God I hope it's not Adani, they have literally no engineering capability. Their only capability is rent seeking and influence peddling at the highest levels of government.
L&T has formed a strategic partnership with Bharat Electronics Limited (BEL) to support Advanced Medium Combat Aircraft (AMCA) programme of the Indian Air Force. The consortium will participate in the Expression of Interest notice issued by the Government of India’s (GoI) Aeronautical Development Agency, by way of submitting a response in the coming weeks.
The partnership will leverage L&T’s expertise in developing strategic defence and aerospace platforms, along with BEL’s experience in defence electronics and systems, to jointly contribute to India’s 5th-generation fighter aircraft.
The partnership will leverage L&T’s expertise in developing strategic defence and aerospace platforms, along with BEL’s experience in defence electronics and systems, to jointly contribute to India’s 5th-generation fighter aircraft.
It's not something , it's called gaming the system & Jayant Patil - head of L&T Defence Division is an old hand at it.
Makes the L&T bid more attractive to the MoD for consideration.
Can't blame him though especially since the GoI is desperate for some reason to birth a competitor to HAL instead of doing the right thing & professionalising the organisation thru more autonomy .
Anyway it is what it is.
Just an assumption. Maybe the government just feels that fixing HAL from within would take forever and probably face a lot of pushback from the organisation itself. We saw how tough it was to restructure the OFB, and HAL is even bigger with deeper roots. So instead of waiting years for internal reforms that may or may not work, they’d rather fast-track a private competitor. The idea seems to be that outside competition will do what internal directives can’t force HAL to raise its game. In short I assume GoI thinks it will take more time & effort to reform HAL than create a competitor. Perhaps unlike us who have not much idea about what kind of politics goes inside all these PSUs like HAL, MoD & GoI is probably aware and don't wants to deal with that.
Last edited:
MoD is doing the right thing.
HAL is now a Maharatna company. Thats the most autonomy a CPSE can obtain. Last FY they had a net worth of ₹35k cr and a profit of ₹8.3k. HAL can now invest up to ₹5,000 crore (or 15% of net worth) in a single project without government approval. Annual investment across all projects can be up to 30% of net worth. In short, they can fund any project by themselves. Therefore, autonomy is no longer an issue here. They have a full order book and they are a monopoly. Monopoly is never a good thing.
How are they supposed to become more competitive without competition? The only thing left to do is to reduce the government's shareholding from the current 70% to below 50% so that it will no longer be a PSU. Do you think it is politically possible?
Every stakeholder from the MoD, DRDO, and IAF is asking for is an alternative. It's a reasonable request. The pie is big enough to share. A capable private aerospace industry will make the pie bigger by exporting. End of the day every one wins.
Divide it into subsidiaries and let them compete. AVIC is also more or less a "monopoly" in China. Even COMAC was once a part of it.
I would advise not to do so or to copy China when it comes to AVIC. The Chinese industry operates under a very different administration, leadership, and business environment. The division of HAL will create more DPSUs and the culture, administration etc. will more or less remain the same. Unless you're talking about selling off those subsidiaries and reducing shares (which has negligible chances of happening). They need competition from a similar competitor. They will either survive and thrive or they will end up like any other PSU. L&T and BEL is not hot stuff but it's a start.
2 aspects to this , beginning with - that autonomy is subjective as the government can & will always interfere in operations if it wants to & there's nothing the management can do about it .
For instance , reservations are still applicable to HAL in spite of its Maharatna status though that's irrelevant to the discussion at hand but it goes a long way to understand what I wanted to convey namely that this entire business of autonomy is subjective.
That's how things are done out here. For example in that same AI slop you quoted here neglecting to attribute source very conveniently it clearly mentions that while the autonomy is considerable it isn't absolute.
GoI still appoints directors to the board of those Mahatatnas . That's another way of maintaining their hold over those organisations.
The idea of autonomy ought to be more in line with the way Airbus operates. It has stakes from a few sovereign governments of Europe but it's management is entirely independent to take decisions they feel is in the best interest of their companies without interference from those governments unless it compromises core interests or strategic ones.
The second & equally important part is what is our annual requirement of aircrafts ? We're the size of the former USSR or the US or China today with aspirations less than a third rate power like UK ?
