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Boeing flags inexperience of private sector 'strategic partners'

In New Delhi on Thursday, the world’s largest aerospace corporation, The Boeing Company, openly expressed what many global arms vendors have complained about in private: The Indian private sector is not yet capable of manufacturing complex military aircraft under transfer of technology (ToT).

Pratyush Kumar, Boeing’s India chief, proposed that highly experience defence public sector undertakings (DPSUs) – like Hindustan Aeronautics Ltd (HAL) – be coopted, since that is where aerospace expertise and experience lies in India.

Speaking “from the vantage point of a company that has been in the aerospace industry for 100 years, across the world,” Kumar in effect proposed a major reorientation of the defence ministry’s new Strategic Partner (SP) policy.

The policy aims at creating capable defence manufacturers in the private sector, to compete with the DPSUs and Ordnance Factories (OFs) that have historically dominated defence manufacture in India. The policy requires private firms chosen as SPs to enter technology partnerships with nominated global “original equipment manufacturers” (OEMs), and jointly bid for contracts to build aircraft, helicopters, submarines and armoured vehicles for the military.

But Kumar, speaking at a seminar organised by the Centre for Air Power Studies, the air force’s think tank, pointed out that successful examples of ToT-based manufacture involved “co-opting of public enterprise and private enterprise in a way that leveraged the investment made in the public enterprise for multiple decades”.

The Boeing chief said he “tried hard, and could not find a single example [of successfully building an aircraft under ToT] where it was just the brand new private enterprise with limited aerospace experience. Look at Turkey, look at Japan, look at Brazil — look at multiple countries. In all cases, there is a fine balancing act of co-opting the capabilities of both public and private enterprise.”

Other foreign companies are less forthright than Boeing. With two multi-billion dollar aircraft acquisitions already launched via the SP route — for single-engine fighter aircraft and helicopters — foreign OEMs have begun partnering Indian private firms. Lockheed Martin has partnered Tata Advanced Systems Ltd (TASL) and Saab has partnered the Adani Group, anticipating a tender for the single-engine fighter.

This although TASL has never assembled an aircraft, while the Adanis have never built a single aerospace component. Foreign OEMs resent having to partner novices, but comply quietly so as not to rock the boat, said a foreign executive based in India.

Boeing is more forthright, bolstered by the confidence of being the most successful arms vendor in India over the last decade. Since 2009, Boeing has sold India aircraft worth $12 billion. These include eight P-8I maritime aircraft in 2009, and then four in a follow-up order; ten C-17 Globemaster III heavy lift aircraft in 2011; and 15 Chinook CH-47F and 22 Apache AH-64E helicopters in 2015.

While these were all sales of ready-built aircraft, Boeing is perhaps anticipating having to “Make in India” with an SP in another forthcoming contract — the navy’s multi-billion dollar acquisition of 57 ship-borne fighters for its aircraft carriers. In that acquisition, for which a tender is awaited, Boeing’s F/A-18E/F Super Hornet would possibly compete with Dassault’s Rafale-Marine; Saab’s Sea Gripen and an upgraded version of the Russian MiG-29K/KUB.

Aspiring Indian SPs, like TASL, admit that their role in an SP contract would remain “build to print”, i.e. manufacturing sub-assemblies and assemblies to blueprints provided by the OEM. Yet, it would provide a lucrative growth opportunity.

“The need of the hour is for the ministry of defence to go forward with the two very large aerospace orders [for] single engine fighter and helicopters. Frankly, in my mind, there is nothing else to it,” said TASL chief, Sukaran Singh, at the same seminar.

In contrast, HAL chief T Suvarna Raju talked up his engineers’ design skills and experience. Pointing to the range of helicopters HAL has designed ground-up – the Dhruv advanced light helicopter, Rudra armed helicopter, and the eponymous Light Combat Helicopter and Light Utility Helicopter – he declared: “Each component of our helicopters demonstrates the skill sets of HAL designers, of their capabilities and innovation efforts. Look at the carbon composite blades and the transmission system, composite body structure, glass cockpit and many more…” The air force, however, continues to back the SP policy. “The only way to sustain the momentum in the aerospace manufacturing space is to start manufacturing here and strategic partnership model is a step in the direction,” said Air Marshal Shirish Deo, the air force’s vice-chief. The SP policy has been in the making since 2014-15. It remains contested and a work in progress.

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