will match the LCA (2052, Derby, Dash etc.) could make a jingo drool. A2A, this would be a menace and very effective A2G too!

But this is all academic, and would take too long. IAF lost interest in the fulcrum ages ago, hence the MKI to begin with. The prospect of getting a couple of sqds of IAF std. SMTs @ dirt cheap prices though should be examined. These could truly come in handy to tide the present crisis over.

[Philip]

The IAF have been asking for spares like the other 2 services for donkey's years.Read the 10 step procedure that babudom have created (IT Sandeep Unnithan) before any acquisition gets passed.It is only after that nightmarish process is completed ,which takes at least a year,more usually,,that OEMs are informed and they begin to manufacture spares.OEMs do nto have what the armed forces might need ready on the shelf for dispatch!

The Q here is what are the DPSUs delivering in real terms? That's why the PM himself has demanded a monthly report from them. The DPSU holiday is over and pvt. industry is now going to force the pace.Inevitable if you don't perform,,,you perish.

If Egypt go through with their wish for MIG-35s ,then perhaps the IAF will take another look when the paisa pinches. I don't understand this exceptionally top heavy fleet of MKIs which might top 300+,each with two pilots and their families to support as civvies,when the SU-35 equiv has only one pilot. However,a second production line must be set up for the LCA,preferably in the pvt. sector to give HAL some competition. That way we will be asuured of at least 20 LCAs (one sqd) arriving every year,which if prod is ramped up in each line,30+,giving room for export too.

PS:The way to go,joint exports.Why can't we reverse this device for the LCA too?!
http://in.rbth.com/economics/defence/20 ... lly_563353

Russia, India to sell jointly made Ka-226Ts internationally

29 January 2016 Sputnik The joint agreement reads that the line will produce no less than 200 choppers.
•India ready for joint production of 200 Ka-226 helicopters with Russia
ka-226t, indo-russian cooperation, helicopters Ka-226T. Source: Russian helicopters

Moscow and New Delhi will offer Ka-226T light utility multirole helicopters produced in India, within the framework of a joint venture, for sale on the international markets, the head of the International Cooperation Department of Russian state technology corporation Rostec said Friday.

On Thursday, Russian Helicopters, which is part of the Rostec umbrella organization, reported that Russia and India had commenced a joint project to produce about 200 Ka-226T helicopters.

"The joint agreement reads that the line will produce no less than 200 choppers. This means that 200 is a confirmed government order. We will definitely be looking at other civilian orders and international markets as well," Viktor Kladov said as quoted by India's The Economic Times newspaper.

Kladov added that the helicopters could be used for a wide range of roles, including rescue missions.

Introduced in 2002, the Ka-226 series of helicopters are designed by the Kamov Design Bureau, part of the Russian Helicopters company. The Ka-226T model is fitted with updated navigation and automatic control equipment, as well as an interchangeable mission pod, which allows for flexible equipment configurations.

[rohitvats]

<SNIP> Potential explanation to IAF's numerical versus qualitative requirements - when one takes to the skies, common sense is left on the ground. <SNIP>

And what is possible explanation of your idiotic comment? Slipped in the bathroom and banged your head against the wall? Or being stupid is the default setting?

[Gyan]

US airpower is divided over USAF, Navy, Army, Coast Guard and National Guard apart from other specialized services like CIA, NSA etc. One has to see the total combat air power of USA.


https://en.m.wikipedia.org/wiki/List_of ... y_aircraft

USA would have around 5000 fixed wing combat aircraft, bombers and heavy UCAVs. Which is equivalent to around 250 combat aircraft squadrons vis-a-vis India's 35-40 squadrons.

[Aditya_V]

^^ USAF alone has ~80 fighter squadrons , combine that with marines and navy the total goes to 120..

You forgot the US Air National Guard, they will have anther 50 squadrons atleast.

[Aditya_V]

Crisis in aerospace in India,See how the DOSU's have been bulsh*tting us about the source of their profits.They collect huge advances from the GOI ,bank it and show the interest as profit! Their order books are so full ,enough for 10-15 yrs. and they deliver b*gger all! Full details in the DPSU td.

Defence PSUs: profiting on advances
http://www.thehindu.com/news/national/d ... yndication

Just one xcpt. from the official report by AM Maheswaran.How is HAL going to manufacture the Rafale from this revelation? No wonder dassault was so skeptical all along.

“HAL is an engineering company in the aerospace sector. It should, by and large, make profits from manufacturing and sale of aeronautical products and allied services in MRO … HAL has very little incentive to create profits through quantity, quality and innovation,” the report says.

How it makes profit is an eye-opener. The HAL receives advance from the military, almost three times its annual turnover. In 2010-11, the financial turnover was a bit over Rs. 13,000 crore, but the order book was Rs. 68,265 crore, against which HAL took advance of Rs. 35,146 crore from its customers. On that advance, it earned an interest income of over Rs. 2,200 crore, and booked a profit after tax of Rs. 2,114 crore. That year, HAL paid the government, its majority shareholder, a dividend of Rs. 423.12 crore.

“HAL is not a financial institution that makes money from money; it is meant to be an aeronautics engineering company,” the Matheswaran report points out.

