Singapore Air Show

India Hungry to Develop Hi-Tech Aerospace Expertise

 - February 13, 2012, 11:45 AM

India’s big-ticket military acquisitions are expected to aggressively push schedules for the transfer of production to the country’s ambitious aerospace and defense industry. But the technology that India expects to be transferred through co-development work generated by offset agreements is raising concerns among vendors about possible violations of intellectual property rights (IPR).

A revised policy on offsets is expected to be released soon and the industry hopes that this will at last deal with the thorny issue of transfer of technology (TOT), which is no longer mandatory as part bids, as it was in the past. Starting with projects awarded from 2011, TOT can now be offered as offsets.

Industry observers say India’s lack of clarity on dual technology and IPR may result in OEMs finding ways to circumvent the use of advanced technology on the grounds that India does not have safeguards to protect manufacturers that license technology to local partners. The Indian industry has called for a National Technology Audit Agency and an integrated legal framework to be put in place to ensure TOT protects the OEM.

Issues are already surfacing. India’s Aeronautical Development Agency selected 99 GE F414 engines to power the Mk II version of Hindustan Aeronautics’s Light Combat Aircraft for the Indian Air Force. GE Aviation will supply the initial batch of F414-GE-INS6 engines and the rest will be manufactured in India under transfer of technology arrangement.

The contract requires 10 engines to be provided in flyaway condition. The agreement also contains a30-percent offset clause and will tap some of the 24 Indian companies that GE has certified. But with India indicating that it might use the TOT for the engine for its indigenous aircraft under development, OEMs are seeing red. “We can almost be sure there will be no transfer of crystal blades of the F414, something India desperately needs,” said an analyst under condition of anonymity.

Last year, there were more than 50 contracts in India that required offsets worth $10 billion. This will increase proportionately with programs such as the $12-billion-plus contract for 126 medium multi-role combat aircraft contract, the $4 billion Boeing P-8I maritime surveillance aircraft program, Boeing’s Harpoon anti-ship missile and the $4.1 billion deal for 10 Boeing C-17 Globemaster aircraft for the Indian Air Force. Further, contracts for basic jet trainers, light helicopters and towed artillery are close to being signed.

Public-private sector partnerships are expected to play a key role in the future. Clarity on the long-delayed joint venture policy to increase foreign participation from 26 to 49 percent is awaited. The potential of Defense Private Sector Units (DPSUs) as large-scale offset discharge vehicles remains uncertain, especially given the capacity and current orderbook mismatch. A choked orderbook for DPSUs looking to honor delivery timelines and future order absorption capacity is a concern.

“India’s largest defense manufacturer Hindustan Aeronautics currently has an orderbook of $18 billion… Its ability to absorb additional orders remains uncertain, given the historical structural issues, even after adjusting for complexity for the order pipeline, currently faced by HAL,” concluded a report by consultancy Aviotech. The comparable order backlogs for other major aerospace firms is around three years for Embraer and around one year for Lockheed Martin.

A letter addressed last year to the India minister of defense by various international associations, including U.S. Aerospace Industries Association and GIFAS of France, recommended increased FDI, wider permission for dual-use technologies and expand the scope of offsets–many of which the MOD has adopted. The letter asks for multipliers in offsets contracts especially in TOT and production-license-based projects and FDI. The letter also calls for “one clear offset authority” outside of the Defense Acquisition Council with decision-making power to “approve contracts in a predictable, efficient and transparent manner.”

“We improve it [the policy] every year, with suggestions from industry and vendors…and refine [it] as we go along,” said Pallam Raju, state minister for defense.

Recently, at a public forum, Raju acknowledged that DPSUs lack program management skills. “ [Improving the skills] is a painful process. It will take some time to gather the requisite skills as programs mature gradually,” he said, while adding that the government is committed to encouraging private participation in defense production, with the ministry focused on strengthening and widening the defense industrial base.

“The Indian aerospace industry is exposed to some risk from its limited expertise in materials science,” said Rahul Gangal, Aviotech’s director for defense advisory and investments. For example, capability has not evolved in the composites precursor and fiber segments of aircraft design and production. Keeping this in focus, the new offsets policy is expected to include certain areas where TOT is required in India, including nanotechnology, single crystal blades, titanium honeycomb and investment casting for barrel manufacture.


In coming year india certainly will mastermind the crystal blade technology there is no doubt.If the american or britisher think that they will withhold the technology under any circumtences they are fool that is why india opted for the french rafale and britisher ,american and russian kicked out of the competition in MMRCA fighter deal.American & Britishers are very smart they just try to sell thier mighty machines and Russian are cunning they feel that one's india reengineer's the technology who will buy thier product.Result is that even they have been kicked out of deal.Not only this their MIG series will be vanished out of the Indian Airforce in near future.For smart people india too can become smart.In near future i see that with help of French india will achieve this mile stone and there will be total stoppage of the fighter jets from british and American manufacturer ,If they help india it will be good for them only if they try to block the TOT then they will be biggest looser in the coming future.They must reframe from such policies.Door will be closed for the big fish and india will buy millitary hardware from only those country which will colloborate it in latest avionics and defence technologies under TOT.It is better for american and britisher who can possiblely colloborate in crystal blade technology so that they can win faith of india and sell thier latest weopon to it.India will be game changer in the coming year's after china.India will not only develop its own technology but also sideline those country which has reframe from passing such technology.You can see this why india has cordial relation with country like Russia,Israel,France and Brazil.Mind it brazil will also go for the raffael fighter in the coming year's to come.This is not only future i am telling you but also i can see this with present senerio going on.Israel has great future with india as india can allow its land to them to manufacture its latest missile,radar and avionics to them.India and Brazil is also coming closer in defence deal and it is possible that one's india will purchase the raffael fighter brazil will also move accordingly.And this deal will not only help the french but french will soon sell its fighter raffael to countries like Indonaisia,Malaysia,Taipai, and possibly to gulf countries.You will see the future of raffael i am telling this to you seriously.

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