The future of defence ecosystem is technological innovation...
The huge 1000+ requirement of defence helicopters by the Armed Forces necessitates increasing indigenous manufacturing.
The Indian Armed Forces are planning on the largest helicopter procurement programmes in the world. Rather, their requirements aim at strengthening the military helicopter assets through the procurement of 1000+ rotary wing aircraft including attack, utility, multi role and lift platforms by the end of 2027. As of now, on the anvil are 500 helicopters for the IA, 350 helicopters for the IAF, 200 helicopters for the IN & ICG. Considering the projected requirement and various on-going foreign and indigenous procurements in pipeline, it is estimated that Indian Military Helicopter is expected to grow at the rate of 6 percent year on year with the Indian Armed Forces likely to spend around $16-20 Billion on military helicopter acquisitions between 2013-2027. If we include the requirement from civil sector, the figure will cross 2000 mark and the total figure for the Indian helicopter market zooms up to $30-40 Billion in the next 15 years. Furthermore, recently, the Government in a bid to boost indigenous manufacturing has opened a series of contracts for the Indian private sector under Buy-Make (Indian) category of DPP, wherein in all likelihood Indian companies will have to partner with global Original Equipment Manufacturers (OEMs). Under Buy and Make (India), 50 percent of the helicopter must be produced indigenously. The overseas companies would transfer technology. The programmes in pipeline include:
- Acquisition of 400 Reconnaissance and Surveillance (RSH) Helicopters for the Indian Air Force and Indian Army.
- Procurement of 100 Naval Utility Helicopters.
The total business opportunity arising from both the above mentioned programs is estimated to be around Rs 25,000 crore in itself. This will include manufacturing a larger number of helicopters as well as creating a supply chain for spare parts as well as maintenance.
Thus, in the wake of the ever growing military requirement of helicopters, augmenting in-country manufacturing capacity and technical capability is the need of the hour. In the past, India has been spending billions of dollars in acquiring military helicopters to strengthen its Armed Forces. It would be in the best interest of the country that it invests in the R&D in defence and develops indigenous defence technologies as this in turn would not only save the valuable foreign exchange/money but also generate employment and other spin offs like technical knowhow, human resource development etc. In the last 10 years the country has spent around over $5-6 Billion on helicopter imports.
Note worthily, the requirement of helicopters for civil use is also sizeable with growing requirements in tourism, mining, corporate travel, air ambulance, homeland security, air charter etc and need to be met through indigenous production due to economic reasons. At present the private players in the civil segment includes ONGC, Essar, Reliance, Jindals, Punj Llyod and all State Governments which are eyeing expanding towards owning their own fleet of helicopters for their private use as well as charter operations. In coming years, the helicopters are going to be utilized for fire-fighting, surveillance, law and order, road traffic control, electronic media reporting, construction work aids, shuttle services between airport and town. Fleet strength and no. of Operators in India is as per the Table.
|Category||No. of Operators||Fleet Strength|
|Total||98||284 Turbine Helicopters|
The civilian segment presently has over 300 rotor wing helicopters. Conservative projections show that the civil helicopter market is growing at 9.5 percent and during the next ten to fifteen years about 600+ new helicopters will be inducted in the civil/commercial industry. The projected market is about 40 machines per year for next 5-10 years. Refer Graph.