The above article is pure BS, HAL would be receiving stage by stage advances, this not vegetables that HAL will need to be paid only when each squadron is delivered to the airforce. Advance here means money paid before full aircraft delivery, by that time HAL would have incurred all its expenses. This is true of Locked Martin, Boeing, Dassualt, Mig, Sukhoi etc. Many times their deposits would be tied to Bank guarantees etc. 2114 crore PAT will mean 3300 crore PBT.



If I ever worked as a Journalist and wrote such article with the mind of a 7 year old. I would Hang myself.

[sudeepj]

^^ USAF alone has ~80 fighter squadrons , combine that with marines and navy the total goes to 120..

You forgot the US Air National Guard, they will have anther 50 squadrons atleast.

Point is, post cold war fighters are not like ford mustangs rolling off assembly lines but are more like hand made Ferraris. There is no way India can afford the same number of ferraris as the ford mustangs we could in an earlier era. Unless of course, we can learn how to make our own maruti suzukis, which we can probably afford a lot more of.

[Viv S]

You forgot the US Air National Guard, they will have anther 50 squadrons atleast.

Exactly.



That's a total of 1,655 fighter jets. About 90 squadrons @ 18 aircraft/squadron. Plus another 15 A-10 squadrons. All F-16s & F-15C/Ds to be replaced one-for-one by the F-35A (1,750 units planned).

Numbers are still very important.

[sudeepj]

But they make their own fighters, and have a ~16.7 Trillion dollar GDP compared to 2.x Trillion dollars for India. Exactly where do we get the money to import that many aircraft? 45 sqn airforce is a fantasy that I dont think Ill ever see in my lifetime.

[Viv S]

The above article is pure BS, HAL would be receiving stage by stage advances, this not vegetables that HAL will need to be paid only when each squadron is delivered to the airforce. Advance here means money paid before full aircraft delivery, by that time HAL would have incurred all its expenses. This is true of Locked Martin, Boeing, Dassualt, Mig, Sukhoi etc. Many times their deposits would be tied to Bank guarantees etc. 2114 crore PAT will mean 3300 crore PBT.

Actually the advance retained by HAL is still quite steep. Any non-govt OEM will be paid about 15% upfront, with rest of the payments made on an annual basis as per delivery.

Point to note here is that HAL has only one main customer and only one shareholder and they are the same entity i.e. the Ministry of Defence. So, the profit it generates and the capital it retains is a meaningless statistic to everyone except for the accountants.

Almost meaningless. If and when, the MoD decides that HAL must go public, that long record of high profitability will ensure that the govt extracts a good bit of capital from the exercise.

HAL has other issues, primarily stemming from the fact that it runs a near monopoly with a captive customer, but the scale of its profits are not among them.

[Hitesh]

They are keeping the F-15Es. Too much value in them for them to be thrown away. They will cannibalize the rest of f-15s for spares to keep the f-15s flying. There will only be 1,500 because the first 250 jsf produced will be of limited utility because pentagon decided to buy those planes even though Lockheed has not finished working out the irons of the f35. Those planes will either become testbeds or trainers with limited combat capability. Count off 300 as spares to be carefully mothballed and only taken out to replace fleet strength due to training and combat losses. So that really leaves about 1200 jsf planes available for usaf.

[Viv S]

But they make their own fighters, and have a ~16.7 Trillion dollar GDP compared to 2.x Trillion dollars for India. Exactly where do we get the money to import that many aircraft? 45 sqn airforce is a fantasy that I dont think Ill ever see in my lifetime.

Why so pessimistic? Of course qualitatively, we'll still fall well short of the larger Western air forces, for the foreseeable future, but 45 squadrons is certainly doable.

2025

Su-30MKI - 15 squadrons (+ 5 follow-on)
Mirage 2000I - 3 squadrons
MiG-29UPG - 3 squadrons
Jaguar - 6 squadrons
Tejas Mk1 - 6 squadrons
Tejas Mk2 - 3 squadrons

MMRCA - 2 squadrons
PAK FA - 2 squadrons

Total - 45 squadrons

An admittedly rosy assessment, but hardly impossible. Getting the Tejas production from 16/yr to 24/yr will be crucial.

[Viv S]

They are keeping the F-15Es. Too much value in them for them to be thrown away. They will cannibalize the rest of f-15s for spares to keep the f-15s flying. There will only be 1,500 because the first 250 jsf produced will be of limited utility because pentagon decided to buy those planes even though Lockheed has not finished working out the irons of the f35. Those planes will either become testbeds or trainers with limited combat capability. Count off 300 as spares to be carefully mothballed and only taken out to replace fleet strength due to training and combat losses. So that really leaves about 1200 jsf planes available for usaf.

216 F-15E + 186 F-22 + 1,759 F-35A ≈ 2,100 fighter jets. Which is slightly over the number they're flying today. Even with steep cutbacks in fresh inductions, they'll still manage to retain at least 80% of their current numbers.

(All F-35s will be retrofitted to fully combat capable Blk 3F standards by 2021. No testbed/trainers aside from the existing developmental fleet.)

[rohitvats]

The above article is pure BS, HAL would be receiving stage by stage advances, this not vegetables that HAL will need to be paid only when each squadron is delivered to the airforce. Advance here means money paid before full aircraft delivery, by that time HAL would have incurred all its expenses. This is true of Locked Martin, Boeing, Dassualt, Mig, Sukhoi etc. Many times their deposits would be tied to Bank guarantees etc. 2114 crore PAT will mean 3300 crore PBT. If I ever worked as a Journalist and wrote such article with the mind of a 7 year old. I would Hang myself.

