MoD in a shock after HAL seeks Rs 463cr per LCA jet, more than Su-30 MKI

[BDforever]

• 

The euphoria within the defence establishment over the induction of the first indigenous Light Combat Aircraft into the IAF appears to have subsided with the Defence Ministry forming a committee to look into the “high price” demanded by Bengaluru-based public sector manufacturer, Hindustan Aeronautics Limited (HAL), for Tejas Mark1A.

Sources told The Indian Express that in response to a request for a proposal for 83 Tejas Mark1A fighter jets issued by the IAF in December last year, HAL quoted a price of Rs 463 crore per jet in April. This raised eyebrows in the government, sources said, as the price compared unfavourably even with more modern foreign fighters. “The HAL supplies the more modern Russian Sukhoi fighter, which it assembles at Nashik, at Rs 415 crore. The Russians supply it at Rs 330 crore. The Swedish Gripen was offered to us for Rs 455 crore, and F-16 for Rs 380 crore, and both were to be made in India. The HAL itself gave us Tejas Mark1 at Rs 100 crore less. This price for an improved version seems high,” sources said.

Concerned about the price for an indigenous fighter jet, which the government has been keen to promote under Make in India scheme, the committee set up by the Defence Ministry will look into the pricing of military equipment manufactured by defence PSUs. The committee is headed by Principal Advisor (Cost) in the ministry and is likely to submit its report in the next few weeks.

Once the committee submits its report, the ministry will form a commercial negotiations committee (CNC) to bring down HAL’s price for the jet. The contract for 83 jets, sources said, will take another year before it is finally signed.

According to sources, the Defence Ministry is also concerned about the delay in supply of the existing order of the first lot of 40 Tejas fighter jets. In last three years, only nine fighter jets in Initial Operational Clearance (IOC) mode were supplied against an order of 20. The order for another 20 Tejas jets in Final Operational Clearance (FOC) has not even begun, as the FOC has not yet been attained by the aircraft. The ministry has also agreed that the HAL will supply eight trainer aircraft out of 40, after the 36 Tejas Mark1 have been supplied. “The idea was that HAL will produce 18 Tejas fighters every year. That is the only way we can provide IAF to make up its numbers as its older fighters go out of service. But there has been a delay and we are in touch with HAL about it,” sources said.

The ministry had also asked IAF about allegations that it had made constant changes in ASQR (Air Staff Quality Requirements), which could have led to the delay. They found that there have been no changes in the ASQR of Tejas Mark1A, since it was first formalised in 2014. Even in the case of Tejas Mark1, the IAF had given 135 concessions on the ASQR to HAL.
source: http://defencenews.in/article.aspx?id=559091

 

[SecularNationalist]

because the so called indigenous fighter is using components from dozen different countries that makes the cost to go high with all import duties and shipping arrangements etc i guess.

 

[war&peace]

The indyjenus piece of crap made by the slum dwellers was designed by Dassault, France. It uses engine from USA, radar from another country and rest of the subsystems from a dozen more countries. The only indyjenus part of this truck-top toy is paint job and polish ...

But still this piece of shit is too expensive because a lot of people want to fill their coffers and let the poor slum dogs foot the bill.

 

[Ajaxpaul]

The indyjenus piece of crap made by the slum dwellers was designed by Dassault, France. It uses engine from USA, radar from another country and rest of the subsystems from a dozen more countries. The only indyjenus part of this truck-top toy is paint job and polish ...

But still this piece of shit is too expensive because a lot of people want to fill their coffers and let the poor slum dogs foot the bill.

Quite rich coming from one's just learnt to tie up together Chinese plane kits.

Lol

 

[A.P. Richelieu]

Maybe HAL wants to sell Su-30MKI, rather than Tejas Mk1A.
Only way to know is to get a quote from someone else...
They will of course have a lot of overhead to setup production.

 

[Daghalodi]

India is a rich country!!!

 

[punit]

Sooner we privatize HAL better for us. This piece of good for nothing babudome has caused immense harm to india.

 

[PakGuns]

Quite rich coming from one's just learnt to tie up together Chinese plane kits.

Lol

But did we named it "indogynos" ?

 

[Ajaxpaul]

But did we named it "indogynos" ?

No guess not..what you wrote is BS. They are better educated than you.

 

[abc123xyx]

and F-16 for Rs 380 crore,

this is how propoganda got cought...

 

[BATMAN]

Sooner we privatize HAL better for us. This piece of good for nothing babudome has caused immense harm to india.

Don't blame it on clerks... LCA is technically flawed... basically the air-frame.
Fix the air frame and rest of all would be fine.

