News Column

FICCI Welcomes Government's Decision to Set Up a Second Line of Aircraft Manufacturing in India

July 21, 2014

NEW DELHI, July 21 -- The Federation of Indian Chambers of Commerce and Industry issued the following news release:

FICCI welcomes Defence Acquisition Counci's (DAC) decision to clear an IAF proposal for issuance of a tender for construction of 56 transport aircraft by private industry players to replace the the ageing AVRO fleet of Transport Aircraft of the IAF. This initiative to create second line of aircraft building in the national interest of both from user (Indian Air Force) and from Military and Civilian Aerospace industry's perspective. According to Dr. A Didar Singh, Secretary General, FICCI "This opportunity to Indian private sector would create a second line of aircraft production and will strength the indigenous capability of Indian industry in aircraft manufacturing. This will encourage the growth of an Indian aerospace industry in the private sector and eventually will prepare Indian industry to participate in more complex programmes in the future."

This innovative model cleared by the DAC of a new categorization of Buy & Make with ToT to an Indian Production Agency (IPA) is a farsighted measure to build capabilities in Indian industry that would act as a force multiplier and pave way for domestic capability creation to address growing need of Indian defence as well as civilian aerospace sectors.

FICCI also hails the open and transparent manner in which Indian Industry was involved over the last three years in conceptualizing the innovative model in this proposal through interactions at various levels at HQ IDS and Service HQs. The involvement of the private sector in understanding the users requirement and user evaluating industry's current capability and desire to innovate, strengthen and achieve next higher level gave Indian Industry confidence about the MoD's intent to truly open up Defence production and doing away with the erstwhile nomination regime.

This changed mindset allows foreign technology provider to evaluate and choose between the best of IPA for future development and tie ups. This also augurs well with the tenets of the Defence Production Policy which call for a move towards "substantive self-reliance "and of the DPP that envisages opening of the sector to Private Sector.

The governments decision to impose confidence and encourage private sector, as envisaged by FICCI, the indegenious content in this second line of production will increase gradually from 30% to 60% over the life of the programme. The capabilities acquired through the Maintenance ToT will reduce cost to the exchequer over through life period. There will further open opportunities for industry with possible civilian spinoffs and export opportunities. FICCI is in total agreement with Defence Minister that this progressive step will help Indian private sector to become "a player" in aircraft-manufacturing and will lead to "capacity-building" domestically.

Dr Singh added "The doing away with nomination process will lead to competition and benefit the user and make both private & public sector more efficient leading to innovation and product specialisation." FICCI believes that Indian defence industry must utilize each and every available opportunity, form strategic consortiums for investments and absorb specialized knowledge. This program gives an excellent opportunity to HAL to team up with IPA in a Consortium / SPV model and contribute to the program through value proposition by sharing its vast experience as well as facilities invested in to by MoD, Govt of India.

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Source: Targeted News Service

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