The pertinent question is what percentage of order value has to be paid in advance by Services and why. And if the advance collected is correlated to the payout to vendors and sub-vendors.

The numbers given for 2010-11 on order value (INR 68,265 crore) and advance (Rs 35,146 crore) show that advances were equivalent to 51% of the order value. And it earned a 6% interest on this advance amounting to 2,200 crore! Accepted that these are year-end numbers and there is bound to be a throttle on cash-outflow to jack-up the numbers. But it is still very high. That advance amount was sitting with HAL doing nothing but earning interest.

Having to pay-up a large percentage as advance means a Service cannot place order for other items.

[JayS]

^^ Are those numbers same as what services pay to foreign OEMs?? or higher??
Another question is, in case services do not have to pay the advances, what would they do with the money? Return to the MoF, right?? Services anyway underspend by thousands of crores which are returned to Govt. Unless the services have better plan of spending their pocket-money, whether the money was returned to GoI by the services or by DPSU, how does it matter??

http://economictimes.indiatimes.com/new ... 842129.cms

All in all, GoI money remains with GoI money. I am not sure if Services are feeling the pinch of payment of advances. I haven't seen any such claim so far. With large amount of unspent money every year, services should not have much to complain. I don't know but I feel its blown out of proportion. There are more important things to be considered such as improving procurement processes, spending on RnD, improvement in production quality, inefficiency etc both for the services and the DPSUs.

[Aditya_V]

The above article is pure BS, HAL would be receiving stage by stage advances, this not vegetables that HAL will need to be paid only when each squadron is delivered to the airforce. Advance here means money paid before full aircraft delivery, by that time HAL would have incurred all its expenses. This is true of Locked Martin, Boeing, Dassualt, Mig, Sukhoi etc. Many times their deposits would be tied to Bank guarantees etc. 2114 crore PAT will mean 3300 crore PBT. If I ever worked as a Journalist and wrote such article with the mind of a 7 year old. I would Hang myself.

The pertinent question is what percentage of order value has to be paid in advance by Services and why. And if the advance collected is correlated to the payout to vendors and sub-vendors.

The numbers given for 2010-11 on order value (INR 68,265 crore) and advance (Rs 35,146 crore) show that advances were equivalent to 51% of the order value. And it earned a 6% interest on this advance amounting to 2,200 crore! Accepted that these are year-end numbers and there is bound to be a throttle on cash-outflow to jack-up the numbers. But it is still very high. That advance amount was sitting with HAL doing nothing but earning interest.

Having to pay-up a large percentage as advance means a Service cannot place order for other items.

Please see R&D thread here where I have rebutted why the article is soo poorly written and the author and newspaper should be aashamed of itself., Advance here 35146 crore does not mean sitting in Bank account, even Lockheed earns 300 mil Interest a year. for eg LCA, amount paid will be advance but HAL would have spent on engines to GE 404 engines etc. It could also mean that the Order Book 68,265 crore fixed by MOD could have a very poor margin for HAL.

To compare HAL profitabilty with efficiency is assuming that HAL is commercial entity when much of its work, hiring etc is controlled MOD Govt policies is ridiculous. And why omit a continuous comparision why a few years with gaps here and there?

[rohitvats]

^^ Are those numbers same as what services pay to foreign OEMs?? or higher??

Why should these numbers be bench-marked against foreign OEM? Doesn't 'H' in HAL stand for Hindustan? And if HAL has the right to behave as any other OEM out there and keeping full business interest in mind, then why should not IAF deal with it like any other commercial entity? A deal like IJT with a foreign vendor would've been shelved long ago. But it persists and IAF cannot import a substitute.

Question is - how can you behave as a commercial entity as well as use the 'national' slogan at the same time while making pitch for new projects/products?

Another question is, in case services do not have to pay the advances, what would they do with the money? Return to the MoF, right?? Services anyway underspend by thousands of crores which are returned to Govt. Unless the services have better plan of spending their pocket-money, whether the money was returned to GoI by the services or by DPSU, how does it matter??

The problem was not being able to spend has more to do with MOD not taking decisions on time. The fact that budget gets allotted in the name of Services does not automatically mean that they've the discretion to spend it as they deem fit. And MOD plays its own game. General VK Singh talks about how the bureaucracy DID NOT appoint a new person for seven months to a post which looks after acquisitions for the IA. Reason: In his first year, IA had managed to put forth proposals to spend the entire amount!

All in all, GoI money remains with GoI money. I am not sure if Services are feeling the pinch of payment of advances. I haven't seen any such claim so far. With large amount of unspent money every year, services should not have much to complain. I don't know but I feel its blown out of proportion. There are more important things to be considered such as improving procurement processes, spending on RnD, improvement in production quality, inefficiency etc both for the services and the DPSUs.

For change, please look at the problem from Services perspective.

Service X has INR 100 as budget. It projects requirement for Product Y which will cost INR 100 over 5 years.

Situation A: DPSU asks for 50% advance and Service is left with only INR 50 for other purchases (either downright or payment of a tranche)

Situation B: It pays 30% advance and has INR 20 more to spend on other stuff.