 

[KapitaanAli]

Why the Tejas cost is high

(Tejas — up and away)

There has been some public handwringing over the unit cost of the Tejas LCA. Most of it motivated, from the same quarters that had repeatedly doubted whether the aircraft would be other than a paper plane and, as the project progressed and began passing technical milestones, whether it would ever match up to specs and, when it began proving its druthers as a fighting platform, whether it would ever be an operationally fit aircraft — recall the then CAS ACM PV Naik’s contemptuous dismissal of this home-grown fighter not that many years ago as “a three-legged cheetah”? — to now when there’s little doubt about the warplane’s bonafides — as it is a damn good combat aircraft that can give any import a run for India’s money. So these import-lovers and skeptics are toggling at the comparative cost angle, per chance, to derail any which way the LCA-variants-AMCA procurement programme, and get the IAF back to the good old way of doing business — buying aircraft abroad.

A recent Indian Express story (June 27) on the topic revealed that HAL charges Rs 463 crore for the Tejas Mk-1A versus Rs 363 crore for the original LCA, and Rs 415 crore for the Su-30MKI built at Nashik (compared to Rs 330 crore if sourced from Russia). The figures for foreign aircraft on offer are Rs 544 crore for the Swedish Gripen, and Rs 380 crore for the US’ F-16 Block 70. And one can be certain that once the race hots up the Sukhoi Bureau will bring the costs of the Su-35 also in the race, below that of any of these aircraft. So, where’s this cost-based argument headed? You guessed it — right up Saab’s, Lockheed Martin’s, Sukhoi’s and, now that the race has been thrown open to all comers and not restricted to single engine aircraft, Dassault’s, doors (for additional French Rafale).

Rs 463 figure seems inflated, but won’t quibble over the numbers in this post. This is high. But why?

Ever since erstwhile defence minister Manohar Parrikar rightly decreed that HAL would, like Boeing, Lockheed, EADS, Saab, and Dassault, be the prime integrator for the Tejas and not its manufacturer, the work along with the production modules were transferred to various private sector entities. Thus, the LCA’s composite wing structure and assembly is done by L&T at its plant in Coimbatore, VEM Hyderabad, outputs the fuselage, Tata Advanced Materials is responsible for the fin and rudder assembly, and so on. This is a wonderful production schemata and the reason why I have been advocating that ADA also transfer the know-why — the source codes of the Tejas, the operational algorithms et al to competent private sector companies so that they can begin designing combat and other aircraft, and right now open whole new Tejas production lines — in addition to the two at HAL, so the LCA can be mass produced for accelerated induction into the IAF. The fact that Tejas are not coming out fast enough out of the factories is used to argue for importing planes to meet “urgent” needs. With many companies producing the Tejas and its follow-on variants and the successor 5th gen fighter plane, AMCA, for the IAF and for exports, it will ensure economies of scale, bring down the unit price, and send the Indian defence industry as a whole rocketing.

But what is at issue presently is the price that HAL charges the IAF for each Tejas. Here HAL resorts to its standard pricing trick to ensure that it makes “profit” and maintains a healthy financial bottom line, and keeps in check those in and out of government baying for privatizing loss-making DPSUs. Like the other ‘nav ratna’ DPSUs, HAL adds 30% to the price charged by the private company for the out-sourced work. To the cost and profit charged by each of the firms with the Tejas production modules, HAL adds 30%. So the price escalates.

MOD can challenge this rentier attitude of the HAL and cap HAL’s margins at 5%-10% on the total cost of the Tejas and bar this DPSU from marking-up the cost by 30% for each of the aircraft’s major assemblies — the reason why HAL is staying financially afloat considering it is not cost-competitive with the private sector defence industrial firms. If this is done — and HAL’s margin thus contained then, voila!, you have a price that no imported aircraft can ever match, and why the Tejas can be a runaway bestseller in the developing world that desires an economical but advanced fighter plane, and which is being taken to the cleaners as India has been and still is, by foreign aviation companies.

What chance that the 5%-10% recommendation as maximum overall HAL margin is accepted by the MOD committee that’s been set up to scrutinize the Tejas price line and suggest ways of paring it? Zero.

Because such extortionist costing schemes are at the heart of the effort to keep alive the DPSU sector and is supported by the department of defence production in MOD — the guardian of the DPSU interests. This department doesn’t care what’s good for the country, it cares only about its remit which is to ensure, by any and all means, that the DPSUs and OFB keep their heads above water, to the detriment of economic good sense and the national interest.

So, now you know why the price tag for the Tejas is Rs 463 crore.

 

[Imran Khan]

tejs engine and body parts made by diamond

 

[KapitaanAli]

tejs engine and body parts made by diamond

Basically, now Tejas modules are made by private companies, other than the critical systems which are either made by DRDO labs or imported.

So these private companies make their own profit, and then HAL adds 30% extra profit to this private company price.

No wonder.

 

[Imran Khan]

Basically, now Tejas modules are made by private companies, other than the critical systems which are either made by DRDO labs or imported.

So these private companies make their own profit, and then HAL adds 30% extra profit to this private company price.

No wonder.

bhai seedha seedha bolo bhti ganga main her koi naha raha hai