The idea of ‘Make in India’ has been around as long as India has been. The largely inefficient public sector undertakings (PSUs) were the result of a fledgling nation’s aspirations to reduce dependence on imports. That most PSUs adopted cultures that did not encourage productivity is a failure attributable to successive governments. As the PSUs had government patronage which the more efficient private enterprise did not enjoy, growth was affected adversely. The credit for raising the concept of ‘Make in India’ to the level of a national objective goes to Prime Minister Narendra Modi who launched this campaign in 2014. The sentiment underlying ‘Make in India’, i.e. indigenisation of industry is lofty and much needed; but its success has so far been unremarkable. Prime Minister Modi laid special emphasis to ‘Make in India’ by inaugurating the 2015 Aero India Airshow in Bengaluru and making it the theme of his inaugural address. However, the current environment has so far kept the private aerospace industry largely bereft of meaningful participation in ‘Make in India’.

Make in India in the Aerospace Industry

Despite the fact that India is a potential superpower and has a healthy economic growth, the contribution of ‘Make in India’ in these areas is negligible. Even Aero India, whose primary purpose is to develop a defence business hub for Asia, has not helped the cause of ‘Make in India’. Response from international entities has been lukewarm largely due to the slow pace of accompanying changes to make the business environment more friendly to global companies and their prospective Indian partners. During Aero India 2017, several MoUs supposedly under ‘Make in India’ were signed. The prominent ones were Thales UK signing up with Bharat Dynamics Limited (BDL) to assess opportunities for transfer of technology of the STARStreak man-portable surface-to-air missile system, European group MBDA setting up a joint venture with Larsen & Toubro aimed at exploring the missile space for opportunities and Raytheon Company of the US signed an MoU with a subsidiary of India’s Tata Group to jointly produce Stinger ground-to-air missile parts. Israel’s IAI signed an MoU with Kalyani Strategic Systems Limited to form a joint venture in India, an agreement with Dynamatic Technologies relating to mini-UAVs ‘to jointly address the needs of the Indian UAV market’ in terms of production, assembly and support, and a cooperative agreement with Taneja Aerospace & Aviation to develop, produce and market crashworthy seats for both the defence and civil sectors. The sole business deal to be signed at the show was between Saab Grintek Defence and Hindustan Aeronautics Limited (HAL) for transfer of technology for maintenance (in India) of Saab’s Integrated Defensive Aids Suite system for $8.5 million.

As far as the defence aerospace industry is concerned, HAL has shown only mediocre achievements. Most of its revenue figures are attributable to licence-production of foreign aircraft and transfer of technology has not been high on its priority list. Tejas, the only fighter aircraft produced indigenously, was thrust down a reluctant IAF’s throat while the Navy resisted staunchly and saved itself from being lumped with a mediocre aircraft. The ongoing fifthgeneration fighter aircraft (FGFA) project being run jointly by India and Russia, is in a precarious situation due to the insistence by India for full scale transfer of technology which would really serve the ideals of ‘Make in India’. The Defence Procurement Procedure (DPP), 2016, promulgated in March 2016, came with a surprise. The all-important ‘strategic partner’ chapter dealing with private participation in strategic defence projects was omitted. There was a great expectation that it would be promulgated on the inaugural day of Aero India 2017. However, these hopes were belied and the uncertainty in that area continues.

WITH FULL-BLOODED PRIVATE SECTOR PARTICIPATION, ‘MAKE IN INDIA’ MAY REALLY TAKE OFF IN THE AEROSPACE SECTOR

In the field of civil aerospace industry, India has failed to produce civil aircraft for commercial use. The National Aerospace Laboratories (NAL) had reached the prototype stage with the Saras 14-seater twin turboprop aircraft. However, after losing one prototype in a crash, the programme came to a grinding halt. Currently NAL is waiting for fresh funding from the government for rejuvenation of the Saras project. This contrasts starkly with China’s record. Having started its aerospace industry almost at the same time as India, it has produced three commercial aircraft and its latest product the 168-seater C919 twin-jet airliner is about to enter the single-aisle space, thus nudging at the Airbus A320 and the Boeing 737 families which have long ruled commercial airliner space. China’s success and India’s failure are both owed to national enterprise. The earlier we recognise this accept that HAL’s internal inefficiencies are incurable, and open the gates for private participation, the better it is for the nation’s aerospace industry.