So, while Services need to buck-up and smoothen their processes, this advance thing and DPSU paying 'dividend' back to GOI exacerbates the matters.

[rohitvats]

Please see R&D thread here where I have rebutted why the article is soo poorly written and the author and newspaper should be aashamed of itself., Advance here 35146 crore does not mean sitting in Bank account, even Lockheed earns 300 mil Interest a year. for eg LCA, amount paid will be advance but HAL would have spent on engines to GE 404 engines etc. It could also mean that the Order Book 68,265 crore fixed by MOD could have a very poor margin for HAL.

To compare HAL profitabilty with efficiency is assuming that HAL is commercial entity when much of its work, hiring etc is controlled MOD Govt policies is ridiculous. And why omit a continuous comparison why a few years with gaps here and there?

The crux of the argument is whether advance taken is correlated to the amount required to be paid to the vendors.

I can understand that any firm will maintain a delta between advance taken and that paid to the vendors for a simple reason that I need to maintain a healthy working capital and some reserves. But is HAL going the RE Sector way where under the construction linked payment plan (CLP), a much larger percentage of money is taken from consumer than corresponding work undertaken.

Sure, HAL will have to pay GE for the engines and other vendors. But question is when? And if I've to pay X to GE in say 2 or 3 tranches, am I charging X from IAF at one go or am I mirroring the payout to GE?

And that INR 35 thousand worth of advance was sitting on HAL's book as of that financial year. I can understand CFO's being eager to ensure their ideal funds earn some money but INR 2,200 worth of interest is humongous. Especially, If I take your argument about this money being transient in nature and most of it flowing out to vendors. Also, I don't think the comparison to LM is valid. I'm assuming the ratio of money flowing into LM versus vendors is higher as compared to HAL.

And variation in advance numbers will depend on when the contracts are awarded. It would be interesting to check where

[deejay]

Actually not to debate if or why or how HAL should handle advance but the point Nilesh makes about Services not being able to spend their budgets is something which I though should be obvious on these forums.

Did we track on some other thread how batteries for Naval submarines were not bought on time leading to a fatal accident later? This thread is the Rafale thread. How many years since the IAF mist have started budgeting for the Rafale and does the IAF know for sure or control the date of deal finalisation and advance payments? Was the Rafale deal budgeted for in 2012-13, 13-14, 14-15 and now 15-16? What if the deal is not signed by March? Should the IAF return the money and re budget it for 16-17?

Is it necessary that to defend the military, I must fault the PSU or to defend the PSU, the military must be blamed - somehow. These are large organisations, which will have sweet and sour spots all along. Each has to work on getting better individually and not rest by faulting the other. HAL will not become A+ if it proves to the world that IAF is C-. HAL can still be C- and that HAL must improve to become A+ at some point of time. The same is true for IAF.

Actually, MOD is the agency which would be playing a role both ways - budgeting for IAF and paying HAL. My question is why do such reports do not bother pointing out the fact that MOD as the nodal agency here could have played a more economically prudent role (assuming there is one)?

--- OK enough ranting but this is an endless game of blame the other guy.

[JayS]

Why should these numbers be bench-marked against foreign OEM? Doesn't 'H' in HAL stand for Hindustan? And if HAL has the right to behave as any other OEM out there and keeping full business interest in mind, then why should not IAF deal with it like any other commercial entity? A deal like IJT with a foreign vendor would've been shelved long ago. But it persists and IAF cannot import a substitute.

Question is - how can you behave as a commercial entity as well as use the 'national' slogan at the same time while making pitch for new projects/products??

This is not about desi vs videsi. HAL has to live in the same world of procurement/manufacturing/delivery processes as other OEMs. I only want to know whether HAL demanding higher advances that is a typical practice in defence sector. I highly doubt HAL demanded high advances just so they will be able to put it in banks and earn interests on it. And that the services guys were so gullible that they couldn't understand this simple trap. I have participated in at least one PNC with services' guys and I don't have to tell you this that they are quite competent in negotiations. HAL also has to pay advances to vendors both desi-videsi upfront. If the rate is more or less uniform in the industry then there is no point in singling out HAL.

The problem was not being able to spend has more to do with MOD not taking decisions on time. The fact that budget gets allotted in the name of Services does not automatically mean that they've the discretion to spend it as they deem fit. And MOD plays its own game. General VK Singh talks about how the bureaucracy DID NOT appoint a new person for seven months to a post which looks after acquisitions for the IA. Reason: In his first year, IA had managed to put forth proposals to spend the entire amount!

HAL also has to go through same red-tapism. What if they do not get required advances in time, and have to wait for nod from MoD/MoF for paying out vendors or for capex?? This would only delay the programs.

For change, please look at the problem from Services perspective.

Service X has INR 100 as budget. It projects requirement for Product Y which will cost INR 100 over 5 years.

Situation A: DPSU asks for 50% advance and Service is left with only INR 50 for other purchases (either downright or payment of a tranche)

Situation B: It pays 30% advance and has INR 20 more to spend on other stuff.

So, while Services need to buck-up and smoothen their processes, this advance thing and DPSU paying 'dividend' back to GOI exacerbates the matters.

