Group Captain Kishore Kumar Khera, VM
Institute for Defence Studies and Analyses
All major economic and military powers, with the exception of India, have a robust indigenous arms and aircraft industry. The dismal state has led to India heading the list of the largest arms importers of the world. A list of major contracts in this century for aerial warfare and training with foreign vendors tabulated in Table 1.1 narrates the story. This list includes not only combat aircraft but also transport aircraft, helicopters, force multipliers AWACS, targeting pods, radars, weapons and even basic trainer aircraft and simulators. Seventy years after Independence, it is time to analyze as to who has failed India in this aspect – the policymakers or the policy implementers. To assess that, it is essential to look at various aspects of the indigenous aircraft industry. The Indian aviation industry and HAL remained synonymous for a very long time, with both struggling over the years.1,2
Table 1.1: Major Contracts for Aerial Warfare and Training Assets Imported by India since 2000
|Year||Major Air Warfare Assets||Quantity||Cost|
|2012||Doppler Weather Radar||11||0.02||Germany|
|2014||Air Missiles and Equipment||–||0.36||UK|
|2016||Full Mission Simulator for |
Sound Start Weak Finish
The aircraft industry in India germinated when Seth Walchand Hirachand conceptualized the idea of Hindustan Aircraft Limited (later named Hindustan Aeronautics Limited or HAL). Taking off in 1940 with the establishment of HAL, the Indian aviation industry has grown in spurts over the past seven decades and more.4 During the initial phase, HAL provided maintenance support to various combat aircraft of the allied forces in the Second World War and subsequently, commenced licensed production of combat aircraft. After Independence in 1947 and its nationalization, HAL grew in strength to design combat aircraft. After Independence, an attempt was also made through HAL to “re-construct” a force of B-24 Liberators from the mouldering remains of nearly 100 ex-USAF bombers of this type at the Care and Maintenance Unit Depot at Kanpur. Three IAF squadrons were equipped with B-24 bombers. But this force could not be sustained. In the last 70 years, the IAF has inducted HAL-designed and built fighter aircraft HF-24 Marut and trainer aircraft HT2, HJT16 and HPT32 into its fleet. Several HAL license-produced fighters (MiG-21, MiG-27, Jaguar, Su-30), trainers (Hawk), transport aircraft (Dornier 228), and helicopters (Chetak, Cheetah) were inducted in the Indian armed forces as well.5 The largest production project for HAL so far has been for delivery of some 580 MiG-21s. The next big project is with Su-30, which is reaching its terminal stage unless more orders are placed. The hope for getting an order to build 108 Rafale as a part of 126 MMRCA deal evaporated because of manpower costs and non-guarantee for aircraft to be manufactured by HAL.6 This is indicative of efficiency and quality control processes prevalent at HAL.
One more critical factor in this regard is the availability of technological skills. The inability to manufacture a suitable engine or generate and develop an indigenous engine technology saw the downfall of HF-24 after limited production to equip three IAF squadrons.7 India’s low technological base and isolation meant that the high Air Staff Qualitative Requirements (ASQRs) defined by the IAF for the HF-24 could not be met.8 Therefore, instead of maturing with age to meet the growing national demand for aviation, HAL gradually lost steam. From being a designer, it slipped back to the lowly status of a license production facility to primarily meet IAF requirements. Eco-systems required to design, develop and produce aircraft sprouted many a time at the organization, only to be quelled. After HF-24, practically, the current under-production Advanced Light Helicopter (ALH) and Light Combat Aircraft (LCA) are two stars of HAL, albeit trying to shine. Thus India, with the fourth largest air force in the world, retains the dubious distinction of operating the largest fleet of foreign-designed aircraft. The picture is bleaker in the civil aviation domain.
Like any other industry, the Indian aviation industry is based on four pillars—policy, technology, manufacturing, and the end-user. The abysmal state of the Indian aviation industry is a result of incoherence and disconnect amongst these four verticals. The necessity of developing an indigenous aviation industry was realized as early as 1940, but it was not backed by a realistic long-term policy. Although HAL’s nationalization did give it an initial impetus, the failure to allow competitors in the field, in effect ensuring a monopoly, resulted in a monolith that moved at a glacial pace. On the policy front, some movement has been made by the concept of the Strategic Partnership (SP) in Defence Procurement Procedure (DPP). But, if not modulated properly, the model could remain in assembly-line mode and unable to scale up beyond it. The assembly-line model has limited implications as has been witnessed in the last six decades. Therefore, disruptive innovation is the answer and should be the approach of the government. Competing social sector priorities, the lack of industrial development, and short-sighted vision and policies allowed the Indian aviation industry to just about exist.
