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This article was first published 9 years ago  » News » How a 'Made in India' project was scuttled

How a 'Made in India' project was scuttled

By Ajai Shukla
January 07, 2015 11:43 IST
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Instead of the Hindustan Turbo Trainer-40, which Hindustan Aeronautics Limited could build, export, overhaul, upgrade and even modify into a light-attack aircraft, powerful lobbies have promoted a Swiss trainer -- the Pilatus PC-7 Mark II. Ajai Shukla reports.

Prime Minister Narendra Modi's 'Make in India' vision faces powerful opposition, including within the military, which sees greater benefit in importing costly foreign weaponry.

This is evident from the successful scuttling of a Hindustan Aeronautics Limited project for designing and building a basic trainer aircraft named the Hindustan Turbo Trainer -- 40 (HTT-40) for training rookie pilots of the Indian Air Force.

Instead of this aircraft, which HAL could build, export, overhaul, upgrade and even modify into a light-attack aircraft, powerful lobbies have promoted a Swiss trainer -- the Pilatus PC-7 Mark II.

Business Standard has learnt, and the IAF has confirmed, that the MoD has directed HAL to close the HTT-40 project.

Instead, HAL will build 106 PC-7 Mark II trainers in India.

In 2009, the defence ministry had ruled that the IAF's requirement of 181 trainers would be met through two simultaneous channels -- 75 aircraft will be bought from abroad while HAL designed and built 106 HTT-40 trainers in India.

Accordingly, the IAF contracted on May 24, 2012 with Pilatus for 75 PC-7 Mark II trainers for Swiss Francs 557 million (Rs 3,600 crore/Rs 36 billion). With that done, the IAF began a shrill campaign demanding 106 more Pilatus in place of the HTT-40.

Business Standard has identified a four-pronged campaign that promoted the Pilatus trainer, while blocking the HTT-40 programme.

This included a letter from a serving IAF chief to the defence minister that knowingly understated the cost of the Swiss trainer, to argue that the indigenous trainer is too expensive; a letter from a Bharatiya Janata Party member of Parliament to the Chief Vigilance Commissioner alleging corruption in selecting an engine for the HTT-40, delaying the engine purchase; another letter from a shadowy non-governmental organisation to the CVC, also alleging irregularities in HAL's engine selection and levelling charges against HAL's design chief; and repeated attempts by the IAF deputy chief, who sits on HAL's board, to choke off funding for the HTT-40.

CVC investigations have found no wrongdoing but the investigation has delayed HAL's purchase of an engine for the HTT-40. Such delays strengthens the IAF's case for buying more Pilatus.

Business Standard had earlier reported on the letter written by then IAF chief, Air Chief Marshal N A K Browne to then defence minister, A K Antony.

Browne's five-page letter argued for scuttling the HTT-40 and buying more Pilatus, falsely stating that the Pilatus costs only Rs 30 crore (Rs 300 million) per aircraft, significantly cheaper than the HTT-40.

In fact, due to the rupee's decline, the IAF was paying Pilatus almost Rs 40 crore (Rs 400 million) for each PC-7 Mark II trainer being delivered.

Browne also stated incorrectly that the Pilatus' cost would remain Rs 30 crore per aircraft till 2017.

In fact, the next 38 trainers will cost Swiss Francs 6.09 million (Rs 39.3 crore/Rs 393 million today) each under the 'options clause' of the contract.

The cost of the following 68 aircraft (adding up to 106 additional PC-7 Mark II) would be negotiated afresh and would almost certainly be higher, due to inflation.

The MoD ignored Browne's letter, being disinclined then to scupper an indigenous project.

However, with the IAF blocking funding for the HTT-40, HAL was forced to commit Rs 180 crore (Rs 1.8 billion) of company funds in July 2013.

In early 2014, that was upped to Rs 350 crore (Rs 3.5 billion), with three prototypes to be built for accelerated flight-testing.

