Defence Notes

New Delhi, 9 July 2008

HAL’s Latin American Order

GLOBAL AMBITIONS ACQUIRE WINGS

By Radhakrishna Rao

At long last, India’s state-owned aerospace venture Hindustan Aeronautics Ltd (HAL) has received a shot in the arm for its ambitious plan of emerging as a globally competitive supplier of high quality products. The Air Force of Ecuador has decided to order seven multi-role Advanced Light Helicopter (ALH) Dhruv, considered a vibrant symbol of India’s aeronautical prowess. The US$500-million contract is likely to be signed within a few weeks, even as HAL is gearing to supply the first helicopter of the order in the next six months. The entire lot is expected to be supplied to this Latin American country within a two-year timeframe.

Significantly, HAL bagged the order from Ecuador in the face of stiff competition from as many as seven helicopter manufacturers, including Eurocopter and Kazan. Clearly, the choice of Dhruv by Ecuador marks HAL’s first major triumph in the “stiffly contested” global market for aeronautical products. For the past five years or so, HAL has been seen vigorously promoting Dhruv as a cost-effective rotary wing aircraft, suited for wide-ranging defence and civilian applications.

However, it could manage to sell only two units to the aviation unit of the Nepalese army and lease out one unit to the Defense Ministry of Israel for ferrying VIPs and defence officials. Of course, in the domestic market around 80 ALH Dhruvs are in operation with all three wings of the services and the Coast Guard accounting for a lion’s share of the Dhruvs sold so far. As it is, HAL expects to produce around 40 Dhruvs a year for the use of the services.

Meanwhile, unconfirmed reports have that another Latin American country, Peru is also edging closer to buying two air ambulance version of Dhruv. If the Peruvian order comes through, it cannot but be a win-win situation for HAL, which could spur this aeronautical giant to forge ahead in the global market with its multi-use products. Till now, HAL had to manage with an image of being a defence outfit dedicated to meet the needs of the Indian armed forces, with little to show by way of the products that have civilian or non defence uses.

For sometime now, HAL has been busy focusing on Latin American countries for marketing Dhruv. In fact, it had demonstrated the prowess of the ALH to the Chilean Air Force and was hopeful of bagging its order for 12 Dhruvs. But it lost out in the race to Bell-412. “Political pressure and lobbying,” are being blamed for Dhruv yielding ground to Bell 412. Even so, HAL is eagerly looking forward to selling quite a few of Dhruv units to Bolivia and Venezuela. Among the Asian countries that have evinced interest in Dhruv are: Dubai, Turkey, Malayasia and Indonesia. In addition, with medical tourism booming in the S. E. Asian region, HAL is also looking at Thailand and Singapore as potential markets for an air ambulance version of the helicopter.

With an eye on attracting more customers, HAL has been deploying the Dhruv helicopter in many of the leading air shows, including the recently-concluded Berlin Air Show. Significantly, the Sarang team of the Indian Air Force (IAF), which used Dhruv helicopters for performing an awe-inspiring aerobatic display, bagged the best performance award at Show. In view of Dhruv’s versatility and wide spectrum of operational capability, HAL’s major thrust is on marketing it. “HAL is pursuing various prospective foreign customers for the supply of Dhruv,” admits its Chairman, Ashok Baweja.  

He revealed that HAL is also into the development of Light Combat Helicopter (LCH), in addition to developing a weaponised version of Dhruv, which is now undergoing field trials before induction into the Services. This new version is powered with Shakti (Ardiden) engine which develops 30 per cent more thrust than TM-333-3B2 engine, used in the non-weaponised version of the helicopter and is being planned to be deployed in high altitude regions along the border with Pakistan.

Incidentally, 5.5-tonne class Dhruv, India’s first-ever home grown product has helped HAL live down its image of being an enterprise focused on licensed production. Being under the shadow of India’s defense establishment, whose “narrow and insular outlook” proved to be  a big stumbling block in its way of emerging as a dynamic and forward looking corporate enterprise, HAL could hardly think  of entering the “fiery competitive” global market.

In this fast shifting ground reality, HAL is aiming to become one of the leading 20 defence outfits in the world. But then it would need to shed its “bureaucratic image”, a legacy of being a defense public sector unit. It must put its act together to strengthen its marketing strategy and after sales’ service network with a focus on timely supply of quality spares. The sheer lack of the above has proved to be the Achilles heel of India’s defense contracts with Russia.

HAL, which has been accorded the prestigious “Navaratna” (nine gems) status by the Government would need a greater degree of autonomy and a higher level of freedom to attain a global status. However, privatization and corporatization with a massive up-gradation of its technological base and production facilities, could alone help HAL go global in the real sense of the term. Though there have been talks of privatizing HAL, the Manmohan Singh led-Government, till recently dependent on the Left for its survival lacks,  lacked the political will to turn the PSU into a private enterprise capable of raising funds from the market.

Presently, the biggest problem facing HAL has been whether it could remain an economically viable venture without orders from the defence forces. The moral of the story being that it would need to widen its customer base by going in for a wider range of multi-use products to grow into an aeronautical entity of global standing.

There is no denying that HAL would stand to gain immensely in terms of revenue, exposure to new technologies and acquisition of skills from the offset clause forming part of the Defence Ministry’s contracts for aircraft, helicopters and hardware. On another front, HAL’s plan to invest Rs 1billion in an engine component production joint enterprise with Rolls Royce is expected to sharpen its skills in this critical area. It has also on its hand a contract to supply doors to the European aircraft major Airbus. It has signed a deal with Boeing in which it is planned to bring in manufacturing works worth US$1-billion to India over the next decade. 

HAL also stands to gain by its participation in the Indo-Russian fifth generation aircraft project, signed in 2001. This advanced aircraft with stealth features and advanced avionics will be among the most sought after contemporary fighter planes in the world. However, HAL is now scouting for a partner to push ahead with the Indo-Russian joint plan for developing a military transport aircraft meant to replace the AN-32 aircraft in service with the IAF, following Moscow backing out on financial grounds.

In the meantime, HAL is busy with two of its projects-- the production of the fourth generation tactical  LCA (Light Combat Aircraft) Tejas, which is expecting operational clearance by 2010 and the Intermediate jet trainer  HJT-36 Sitara. It now would need to focus on emerging and new technologies assimilated over the year and best practices for future projects. For HAL the best is yet to come. ---INFA

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