This is all OK. But what is the guarantee that the services will be able to spend the extra buck in case they have it?? If he available money for existing procurements is not being spent properly, how much weight above argument holds?? In reality, is there any impact of this advance payment to HAL on the procurement of the Services to date?? Lots of theory on both side.

My point is without going into details such as how and when HAL needs to spend the money, how much money was seating idle for how much time, what are the reasons there are delays in planned expenditures, if there are any, how MoD has planned for the expenditure in given financial year etc, its not going to be a fruitful discussion. Right now its more like scoring brownie points rather than constructive criticism on the part of the reporter.

@ Deejay saar. I only wanted to point out that despite giving large advances, the Services still have enough money to spend on other things and there should not be much effect on their procurement as such. Agreed that MoD is to be blamed for the mess and not the Services. But I fail to see how DPSUs are also responsible for this.

But we are going OT in this thread. So no more on this from my side here.

[Sid]

It's astonishing to see reaction to this article, given its reported only in one paper and made on "classified" material, headed by a person who was once recommend to head HAL, which incidentally no one else has access to!!

Or atleast that's what was preached by folks on other thread. Guilty until proven innocent?

[Philip]

Part 2:
February 5, 2016
HAL’s import, assemble, supply ‘model’
http://www.thehindu.com/news/national/h ... 194894.ece

The aerospace giant has failed to create a robust supply network of domestic firms’.

The Ravindra Gupta Task Force Report on Defence Modernisation and Self Reliance submitted its report in September 2012, officially recording that the Hindustan Aeronautics Limited, India’s aerospace giant, has been importing most of its raw material from abroad, assembling them and supplying finished products to the Indian military. And that it has failed to create a robust supply network of domestic companies and R&D capabilities.

Of the total raw material consumption of HAL, the import component has been going up over the years. Between 2000-01 and 2010-11, it was always above 77.3 per cent. And in 2009-10 and 2010-11 it went up further to 92.6 and 95.4 per cent respectively.

Over the last decade, as HAL grew exponentially, its total raw material consumption was worth Rs. 12,280 crore in 2010-11. The indigenous component was just Rs. 565 crore, which was just 4.6 per cent of the total consumption as opposed to 15.8 per cent in 2000-01, the Task Force Report pointed out.

How did HAL react to the Task Force concerns? Air Marshal Matheswaran’s report points out that the annual reports of HAL for 2011-12 and 2012-13 omit the details of imports after the Task Force report. The report pointed out that the figures available from the Task Force and other sources show that “These figures reiterate the window-dressing that ‘indigenisation’ actually has become in many DPSUs/PSUs.”

“HAL has been an assembler, in essence, of SKD and CKD [semi knock down and completely knock down] kits for engines and aircraft for six decades. Much of this is dependent on component, sub component, engine and airframe assemblies manufactured under licence. Hence it could actually be thought of as a ‘licence raj’,” the Matheswaran report says. It points out that the import content of HAL for materials and spares amounts to a major portion of its turnover itself.

Little indigenisation

“HAL’s model ... has resulted in very little indigenisation, less than expected ancillary job and revenue generation within India, besides inadequate vendor development. Along with scanty vendor development in terms of true value and criticality of product to the aircraft itself, there is negligible impact on skill development within the DPSU/PSU,” the report points out.

Examining the 2010-11 performance of HAL, the report points out that the company’s turnover was Rs. 13,115.5 crore and the total consumption was Rs. 12,280.2 crore. Of the total consumption “Rs. 11,715.1 crore [i.e. 95.4 per cent] went abroad towards imports and can be said to be towards profits that foreign OEMs, vendors and MRO services would make there from,” the report says.

“Although 10 Research and Development centres have been in existence for a long period of time at various divisions of HAL, their contribution towards self reliance is negligible,” the report says. Most of these centres spend most of their time resolving basic transfer of technology implementation issues. Resultantly, HAL has come to be fully dependent on imported items.

Now those dissenters may please dispute the facts as these are official reports,not a journo expose.A few years ago the Indian Express carried out a series of reports on the DRDO,what was wrong with the edifice.That entity has seen much reform after the new govt. has come into force.If the facts are wrong,let HAL contest them.

HAL execs must be salivating at sealing the Rafale deal where they will "manufacture" for astronomical cost,"made in India" Rafales according to the above reported model!

[Karan M]

LOL those Indian Express reports were nothing but puerile hit jobs, much the same as coup reports run by the very same coup-ta, when DRDO spoke up against MMRCA's lack of TOT and offsets. That they are being quoted as factual, just shows the depth to which some folks go to disparage anything and everything Indian.

As regards HAL's this model, that model, the blame fairly and squarely lies with MOD & IAF etc second, third whatsoever. HAL proposed way back in the early 80's that it invest in R&D. That was shot down by MOD. In the 80's and 1990's, HAL became an assembly shop and license manufacturer thanks to GOI policies. As late as 2000', HAL finally got fiscal leeway to invest in R&D etc. By this time HAL was so addicted to the assembly model it itself was not committed to the LCA and other programs. If the MOD et al don't decide that indigenization is a primary focus and merely focus as procurement agencies, and ask funds to be returned as dividends etc, then its meaningless to blame their own folks for doing as per MOD policy.

