Analysis

ADAG gains at HAL’s cost

Rafale Aircraft

MMRCA (Medium Multi-Role Combat Aircraft) for IAF was always going to be a too sweet a candy for all weapon manufacturers around the world. It’s not every day that an Air Force tries to equip 10 squadrons with the same kind of factory line production. Most nations do not have ten squadrons as total strength.

So, when India agreed to buy 126 of the Rafale fighter jets from Dassault, it was seen as a great victory for nation of France. The original agreement required a great part of the cost to be offset by local production by Indian Government owned Hindustan Aeronautical Limited (HAL).

However, the entire deal was cancelled in July 2015 by Modi government. The deal was instead replaced with a direct government to government buy for juts 36 jets. As a government to government contract all aspects of the negotiations were kept secret. No cost offset was made public

Yesterday it was announced by ADAG that Reliance plans to start production of defence components at its unit in the Mihan-SEZ region from the first quarter of 2018, in association with its JV partner Dassault Avaition. The foundation stone-laying ceremony, which was attended by Ambani, France’s minster for armed forces Florence Parly, state’s chief minister Devendra Fadnavis and Union minister Nitin Gadkari, was a precursor to a Rs 6500 Crore Investment.

The joint venture is expected to deliver the offset obligation arising out of the deal to buy 36 Rafales. Further if the orders were to continue from either Indian Air Force or Indian Navy, the JV is supposed to deliver.

So in effect it’s the HAL that has been booted out of project, replaced by ADAG.

Between ADAG and HAL , while the Reliance conglomerate has zero experience in building Aircrafts, HAL has been in the business for six decades having  manufactured their first fighter HF 24 Marut way back in 1961.  The fighter aircrafts with Indian armed forces are complex piece of machinery. In case of Rafale it was planned that the planes will carry Israeli aviation suits, weaponry of Indian, Israel and Russian origin, to be integrated with Indo/Israeli radars, Russian Air defense and American built AWACS.

HAL could well have bene both the nodal agency and the executioners of the program, however with HAL completely out of picture, this is going to be a mess. ADAG simply has no experience and even Dassault hasn’t worked with India for over a decade to sort out the complications.

The presence of both state government and union government ministers for the project does seem to have a right political alignment for Anil D Ambani, but now the real work will begin and country’s defense will be at stake

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