With the HTT-40 on track, and racing towards its first flight next year, two corruption allegations mysteriously popped up, stalling the project.

Both alleged wrongdoing in HAL's selection of the Honeywell TPE 331-12B engine after an open tender, when the alternative supplier, Pratt & Whitney, refused to allow licensed manufacture in India.

With the first flight looming, Honeywell agreed to provide a 'Category B' engine -- a used engine with more than 80 per cent of its service life remaining.

The first complaint came in early November from the BJP MP from Jaunpur, Krishna Pratap Singh, who complained to the CVC about the engine selection and blamed HAL's design chief, T Suvarna Raju, who oversees the HTT-40 project. Investigation began and the MoD halted engine procurement.

Contacted by Business Standard, Krishna Pratap Singh claimed that he knew nothing about the HTT-40 or the issues involved.

"About three to four months ago, a sajjan (person of good character), who I don't remember now, came to me and said there was corruption. I only wrote that the matter be investigated, and any wrongdoing corrected," said Singh.

The second allegation came almost simultaneously from an NGO called Rashtriya Mukti Morcha. The RMM has neither expertise nor previous interest in aerospace. It has earlier filed petitions against Sonia Gandhi's right to hold Constitutional office, and in the Jharkhand Mukti Morcha bribery case.

Contacted by Business Standard, RMM chief Ravindra Kumar acknowledges filing a complaint. He said details are in his files, but he repeatedly denied requests to visit his office to ascertain the basis for his complaint.

CVC investigations into the complaints unearthed no wrongdoing; It is not unusual for 'Category B' engines to be chosen for prototypes, while buying new engines for the production aircraft.

HAL had powered the intermediate jet trainer prototype with a 'Category B' Larzac engine, until new engines became available.

Even so, engine procurement was halted. Meanwhile the IAF repeatedly petitioned the MoD that Swiss trainers should be quickly bought since the HTT-40 would be late.

Meanwhile, the deputy chief of air staff, who sits on HAL's board, steadfastly opposed funding for the HTT-40.

When the board allocated Rs 180 crore in July 2013, the DCAS dissented in writing, something that the IAF now denies.

The IAF has sought to associate the PC-7 Mark II with the 'Make in India' drive by seeking to build it in India to blueprints provided by Pilatus.

Yet that would essentially remain a foreign aircraft, with intellectual property, technology and licensing residing abroad.

In contrast, a 'Make' category project like the HTT-40 would involve far more expansive indigenisation -- including ground-up design and integration, test flying and certification and eventual manufacture.

In 2013, the IAF asked HAL to scrap the HTT-40 and instead build 106 PC-7 Mk II from technology transferred by Pilatus.

"However, in their own interest, HAL declined to participate in license manufacture of the PC-7 Mk II," the IAF told Business Standard.

Rebuffed by the HAL, but insistent on providing a veneer of indigenisation, Browne bizarrely declared on October 8, 2013, that the IAF's base repair depots, which maintain and overhaul aircraft and engines, could build the PC-7 Mark II.

The IAF's maintenance chief, Air Marshal P Kanakaraj, quickly contradicted him, while the MoD simply ignored the proposal.

Now, however, battered to a halt by groundless complaints and unable to buy an engine, HAL has buckled under the pressure.

Last month HAL Chairman R K Tyagi agreed to build the PC-7 Mark II, while developing the HTT-40 as an HAL project.

Now even that is seen as a threat.

At HAL's board meeting on December 20, P K Kataria, an MoD financial advisor, questioned why the HTT-40 project should continue, since HAL would be building the PC-7 Mark II.

Defence Minister Manohar Parriker will pronounce final sentence on the HTT-40, in the apex Defence Acquisition Council.

Asked when this would happen, he indicated that the die was not yet cast: "There are issues (relating to the Pilatus) that were raised and which have to be addressed. I think every query and every difficulty has to be properly addressed."

The MoD and HAL did not respond to a request for comments for this report.

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Ajai Shukla
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