[Philip]

The remarks by both former DM AKA and the currenr DM,PM on DRDO/defence matters bear out the DRDO expose by the IE.
However,the period of same. the neo- licence raj,coincides with the period of Cong/UPA rule,the party that invented the licence raj policies.What we are seeing today is greater openness by thae NDA regime in defence matters and for accountability coupled with greater responsibility and a new policy of manufacturing in India with greater local raw material.
If you examine the report carefully you will see that 90%+of raw material is imported and the fig only increasing with HAL not revealing the same.This could not have been done without the MOD support from Babudom. One huge Q though.How is it that the "Cinderella of the services",the IN has achieved so much? I agree with Karan on this point,the IAF must acknowledge its share of the blame for this situation.It has had its own policy of an import raj which we are sadly witnessing with the uber expensive Rafale deal.At least a range of other cost effective alternatives should've been tabled when the Rafale's price skyrocketed.

[Austin]

Rafale can supercruise at Mach 1.4 with 6 A2A Mica Missile

http://rafalefan.e-monsite.com/medias/f ... t-2011.jpg

[Philip]

The third instalment from the Hindu on how "made in India" aircraft by HAL are far more expensive than outright purchases.It makes one wonder whether the GOI should invest and buy shares in firang OEMs instead of HAL's expensive wares,of which from the official report.most of the raw material is also imported.

The B-8 JV is another farce from the report.The IPR remains with Israel.The revelations are scandalous and concerned MPs should take up the issue during the next session in par,liament.

http://www.thehindu.com/news/national/m ... 199677.ece
February 6, 2016
Made in India is costlier; joint development is mere purchase

Josy Joseph
The IAF entered into four different contracts with HAL for supply of the 140 aircraft, and later two contracts for 40 and 42 additional fighters. File photo: Akhilesh Kumar

The report also indicts HAL for taking 2-3 times more man-hours than those taken by Russians.

What was supposed to be cheaper when made in India is much costlier. What was supposed to be a joint development programme has been reduced to a purchase from abroad. That is among the key findings of internal government audits of major aerospace projects in recent years.

All the aerospace reports accessed by The Hindu are scathing in their indictment of agencies such as the Defence Research and Development Organisation (DRDO) and Hindustan Aeronautics Ltd. over the way they have handled joint development programmes involving foreign partners, or produced aircraft in India under transfer of technology.

Sukhoi-30 MKI fighters

HAL was originally tasked by the Cabinet Committee on Security (CCS) with undertaking licence production of 140 Sukhoi-30 fighters under transfer of technology from Russia, with conditions including: indigenous manufacture of the aircraft at a cost lower than that of the imported aircraft.

The IAF entered into four different contracts with HAL for supply of the 140 aircraft, and later two contracts for 40 and 42 additional fighters. Thus a total of 222 S-30 MKI were to be assembled by HAL. When HAL began to assemble, however, the story was different. “Contrary to projection in the CCS note, where it was estimated that the indigenous aircraft production cost would be lower than that of the imported aircraft cost… the actual cost of phase IV aircraft has always been higher than that of the imported aircraft,” the report says.

In the production year 2014-15 in phase I, when aircraft was directly imported from Russia, the average cost per fighter was Rs. 270.28 crore. In phase IV, when aircraft is manufactured by HAL from raw material, the cost is Rs. 417.85 crore.

The report also indicts HAL for taking 2-3 times more man-hours than those taken by Russians.

Advanced Light Helicopter

An audit of the Advanced Light Helicopter (ALH) project of HAL from 2001 to 2009 carried out by the Controller-General of Defence Accounts (CGDA) pointed out: “As against the envisaged indigenisation level of 50 per cent, about 90 per cent of the value of material used in each helicopter is procured from foreign suppliers.”

The audit said that during the production of the helicopter, despite gaining experience of making 90 of them, the labour hours remained almost double of what was prescribed by the consultant.

The Air Marshal Matheswaran report on the aeronautical sector points out that the Shakti engine used in the helicopter “only has an indigenous name with hardly any self-reliance or technology control.”

Missile development

The Matheswaran report points out that in 2003, a decision was taken to allow the services to meet their operational requirements of surface-to-air missiles (SAMs), till 2010, by acquiring through the “buy global” route because the development of the indigenous Akash and Trishul missile systems was delayed.

The DRDO stepped in and proposed joint development with Israel. So the DRDO and Israel Aerospace Industries (IAI) started development of a long-range SAM (LRSAM) for the Navy in 2005. In 2007, they started work on developing a medium-range SAM (MRSAM) for the IAF under a separate contract. “Incidentally, LRSAM & MRSAM is the same missile,” the report says.

In a scathing indictment of the entire project, the report says IAI remains the design authority for the complete system. “IAI is doing the role of supplier and the DRDO is the buyer, which is contrary to the DRDO role of design agency.”

“No transfer of technology (ToT) has been taken as part of the contract. We will remain dependent on IAI for its share,” the report points out, adding that the intellectual property rights (IPRs) remains with the design authority.

Conflict of interests

The report also tears into the Department of Defence Production.

“The DDP, which on behalf of the Services and the MoD would have been the instrument of indigenisation, became primarily a custodian of a large collection of ordnance factories and de-facto owner of shipyards, aircraft factories etc.”

This resulted in a conflict of interest, the report says.