Research and Development
The aviation sector has high R&D costs and the risks are extraordinary. As the largest consumer is the government itself, unless a part of the risk is covered by it, private ventures will remain skeptical. At the same time, denying entry to private players with a level playing field would make it difficult to reinvigorate the dormant aviation industry. The second factor is that in this industry the successes are rare and the successful products have to fund the cost of failures as well. Lastly, unless, the production scale of successful articles is high or a firm commitment is available, amortization of R&D costs has to take place on the first order itself. This makes the cost of equipment prohibitive. Strategic direction and appetite for higher risk and investment in research and development (R&D) were missing after the HF-24 experiment. Thus, efficiency and creativity became causalities and what should have been an organic growth of both the organization and indigenous aviation industry, stalled. Unaccounted government support, a captive market in terms of the Indian Armed Forces, and reliance on foreign vendors to supply technology reduced HAL to a mere assembly-line functionary. It is true that India went through phases of technological isolation owing to various political and diplomatic reasons. However, the intervening periods were not utilized efficiently to build a core of technical expertise. Contrast this with the development of India’s indigenous space and nuclear programmes. The model followed by the Indian Space Research Organization (ISRO) focused on quality expansion rather than quantity expansion. Yet we find that this was not applied to the aviation sector. What eventually followed was the supremacy of mediocracy.9 Even today, India is far from developing a suitable engine technology for aviation. The LCA project bore the brunt of this shortcoming. All is not bleak, however. The growth of the indigenous software industry has ensured that we are self-sufficient in some technological aspects.
Every industry needs to innovate to survive and be relevant to the changing operational and technical environment. Those who fail to innovate are destined to stagnate and perish in this competitive world. HAL has had 28 major projects till date.10 Lessons learnt after each project are nearly identical. The inability to learn from the past experiences and global trends is evident. Innovation is missing. Unfortunately, it is this inability that shines throughout the narration of HAL.11
The industry too has to be ready to keep pace in terms of technology and manufacturing even in case of a robust demand. Assured quality control and adherence to delivery timelines are two parameters on which the end-user will judge the industry and decide on supporting it further or discarding it entirely. Today, private sector entities such as Tata Aero Space Limited—in a joint venture with Lockheed Martin, and aiming to manufacture of the fuselage section of the C130—are appearing on the horizon, albeit at the lower end of the spectrum and limited scales. For the domestic aviation manufacturing industry to grow, these private ventures need to expand manufacturing processes to include high-technology aviation equipment. For that, the order book will have to initially depend on the Government of India (GoI). Even the GoI needs to move aggressively to form joint ventures with technologically relevant aviation manufacturers. The BrahMos model (GOI’s share is 50.5 per cent, just short of 51 per cent so it is not classified as DPSU) has yielded results and needs replication.12 In the aviation space, the manufacturing of the Kamov helicopter, whenever it commences, may provide the requisite boost to this sector and test new structures.
Additionally, the HAL going public is a step in the right direction to enhance its accountability. But HAL would need a strategic partner to meet the production targets. Indian private sector companies have already joined hands with Lockheed Martin and SAAB for the anticipated order of about 100 combat aircraft. The same concept can be exploited by the Indian private sector collaborating with ADA for transfer of technology and thereafter production of the LCA. This will be a game changer for enhancing HAL efficiency as a competitor and creating an ecosystem for the aviation industry in India. Reduction in the profit of HAL is a very small price to pay for developing this national capability.
End User Interface
While it is natural for the combat forces to seek the best combat equipment, their desires need to be realistic too. The HAL-designed HF-24 Marut became the first indigenous aircraft in the IAF. This was expected to change the complexion of the IAF’s combat aircraft fleet. But HF-24 did not meet the high performance criteria set by the IAF. The Air Staff Qualitative Requirements (ASQR) for HF-24 in the 1950s13 cannot be met by most of the combat aircraft in the IAF inventory even today! Although the end-user cannot be held accountable for the failure of the industry to grow, a pragmatic hand-holding approach is also required. Expansion of scale with greater visibility can assist the industry to cut production costs and lead to economies of scale.
