EXCL: How Praful Patel’s letter made MoD develop cold feet & got IAF’s AVRO replacement deal delayed

Article as appeared in the Mail Today newspaper on November 28, 2013.
Article as appeared in the Mail Today newspaper on November 28, 2013.

Last month’s outburst of Minister for Heavy Industries and Public Enterprise (MoHIPE) Praful Patel against the Indian Air Force’s (IAF) deal to replace its 56 ageing Hawker Siddley (HS) AVRO 748 transport aircrafts seems to have hit its mark. The Ministry of Defence (MoD) has developed cold feet and as a result has quietly extended the date for the submission of the proposals without assigning any cause for the same, a move that has caused heartburn among the IAF as well as domestic private industry players.

According to information accessed, while the IAF had issued a Request For Proposal (RFP) on May 8 2013, the proposals were to be submitted to them by October 8, 2013 which was subsequently extended to December 8, 2013. Now, the MoD’s move will mean that the date has been further shifted to March 8 2014. This is the second extension that this project has got.

When asked, IAF confirmed that an extension had been provided to the OEMs by three months. However, IAF failed to answer whether the extension was sought by the participating companies or provided unilaterally.

A senior MoD official, when asked, admitted, “Mr. Patel may have his reason and beliefs for writing to the Defence Minister but we cannot ignore his letter on this subject.” Last month, while responding to Patel, Defence Minister AK Antony had ordered an ‘examination’ of the deal without committing to delay or hold back the deal. Back then the IAF had strongly rejected Patel’s claims in their meeting with the MoD and were reportedly relieved that Antony had not delayed or held the deal back.

Said a source, “It is rather unfortunate. Can anyone doubt that we need to replace these aircrafts first of which more than 50 years ago? Hope that the delay does not last beyond these three months. Whatever the procedures are there have been followed and the deal cleared only after that. Need was to sensitise Mr. Patel and not retreat into a shell.”

Image courtesy www.bharat-rakshak.com
Image courtesy http://www.bharat-rakshak.com

The primary cause for the opposition by the Patel on behalf of the Public Sector Undertaking (PSUs) lies in the nature of this deal. When in June 2011, the IAF indicated a need to replace these transport aircrafts, a detailed examination was done in the MoD to evaluate the situation at the only Defence PSU capable of manufacturing and assembling aircrafts in India, the Hindustan Aeronautics Limited (HAL). It was then decided to acquire these aircrafts from foreign Original Equipment Manufacturers (OEMs) who had to tie with one or a consortium of led by Indian private sector players and announce an Indian Production Agency (IPA). The deal also involved the off-the-shelf purchase of 16 initial aircrafts followed by manufacturing and assembling of the remaining ones in the IPA with a complete Transfer of Technology (ToT). “The point being that while the HAL has its hands full, there is a pressing need to integrate and galvanise our private sector in the aerospace sector if India is to seriously pursue indigenization,” said a MoD official.

Air Marshal (Retd) PS Ahluwalia
“AVROs have been the workhorse for the IAF for about half a century and the plan was to phase them out by 2015 towards maintaining flight safety and operational standards. So the case for replacing these planes is genuine. Yes reservations have been expressed but there is a lot of misinformation regarding participation of PSUs. It is a very honest and fair effort towards getting our private sector involved. If not done now, it will never happen. I believe one of reasons for this delay is also because OEMs want further time.”

Amit Cowshish, former Financial Advisor Acquisitions, MoD
“It is a little difficult to grasp why the MoD is being unable to come clear and respond to Minister Praful Patel. After all this deal is all black and white and has the approvals of multiple committees including that of Defence Acquisition Council which is chaired by Defence Minister himself. On the other side, I’d rather have the MoD take the time and sort issues now than after making more progress in the matter.”


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