[Ramu]

DRDO & HAL bashing in the same article? I think this is a progress in some way. Usually the institution which steps out of line with MoD gets its dirty laundry washed in public. Stick to the script OFB, i am looking at you.

[Gyan]

But they make their own fighters, and have a ~16.7 Trillion dollar GDP compared to 2.x Trillion dollars for India. Exactly where do we get the money to import that many aircraft? 45 sqn airforce is a fantasy that I dont think Ill ever see in my lifetime.

If India decides to purchase LCA with Kaveri for light/defensive work then we can easily knock out additional 500 fighters for USD 5 Billion and even get 60 squadrons. But Our Brass is only into costly imports. Just see, how all the urgency for Howitzers has vanished after Dhanush cleared all the trials in which other foreign products failed. The orders are stuck at 144 only.

[NRao]

X-Posting:

Are Boeing and India About to Open the Door on a Possible F/A-18 Super Hornet Deal?

[Philip]

The USN's "PLan B" for delays in the JSF arrival.Pragmatism at work. Something the IAF should scratch their heads with.Not that I'm rooting for the F-18 as the MMRCA! Adding another type defeats the purpose of reducing types and better op availability tx to economy of scale of existing types.

Popular Mechanics

By Kyle Mizokami
Feb 10, 2016

Arguing that they face a wide spectrum of threats, the U.S. Navy and Marine Corps will buy nearly as many aircraft as the Air Force in 2017, plus more than half a dozen large combatant ships. The Sea Services are requesting $152.9 billion in funding for the coming year, $7 billion less than they received in 2016.

In a budget presentation uploaded by U.S. Naval Institute News, the service identifies five threats it is working to counter: China, Russia, North Korea, Iran, and the Islamic State. The five compose a broad spectrum of threats, with China and Russia at the high end, North Korea and Iran in the middle representing more limited threats, and at the low end, the slow heartburn of the Islamic State.

The Navy's budget request reflects the spectrum. Nuclear submarines, P-8A Poseidon patrol planes, and the F-35C Joint Strike Fighter are needed to deter or fight the advanced threats. Guided missile destroyers can shooting down North Korean and Iranian ballistic missiles, while amphibious assault ships, helicopters, and drones are useful in chasing down ISIS.

Planes

The Navy will buy four F-35Cs in 2017—that's the aircraft carrier version of the Joint Strike Fighter. It's proceeding with its F-35C buy slowly, with only 64 planes bought between 2017 and 2021. The F-35C is expected to be the last of the Joint Strike Fighter variants to become capable of real-world operations.

And in a surprise move, the service also will buy two F/A-18E/F Super Hornets this year and another 14 next year. The delay of the Joint Strike Fighter, which is now at least six years behind schedule, has triggered a shortfall in the number of fighters—possibly as many as 138 planes into the 2020s, according to Navy Times. Thus the need for more Hornets to fill the gap.

The Navy also wants 11 P-8A Poseidon maritime patrol aircraft, the replacement for the P-3C Orion. The Navy and Marines want two MQ-4C Triton drones—the naval version of the Air Force's Global Hawk—one MQ-8C Fire Scout, and eight RQ-21A Blackjack drones. Funding for CBARS, the Navy's midair refueling drone, starts in 2017 with a modest $89 million budget.

Controversially, the Navy plans to deactivate the 14th Carrier Air Wing, one of ten carrier air wings. Each wing comprises the entire aircraft complement of an aircraft carrier. The Navy believes it can get away with this because although it has a ten-carrier force—which one might assume needs ten wings—in reality, at least one carrier is always stuck in deep maintenance and couldn't be readied for war even if the Navy tried. The Navy want to shift the costs and personnel associated with the wing work to reinforce other units.

Meanwhile, the Marines are charging ahead with the vertical-takeoff version of the Joint Strike Fighter, buying 16 F-35Bs for the Marine Corps. The Corps will purchase 97 fighters over the next five years. It will also buy the first two CH-53K King Stallion heavy lift helicopters, sixteen Osprey tiltrotor transports, and 24 AH-1Z and UH-1Y helicopters.

Ships

The 2017 budget will fund seven ships, including two Virginia-class attack submarines, two Arleigh Burke class guided missile destroyers, two Littoral Combat Ships, and one amphibious aviation ship of the America class.

The Virginia submarine purchase reflects the excellent multi-year deal the Navy struck with the submarine industry in 2014, when it agreed to buy ten of the nuclear-powered attack submarines for $18 billion. The destroyers will be among the first of a fresh batch of Arleigh Burke-Class guided missile destroyers, equipped with the new Air and Missile Defense Radars that boost the ship's ballistic missile defense capabilities.

The Littoral Combat Ship purchase hangs under a cloud, as influential members of Congress this week blasted the frigate-like ship. The overall purchase of the LCS was recently cut by the Secretary of Defense from 52 to 40 as ship reliability and lack of deployable mission modules—a capability that was supposed to give the LCS the ability to sweep mines, conduct anti-submarine warfare, and engage surface ships—has dogged those vessels already built.

The largest ship in the budget is an amphibious assault ship of the America class. 844 feet long and displacing 45,000 tons, the ships can carry up to 1,600 Marines. The America class is optimized for aviation, capable of launching an air assault using F-35B, MV-22B Osprey, King Stallion, and other aircraft.