Fear of defeat forces a soldier to train. If victory is assured before a conflict, it is unlikely that soldiers would sweat it out during peacetime. Same is the story with the corporate world. Any company that has profits assured fails to innovate. This is exactly what happened with HAL. Till the late 1990s, the Cost Plus bases14 of costing ensured that the company would always be profitable no matter how inefficient it remains. Can a company running on cost plus basis ever become efficient?15 Fortunately, this practice was stopped in 1996 but the culture has not changed much. That is why for a job with same machinery and tools, a Russian in Russia or a French technician in France takes 100 man hours but HAL takes 270 man hours! For the MMRCA deal in June 2011, HAL had stated that the French man hours had to be converted to Indian man hours by multiplying Dassault Aviation quoted man hours by a factor of 2.7.16 It will take a while for HAL to reinvent itself to meet industry standards.
One of the critical factors for assessing the requirement of combat aircraft in an operational scenario is the nation’s capability to replenish the battle losses. Owing to the enhanced complexity of combat aircraft, each manufacturing line averages one aircraft per month. The F-35 production line is the latest example and confirming to this norm. However, the Indian DPSU HAL has rarely met such production targets. The IAF’s combat potential will continue to deplete over the next decade as the rate of phase-out is faster than the production/ acquisition rate of one combat aircraft a month. Moreover, HAL being the prime agency for repair and maintenance, that capability needs to be suitably enhanced. Low level of maintenance and reparability will demand that the basic aircraft inventory be enhanced. The new generation aircraft indeed need specialised repair and maintenance facilities as is evident in the case of the F-22 that has had only 60 per cent as the Mission Capable Rate (MCR), one measure of an aircraft’s reliability and maintainability.17 The Indian combat aircraft fleet has had periods of very low availability too with some fleets dipping below 50 per cent mark. Looking objectively at the production value versus the manpower cost since 2003-04, the trend indicates a slide (Figure 1.1).Unless this trend is stemmed and then reversed, the HAL will go into oblivion.
Figure: 1.1 HAL-Value of Production/Manpower Cost
International Models and Comparisons
An analysis of different models for the aviation industry that have been developed and followed across the world and the lessons learnt during their application, are relevant.19 The aviation industry in China, Russia and the US are relevant examples but Embraer (Brazil) is the most notable one. About half a century ago, HAL had a fighter jet design and production to its credit and Embraer was in its infancy looking for expert support from a fellow developing country, India. Apparently, HAL rebuffed Embraer and refused any collaboration with a minnow. Today, Embraer is the third largest manufacturer of aircraft in the world! Lessons need to be learnt and implemented for a growth strategy.
The Way Forward
Models across the world underscore the following critical facets: sustained support by the governments; development of the integrator model; interface with the end-user; and logical production scales. Various models have been advised to reinvigorate HAL and are based on varying degrees of government control, ranging from complete to zero, and on the economics of R&D. A visionary policy and support by the government; efficiency and creativity by the industry; an investment in knowledge and focus on research and development to bridge the technological gap; and a practical and pragmatic end-user to assist in generating the requisite ecosystem. The need of the hour is to strike a balance between these four pillars. Unless a holistic review is carried out with all stakeholders, and an impetus given on all four fronts simultaneously, it will take a long time before Indian aviation industry can be counted among the best.20
The Indian Armed Forces are the prime end-users of aviation assets in India and are looking for over 500 platforms in various categories in the next decade alone! The demand in the civil aviation sector is also rising. This boom in demand could trigger an expansion of the domestic aviation industry and lead it to maturity. The indigenous aircraft industry has a pivotal role. The production capacity and efficiency of HAL have a lot of scope of improvement to match the world’s industrial standards. Generating competition for HAL may be the correct driver for transformation. Transferring technology to an Indian industrial entity to manufacture Light Combat Aircraft (LCA) may be just the impetus that is required.
“…. during the last four years, 150 contracts worth Rs 1,27,500 Cr had been signed with Indian vendors for procurement of defence equipment for the Armed forces.
…. the Government had accorded AoN to 164 proposals worth Rs 2,79,950 Cr under ‘Buy and Make’ categories only to the Indian vendors.
…. several policy initiatives of the Government under the ‘Make in India’ viz. 100% FDI in Defence Manufacturing, Defence Offset Policy 2016, Delicensing of Defence items, iDEX and the Defence Investor’s cell.”The Indian Defence Minister’s statement at the inauguration of Aero India 2019 on February 20, 2019 sums up the various factors in the Indian defence sector.21
Hopefully, these events and directions will set in motion a process that will pull the Indian arms industry out of the abyss and start contributing towards building tangible indigenous national power.