Private Players

Currently, private sector participation is meagre; even that is more for foreign original equipment manufacturers (OEMs) than for Indian entities; even after private companies enter the fray in a big way, given the fact that aerospace industry is capital and technology intensive, it will take them possibly a decade or more to build the infrastructure and to absorb the technologies involved. While the airframe and structural requisites would be comparatively easy to master, power plant technology would remain elusive for longer periods due to its more complex nature and due to the time lost so far by HAL and indigenous R&D in that field led by Gas Turbine Research Establishment (GTRE). The ideal solution would be for private participation in a joint venture with a leading edge aircraft and engine manufacturer which includes provisions for transfer of technology. The offers of Saab and Lockheed Martin to build modern combat aircraft in India are possible opportunities, to be weighed against other considerations, economic and political.

In the case of the Rafale deal, Dassault Aviation has already made it clear to India that it will not be able to provide full transfer of technology and create an industrial ecosystem by manufacturing the planes here under the ‘Make in India’ programme unless the order is for at least 100 aircraft. When one juxtaposes the high cost of the 36 Rafales with the non-existence of transfer of technology, the whole deal appears to be one that needs a fresh and incisive look. It may be mentioned here that in the original tender for 126 aircraft, Dassault had been chary of partnering with HAL and had preferred Reliance Industries Limited (RIL). There was intense lobbying by HAL which had originally been named the Indian partner in the RFI. The government finally overruled Dassault’s contention that, if it was to be responsible for the quality and time guarantees, it should have the freedom to select its partner. For the 36 aircraft deal also, Dassault had wanted to stay away from HAL. Should India be able to persuade Dassault to agree to transfer technology, one or more private companies could reap the benefits and take giant steps in aerospace technology. That would be a significant step for ‘Make in India’.

Tata Advanced Systems Limited (TASL) is perhaps the one nearest to acquiring the capability of manufacturing full aircraft, radars and unmanned aerial vehicles (UAVs). Besides a Dornier production line for RUAG, it has a tie up with Airbus for the possible manufacture of C295 transport aircraft to replace the Avro fleet. TASL has become 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 Limited, Cobham Mission Equipment and RUAG Aviation. Reliance Defence Limited, an Anil Ambani company, is working towards consummating ‘Make in India’ and has set up the Dhirubhai Ambani Aerospace Park spread over 160 hectares land 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. Its 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 recently signed an agreement with Ukraine-based, state-run Antonov Company for cooperation on a 50/80-seater transport aircraft for military, paramilitary and civil use. The plan is to manufacture the aircraft at MIHAN. Reliance Group is a new entrant in the defence sector and has 12 industrial licences for defence subsidiaries of group company Reliance Infrastructure Ltd (R-Infra) for making helicopters, aircraft, missiles and UAVs among others.

The Mahindra Group entered aerospace industry in 2008 through its company Mahindra Aerospace and acquired Gipps Aero and Aerostaff (both Australian entities) in 2010. Indeed, it is the first one in India to go into full aircraft production, albeit a small one (Airvan 8/10) and that too outside India. Airbus has shown interest in having the company forge aircraft parts in India for Airbus aircraft. With manufacturing in Australia and India, it has inked sourcing and partnering deals with aerospace majors such as Premium Aerotec and GE Aviation. Mahindra Defence has also signed a ‘statement of intent’ with Airbus Helicopters for forming a joint venture to produce military helicopters in India. 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; it is supplying titanium flaptrack forgings for Boeing 737 NG, a first for any Indian company, and will be supplying the same for the 737 MAX. 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 30MKI. It also works closely with European Aeronautic Defense and Space Company (EADS) and Spirit AeroSystems to assemble flap track beams for the Airbus A320 family on a single source basis.

Concluding Remarks

The private entities mentioned above are the major ones involved in aerospace industry; there are others too. However, as is apparent from the texture and partnership patterns of these companies, their patrons are not in India. It is also apparent that, given the opportunity, private enterprise could outdo PSUs in the aerospace arena. If India is to achieve the status of an aerospace power, it has to radically alter its perception and treatment of private aerospace players. The first step in this direction could be enshrining in the Strategic Partnership chapter of the DPP 2016 stipulations that provide for a level playing field for private and public players in the aerospace industry. With full-blooded private sector participation, ‘Make in India’ may really take off in the aerospace sector.