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Prime Minister Narendra Modi’s efforts to refresh an aging air force are skirting state-run Hindustan Aeronautics Ltd., India’s largest defense contractor, and signaling opportunities for the private sector.
The nation this month agreed a $1.9 billion deal for Airbus Group NV military planes to be built jointly in India by Tata Advanced Systems Ltd. rather than Hindustan Aeronautics. Modi in April shelved plans for the state firm to make French Rafale jets under license, putting other local manufacturers on alert.
Modi’s goals of a stronger military and modern defense industry that makes greater use of private sector skills puts Hindustan Aeronautics at a crossroads. It dominated India’s aerospace market after independence from Britain, but project delays and crashes of jets the company assembled are hurting the air force as rival China pulls ahead with stealth fighters.
“India’s private companies may not have Hindustan Aeronautic’s aerospace experience,” said Richard Aboulafia, vice president at defense consultancy Teal Group Corp. in Virginia. “But they’re much better managed and can do a better job delivering products.”
Talks between the government and Dassault Aviation SA over a 2007 tender for 126 Rafales, including 108 to be made by Hindustan Aeronautics, stalled partly because India sought quality guarantees from Dassault for the locally made jets.
Modi then chose to buy 36 Rafales directly from the French government to get them faster, leaving open the possibility of a separate order for more and in effect killing the earlier $11 billion tender.
The separate purchase could involve a private company for local assembly, said Amit Cowshish, a distinguished fellow at the Institute for Defence Studies and Analyses in New Delhi.
“India is a huge market for defense products,” he said. “There’s room for more than just Hindustan Aeronautics. The Airbus-Tata decision is a good beginning.”
Modi’s vision is to develop a defense-industrial complex that can strengthen India’s sometimes poorly equipped armed forces, spur manufacturing and curb overseas acquisitions by one of the world’s biggest arms importers. He’s approved about $45 billion of weapons purchases since taking power last May.
Modi Skirts India?s Top Warplane Maker to Check China - Bloomberg Business
Does it mean the death of state run industries?
The nation this month agreed a $1.9 billion deal for Airbus Group NV military planes to be built jointly in India by Tata Advanced Systems Ltd. rather than Hindustan Aeronautics. Modi in April shelved plans for the state firm to make French Rafale jets under license, putting other local manufacturers on alert.
Modi’s goals of a stronger military and modern defense industry that makes greater use of private sector skills puts Hindustan Aeronautics at a crossroads. It dominated India’s aerospace market after independence from Britain, but project delays and crashes of jets the company assembled are hurting the air force as rival China pulls ahead with stealth fighters.
“India’s private companies may not have Hindustan Aeronautic’s aerospace experience,” said Richard Aboulafia, vice president at defense consultancy Teal Group Corp. in Virginia. “But they’re much better managed and can do a better job delivering products.”
Talks between the government and Dassault Aviation SA over a 2007 tender for 126 Rafales, including 108 to be made by Hindustan Aeronautics, stalled partly because India sought quality guarantees from Dassault for the locally made jets.
Modi then chose to buy 36 Rafales directly from the French government to get them faster, leaving open the possibility of a separate order for more and in effect killing the earlier $11 billion tender.
The separate purchase could involve a private company for local assembly, said Amit Cowshish, a distinguished fellow at the Institute for Defence Studies and Analyses in New Delhi.
“India is a huge market for defense products,” he said. “There’s room for more than just Hindustan Aeronautics. The Airbus-Tata decision is a good beginning.”
Modi’s vision is to develop a defense-industrial complex that can strengthen India’s sometimes poorly equipped armed forces, spur manufacturing and curb overseas acquisitions by one of the world’s biggest arms importers. He’s approved about $45 billion of weapons purchases since taking power last May.
Modi Skirts India?s Top Warplane Maker to Check China - Bloomberg Business
Does it mean the death of state run industries?