While charting the long-term course in this direction, India needs to have realistic goals for the medium and short term as well. Quantitatively, the combat aircraft fleet in India will continue to go down in the next two decades. This decline has to be offset by creating supporting and alternative capabilities. First among these has to be battle space transparency. Tools, methodology and processes need to be enhanced so that threat zones are continuously under surveillance. An early detection of abnormality will minimise the probability of recurrence of events like the Kargil conflict, the Mumbai attacks or the Doklam standoff. The surveillance systems need to integrate the entire electromagnetic spectrum and their tools of analysis with embedded Artificial Intelligence platforms for such tasks, to include sub-surface, surface, aerial and space-based assets. A thrust on research and development in these areas ought to be a key priority. This capability will reduce the impact of the dwindling strength of combat aircraft.
The second thrust should be on developing alternatives to minimize dependence on combat aircraft. UAV and UCAVs are relevant but have limited utility in the presence of potent air defence systems. Augmentation of surface-to-air weapons systems like the S-400 is the best thing that has happened and this needs to be further enhanced by the home-grown Akash and other systems like QRSAM and MRSAM systems developed in large numbers to provide defence to critical points. Another indigenous system that needs large-scale induction is BrahMos. This is the best weapon in its class and is of very high tactical value. The furtherance of the Nirbhaya project22 and the development of long-range anti-shipping ballistic missiles will ensure availability of requisite deterrence in the maritime domain. With a successful anti-satellite test, India has moved up the ladder towards achieving a potent anti-ballistic missile system. This technology needs to be harnessed to achieve indigenous ABM capability.
Third, for immediate needs, India needs to fast-track integration and then operationalise long-range weapons like the BrahMos Air-Launched Cruise Missile23 and specialist weapons like Astra – the Beyond Visual Range Air-to- Air Missile (BVRAAM)24 and SAAW (Smart Anti-Airfield Weapon)25 developed indigenously. This will not only reduce the dependence on imports, but allow greater inventory of weapons for force application.
India needs to holistically review its strategic goals and accordingly, plan military capability enhancement. Combat aircraft form a credible part of the military capability but have high associated costs. The strength of the IAF combat aircraft squadrons has come down to 31 against an authorisation of 42 squadrons. With the scheduled phase-out of existing combat aircraft fleets on completion of their calendar life/total technical life, the combat aircraft inventory is depleting at a fast pace. The rate of new inductions like the Su-30, LCA and Rafale is far slower. The net result is that this capability will further go down in case no additional procurements are initiated.
Furthermore, the Indian combat aircraft inventory is very diverse and therefore, is a logistical nightmare. Along with that, maintaining and deploying a diverse inventory has very high costs not necessarily supported by proportionate capability enhancement. On the one hand, there is a need to stem the slide in the Indian combat aircraft inventory, and on the other, to make it more homogenous. Therefore, the choice of combat aircraft to add to the existing fleet needs to be carefully considered taking into account not just the life-cycle cost of the platform but also the system induction cost. Adding to platforms that are already operational is a good option to follow and the three platforms that need consideration in this category are the LCA, the Su-30 and the Rafale.
Amongst these three, the LCA is least capable at present; however, being indigenous, it has distinct advantages. In this regard, the indigenous aircraft industry has a pivotal role. As an interim measure, the Su-30 production line can be given an extension with a fresh order. This will help tide over the crisis till production of the LCA matures and reaches requisite efficiency.
Should a type other than the existing platforms be selected for induction in the IAF, then these will have to be ordered in large numbers in the region of 240 platforms. This is to offset the high system-induction costs that may be associated with the new platform. Large orders not only offset cost-per platform but are better managed from the operational, maintenance, training and logistical viewpoints.
Excerpted from Gp. Capt. Kishore Kumar Khera, “Dry Cranking Engine: Indian Indigenous Defence industry”, in Gp. Capt. Kishore Kumar Khera, Combat Aviation: Flight Path 1968-2018, MP-IDSA-KW Publishers Pvt. Ltd., New Delhi, 2020, pp. 278-291.
About the Author: Group Captain Kishore Kumar Khera VM is an independent analyst. He served as a fighter pilot in the Indian Air Force for 33 years. He was a pioneer member of the Composite Battle Response and Analysis (COBRA) Group and headed the Operational Planning and Analysis Group at Air Headquarters. He was awarded Vayu Sena Medal in 2005. He was a Research Fellow at the Manohar Parrikar Institute for Defence Studies and Analyses, New Delhi from 2017 to 2019.
