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Heavy industries minister Praful Patel has accused his counterpart in the defence ministry of denying PSUs a level playing field in the Rs 14,000 crore deal to replace the ageing fleet of the Avro aircraft. In the second part of our special series, CNBC-TV18’s Rituparna Bhuyan and Anshu Sharma report that there is merit in the defence ministry’s argument to give preference to private OEM’s as the lead contractor in the consortium bidding for the new transport aircraft.
Praful Patel, minister, heavy industries says “Private sector is most welcome, not questioning private sector participation but PSUs should be encouraged too and not be debarred. PSUs should also be given equal ground for competition. That’s Praful Patel defending his stance that PSUs must continue to be given lead status while bidding for contract. But the Indian Air force has not been a happy client of navratna, Hindustan Aeronautics Ltd.
In may last year, defence minister AK Antony acknowledged before the Parliament that he has received numerous complaints from the IAF on delays by HAL. “The government has taken cognizance of the complaints of IAF regarding the delayed delivery of equipment by the Hindustan Aeronautics Limited,” says AK Antony. But its not just HAL’s unreliable delivery schedule that has bothered India’s defence forces, cost overruns and higher cost of development of critical defence equipment seems to be routine. Basic trainer that HAL is developing for the IAF at quoted price Rs 32.7 crore a piece.
But IAF headquarters claims HAL is under reporting. In a letter written to the defence minister, the Air Force says the actual price on delivery will work out to be almost Rs 60 crore. This is almost 83 percent more expensive than the Pilatus basic trainer being supplied by a Swiss manufacturer. So in effect, the Indian PSU is charging the government almost double amount. HAL’s cost overruns have even come under the CAG’s scanner. The central auditor in its report this year notes that government has to pay 160 percent more for the two intermediate jet trainer prototypes, which were to be delivered by HAL in 2004. Given the time and cost overruns, Praful Patel’s opposition to the defence ministry’s move to end HAL’s monopoly raises serious concerns.
Heavy industries minister Praful Patel has accused his counterpart in the defence ministry of denying PSUs a level playing field in the Rs 14,000 crore deal to replace the ageing fleet of the Avro aircraft. In the second part of our special series, CNBC-TV18’s Rituparna Bhuyan and Anshu Sharma report that there is merit in the defence ministry’s argument to give preference to private OEM’s as the lead contractor in the consortium bidding for the new transport aircraft.
Praful Patel, minister, heavy industries says “Private sector is most welcome, not questioning private sector participation but PSUs should be encouraged too and not be debarred. PSUs should also be given equal ground for competition. That’s Praful Patel defending his stance that PSUs must continue to be given lead status while bidding for contract. But the Indian Air force has not been a happy client of navratna, Hindustan Aeronautics Ltd.
In may last year, defence minister AK Antony acknowledged before the Parliament that he has received numerous complaints from the IAF on delays by HAL. “The government has taken cognizance of the complaints of IAF regarding the delayed delivery of equipment by the Hindustan Aeronautics Limited,” says AK Antony. But its not just HAL’s unreliable delivery schedule that has bothered India’s defence forces, cost overruns and higher cost of development of critical defence equipment seems to be routine. Basic trainer that HAL is developing for the IAF at quoted price Rs 32.7 crore a piece.
But IAF headquarters claims HAL is under reporting. In a letter written to the defence minister, the Air Force says the actual price on delivery will work out to be almost Rs 60 crore. This is almost 83 percent more expensive than the Pilatus basic trainer being supplied by a Swiss manufacturer. So in effect, the Indian PSU is charging the government almost double amount. HAL’s cost overruns have even come under the CAG’s scanner. The central auditor in its report this year notes that government has to pay 160 percent more for the two intermediate jet trainer prototypes, which were to be delivered by HAL in 2004. Given the time and cost overruns, Praful Patel’s opposition to the defence ministry’s move to end HAL’s monopoly raises serious concerns.