If you truly manage a second aeronautical firm do we have enough orders going around for two companies like it is in the aforementioned countries ? Is that even possible in the foreseeable future ? One can conceive of this move if we're inducting FAs in the several hundreds with a massive push towards exports like China just rolled out its 300 th J-20 not a 100 here & 200 hundred there
The same is true for our submarine mfg . One can understand the need for two mfg centres for N powered boats & conventionally powered ones respectively . I don't see any prospect for a third line. Yet L&T exists . Why ? Coz it's confident of snuffing out competition which it will eventually for it has deep pockets & the government's & babooos tacit support.
Returning to the subject matter ,by the looks of it , the LCA Mk-2 will go to this consortium as well . Where does that leave HAL once all the Mk-1a's are rolled out ? If one didn't know better I'd say the process of emaciation of HAL has begun in right earnest just like we did for MTNL , HMT , etc in the past & like we're doing to the OFBs at present.
The recent Sharang gun upgrade is a good example in this regard. Don't modernize the factory for decades not just years , lose manpower & the skills along with it , let the entire ecosystem atrophy , then give them an order & see the circus more to expose them than to actually fill in their order books.From incompetence to corruption in vendor selection everything is on open display here.
I've long advocated for splitting up HAL into 4 entities. Have you guys ever come across an aerospace mfg co which doesn't have an in house Fighter Aircraft design bureau ( was amalgated into ADA , 4 decades ago & they're struggling with ARDC ) yet is involved in mfg / assembling everything from TF's to TS's to FAs to Trainers , to HALE / MALE Drones , to Hptrs to CCAs now & possibly UCAVs later to space rockets & other space based components to MROs for those TFs & TS's & for Marine Gas Turbines to you name it .
Name me one such aerospace company in the entire history of aerospace engineering if you cannot find a contemporary one ! Should be easy.
There is indeed none in recent history. BAC, a British company, operated in a similar manner. However, that was while back and the industry has undergone generational changes since then. The HAL split is unlikely to be done by the present government. It will be a messy affair and a coalition based administration will try to avoid it. The easier route is to let other conglomerates compete with it. Seems GoI and the rest have already made some decisions regarding this issue. Reforming the HAL is a tedious process and whichever way you look at it, the babus and the netas are not keen on it.
A nudge and wink at the right time and you know we'll be seeing some movement. Apparently this is just the start, a few other sharks have smelled blood in the water and can arrive soon.
Other players will be vying for a share of the pie. Let's see what ends up happening.
We should not perpetuate the bad idea of the government engaging in business to fix it. All the issues of hiring, firing to basic incentives remain.
China is ruthlessly capitalistic when it comes to competition within the state machinery. They are willing to fire or close down state-owned companies when they fail. It's not possible to do that here.
Like for example, in the late 1990s, the communist party fired 30-40 million workers from state-owned enterprises to downsize. They are a different breed.
I have addressed both points i the original post itself.
- Maharatna is the highest level of autonomy that a CPSU can achieve. It will always have HR policies such as reservation. There is no point in squabbling about it. Thus, the only fix is disinvest to below 50%, which is politically not possible.
- There is enough demand for multiple aeronautical manufacturers when you add the civilian aerospace industry. No other nation besides China is developing three fighter designs, helicopters, UCAVs, and a reusable heavy rocket all simultaneously. We also aspire to produce multiple civilian aircraft, including airliners. The pie will only get bigger with the export market. We do not lack demand, competent human capital, or other resources.
Even Russia unified Sukhoi & Mig bureau & merged it into UAC. What benefit would be there to turn a Maharatna co which they finally got granted after 70+ years of work ? Subsidiaries will not have same autonomy level like the parent company.
BAe was itself a result of amalgamation of a number of other British aerospace engineering firms . Moreover they didn't mfg hptrs or TFs , TS's etc .
There's nothing messy about splitting it up into 4 individual autonomous units with cross holdings between them . Frankly , I don't see why should coalition politics impede this.
Looks like it.
It isn't actually. Problem is our bureaucracy takes the easy way out after spending decades ruining institutions with their meddling & petty politics . Plus we've an NPA in the form of a Raksha Mantri .
Somebody made of sterner stuff like MP would've taken it up as a challenge & done the right thing.
I disagree with you that it's easy to reform HAL. Because that ignores the internal politics that goes inside HAL itself as well as external politics. As Ashwin has mentioned above, that would require major disinvestment. Which in turn will be not liked by certain people within HAL and outside HAL. Causing a political drama, which the Government would not prefer to get into. Also splitting HAL would reduce autonomy as well as over complicate things. Heck we might end up with two companies worse than HAL with less budget, less human and other resources. Less said about the political consequence of such a move the better.