About the Book: Combat aircraft, a powerful component of military strength, define the battle space today. In the last five decades, world combat aircraft inventory, after peaking in 1988, gradually declined owing to changes in the geopolitical landscape, altering character of war, evolving technology and emerging alternatives. Today, there are 106 countries in the world that own and operate around 80 types of approximately 18,000 combat aircraft. But, there are only 19 countries that have more than 200 combat aircraft in their inventories. In this book, the available data of the world’s combat aircraft inventory is analysed for the trends and probable reasons for changes in the holdings, before predicting the future trajectory of manned combat aircraft. Additionally, the role of combat aircraft and their interplay with various tenets of Indian air power capability and the likely future is discussed.
Photo Credits: Dassault Aviation
- Kishore Kumar Khera, “Review of Indian Aircraft Industry: Possible Innovations for Success in the Twenty-First Century by Vivek Kapur”, Journal of Defence Studies, 12 (3), July-September 2018 at https://idsa.in/jds/jds-12-3-2018-kk.khera, accessed on June 13, 2020.
- Data collated from the Comptroller and Auditor General’s Report 3/2019 tabled in Parliament in February 2019; Military Balance 2019; Press Release, PIB, Ministry of Defence, Government of India; and Press Releases by equipment manufacturers along with reports in aviation magazines. Conversion of contracted value to US $ is based on Reserve Bank of India exchange rate for the year of contract available at https://www.rbi.org.in/scripts/ReferenceRateArchive.aspx.
- For more see Vivek Kapur, Indian Aircraft Industry: Possible Innovations for Success in the Twenty-First Century, Centre for Air Power Studies and KW Publishers Pvt Ltd., New Delhi, 2018.
- Performance Audit Report of the Comptroller and Auditor General of India on Capital Acquisition in Indian Air Force for the Union Government
- Kishore Kumar Khera, no. 1.
- For more see Vivek Kapur, no. 4.
- Kishore Kumar Khera, no. 1.
- For more see Vivek Kapur, no. 4.
- Kishore Kumar Khera, no. 1.
- Vivek Kapur, no.4, p. 41.
- Cost Plus bases means that the sale price will be guided by the actual cost of production and an assured profit over that cost.
- There is an anecdote which may not be true, about a meeting between the Chairman of HAL with the CEOs of Dassault (France) and BAe (UK) during the Paris Air Show. The BAe CEO proposed a dinner at Eiffel Tower restaurant (one of the most expensive in Paris). The three met and had a wonderful dinner. When the time to pay the bill came, the BAe CEO offered to pay stating that it was his idea so he must pay. The Dassault CEO objected that they were in his country and he was the host so he should foot the bill. The HAL Chairman said both of them had a valid and emotional reason for paying the bill but he must pay because it made business sense. The other two were perplexed. Then the HAL Chairman explained that HAL operates on Cost-Plus basis. That means, whatever the cost of production; he gets to add 10 per cent as profit for his company to fix the sale price. By footing the bill, the cost of production goes up and so does the HAL’s profit. So it made business sense for him to pay the bill and increase the profit of his company.
- Performance Audit Report of the Comptroller and Auditor General of India on Capital Acquisition in Indian Air Force for the Union Government (Defence Services), no. 6, pp. 121-124.
- Jeremiah Gertler, “Air Force F-22 Fighter Program, Congressional Research Service Report 7-5700, L31673, July 11, 2013.
- HAL Annual Report 2017-18 at https://hal-india.co.in/Common/Uploads/ Finance/Annual-2017-18.pdf, accessed on January 11, 2019.
- For more see Vivek Kapur, no. 4.
- Kishore Kumar Khera, no. 1.
- “Runway to a Billion Opportunities – Raksha Mantri Inaugurates Aero India 2019”, Press Release, Ministry of Defence, Government of India, February 20, 2019 at http://pib.nic.in/newsite/pmreleases.aspx?mincode=33, accessed on February 21, 2019.
- “Press Release, Press Information Bureau, Ministry of Defence, Government of India, November 7, 2017” at http://pib.nic.in/newsite/pmreleases.aspx?mincode=33, accessed on November 23, 2017.
- “Press Release, Press Information Bureau, Ministry of Defence, Government of India, November 22, 2017”, at http://pib.nic.in/newsite/pmreleases.aspx?mincode=33, accessed on November 23, 2017.
- “Press Release, Press Information Bureau, Ministry of Defence, Government of India, September 15, 2017”, at http://pib.nic.in/newsite/pmreleases.aspx?mincode=33, accessed on November 23, 2017.
- “Press Release, Press Information Bureau, Ministry of Defence, Government of India, November 3, 2017”, at http://pib.nic.in/newsite/pmreleases.aspx?mincode=33, accessed on November 23, 2017