Under water, the Navy is boosting funding for the XL/LD Unmanned Undersea Vehicle. Essentially a large drone submarine, the XL/UUV would be able to operate at sea for at least 70 days, using a Littoral Combat Ship or Virginia-class submarine as a home base. The drone could be equipped with a dry deck shelter to carry SEALs or equipment for surveillance, anti-submarine warfare, mine warfare, or even weapons for taking on other submarines or surface ships.

One major program beginning to make its presence felt: the Ohio Replacement Program, the successor to the fourteen Ohio-class nuclear ballistic missile submarines. The Navy is spending $1 billion this year to develop the new submarine, and the entire program is estimated to eventually cost $100 billion.

[sooraj]

India, France set to close Rafale deal at lower price of Rs 60,000 cr

Top government sources said after the initial price of 11.6 billion euros (Rs 85,000 crore) with 2015 as the base year, Dassault brought it down to 8 billion euros (Rs 65,000 crore) with 2011 being the base year for fixing the cost per fighter.

However, the defence ministry under Manohar Parrikar is expected to further hammer down the cost by opting out of unnecessary or what are called “over-specified” add-ons in Rafale fighters as per the initial MMRCA contract.

[Gyan]

Reading of this article indicates that Frogs want USD 400 million per Ra-farce and India is trying to bargain them down to USD 300 per Re-fail by dropping some useless stuff like wings and engines etc.

[SaiK]

like $222M per puppy... still wtf!?

why are we behind this Rafale that desperately? modi sarkar needs to explain now. forget the UPA freakanomincs

[kit]

cross posting from the missiles thread

tsarkar wrote:
Posting from the above link in full

Quote:
After developing a latest missile decoy system for fighter planes, the Defence Research and Development (DRDO) is now desperately scouting for a metal casing for the product. Available right in the backyard at Nagpur, the component is made in India, but not made for India. As a result, the agency is forced to look for other vendors in private sector, but has not succeeded so far.

Pune-based High Energy Materials Research Laboratory (HEMRL), a unit under DRDO, has put on display the latest infrared counter measure disruptive system (CDMS) at the Vignyan Bharti exhibition held at VNIT campus. The event is aimed at bringing industries and researchers together. The user trials of the CDMS have proven that the chemical composition, which diverts the missile attack, is fine, but the metal casing needs to be strengthened.

At present, Indian Air Force (IAF) is using the systems supplied by UK-based company Chemring Group. It has been learnt by the agency that the UK company buys the metal casings for its product from a Nagpur-based firm. A mid-sized unit, the company also caters to the ordnance factory and specializes in metallics. However, when approached by HEMRL, the local company has denied having any such product. Though it was reconfirmed by the agency’s own intelligence gathering and through the industry sources, that the casings used by Chemring’s product are from this firm only. The denial has forced HEMRL to look for a different manufacturer. Repeated parleys with the firm have failed, say sources who preferred not to disclose the local company’s name.

“This is a tricky situation,” say sources related to the affair. The company cannot be compelled to share the technology as it is already under a contractual obligation with the British firm. This is the reason it is believed to be so secretive on the matter. There are all chances that the British company may initiate legal action against the Indian supplier, which makes it as helpless as HEMRL in this case.

What looks like a small metal box is reported to be the latest missile decoy system developed indigenously. It diverts the attack of the heat seeking missiles which otherwise can accurately hit the target. The present system available with the IAF can be effective against second and third generation missiles. On other hand, the DRDO product is expected to be useful even when the fourth and fifth generation missiles are fired. However, DRDO cannot go ahead till it gets a stronger box to pack the material.

The second round of user trials has been delayed for almost two years now for want of the new casing. The earlier casing was also outsourced from a private vendor, who could not come up with a better version so far.

The trials were undertaken on aircraft like MIG 21, Jaguar, and Mirage 2000. Trials have proved that the DRDO system is better than the existing system used by the IAF. The casings have been made through impact extrusion technology. The existing product is reported to have been co-developed by Chemring and the city-based firm. It is likely that private industries coming to the exhibition may like to develop one.


In the US, some years ago, Rolls Royce BOUGHT Allison. They were forced to do the following,

"OSD agreed with the Air Force evaluation, but after four months of
assessments it concluded that safeguards could be put in place that
would allow Allison’s acquisition by Rolls-Royce to move forward.
These safeguards included an SSA that imposed restrictions on uncontrolled
transfers of information and technology between Allison
and Rolls-Royce. In addition, programs classified above Secret, as
well as the IHPTET and JAST programs, were placed in a separate,
newly created proxy company called Allison Advanced Development
Company, Inc. (AADC). This company was governed by a separate
proxy agreement, separate management, and additional security
procedures. Even visits between representatives of Rolls-Royce and
Allison and AADC required prior approval from the appropriate authorities.
As a result, Allison and AADC became wholly owned subsidiaries
of Rolls-Royce"

And in India, an Indian company has more obligations to a foreign entity!

And there you have it ..any surprise why Dassault wants Reliance to produce the Rafales instead of HAL is precisely because they will have greater control over how the tech is used.. ( Read .. pay through your nose if you want to use any of their tech on any other product being developed by any indian entity

[Viv S]

like $222M per puppy... still wtf!?

$250 mil actually. [€8 bn = $9.1 bn]