Current Indigenous Production Infrastructure
As far as the indigenous capability to design, develop and produce helicopters is concerned, it is centered around the government owned HAL. The HAL Helicopter Division has produced 336 Chetak and 246 Cheetah Helicopters so far and overhauled more than 200 helicopters of both the types. It has also undertaken the Cat 'B' repairs of more than 75 helicopters and put them back into operation. Among the current programs underway at HAL are the development and production of the Advanced Light Helicopter (ALH) Dhruv, which has various variants of it to fulfill conceived roles by the armed and civil services. The other indigenous programmes in pipeline that are to be developed and produced by HAL are 187 Light Utility Helicopter, 179 Light Combat Helicopters and 76 Weaponized Utility Helicopter (Rudra). However, for the timely deliveries of these, HAL will need to augment its production facilities and make massive investments for its helicopter division, to have the required infrastructure ready in time for the LUH, LCH and IMRH production. By the year 2015, HAL plans on having three helicopter manufacturing plants with one in Bangalore and the other two outside. However, the HAL design and manufacturing of helicopters or engine design had a limited success. Nevertheless estimations depict even after augmenting its infrastructure the HAL is unlikely to fulfill the military helicopter requirements of the Indian Armed Forces on its own. Note worthily, HAL right now, has the capacity to make 25-30 helicopters per year, which is not enough to meet the current demand. Taking into consideration the demand of 1000+ helicopters and past history of delays and resource diversification considering that all indigenous orders to be handled by HAL as it being the only helicopter manufacturing unit that country has, the Armed Forces would remain woefully short of the required number as the figure arrived would be 275-300 helicopters in 15 years. Rather, it would take more than 40 years for the HAL to cover the gap with regard to the numbers required. India cannot afford to have delayed deliveries as because they not only hamper operational availability and maintainability but also drastically affect modernization. If HAL doubles its present capacity, say, to 50-60 helicopters per year then also it would not be able to meet the required target. For the achievement of the 1000+ mark requirement, HAL requires to build at least 50-100 helicopters (per year) which seems a distant dream to achieve as for this lot of investment and resource diversification is required which is not possible at present.
Private Sector And Helicopter Manufacturing
The defence forces fleet needs replacement and new acquisition in the very near future, which HAL alone is not capable of meeting the numbers required thus there would remain considerable gap between the demand and the supply which will keep on widening unless requisite steps are taken. Nevertheless, this situation can be averted if the Government involves and boosts the private sector participation. As far as the private sector is concerned, the private sector participation in aerospace/helicopter manufacturing segment so far has been only as suppliers, fabricators to HAL and OEMs. Some of the major private players today intend to have the technological capabilities to undertake complex manufacturing required for this sector; however, they will have to start as system integrators or recipients of technology in absence of knowhow and build capability. The major private players that have forayed into military manufacturing comprises of:
Tata Group- The Tata Group has been associated with defence production for the last fifty years. In 2010, Tata Advanced Systems Ltd formed a joint venture for manufacture of the Sikorsky S-92 helicopters in India for the domestic civil and military markets. Indian Rotorcraft's $30 million investment in the assembly line will be spread over two years.
Mahindra Aerospace- Mahindra Aerospace subsidiary of Mahindra Group specializes in production of light aircrafts & aero composites. In 2011, it signed a MoU with Eurocopter Group and its subsidiary Eurocopter India, to manufacture sub-assemblies and other engineering products for the growing helicopter market in India. Recently the company has teamed up with Bell Helicopter for 197 LUH tender for the Armed Services.
Larsen Toubro HED Aerospace- Larsen Toubro HED Aerospace division specializes in production of aero composites, sandwich honeycomb structures for aerospace & space sector.
Reliance Industry Limited (RIL)- The group has set up Reliance Defense and Aerospace (RDA) as a wholly owned unit of Reliance Infrastructure Ltd recently. The company is already in talks with some of the international companies like Eurocopter of France, Kamov of Russia, and Sikorsky of the US, for technological tie-ups although the group has yet not confirmed the same.
Invesment And Infrastructure Requirements
Helicopter manufacturing requires huge investments from building up of the infrastructure to manufacturing, assembling, testing, training and simulation facilities. The Capex for building up infrastructure which could be up to 10 Billion depending upon the desired infrastructure. The main fields of activities are to be undertaken includes design, construction and testing of prototype helicopters; the introduction of mass production, certification, upgrading, supervision and support of helicopter operations of civil and military applications. It need to provide systems design, development, production and integration capabilities, along with in-depth training and customer support, to military and commercial operators.
As setting up such venture involves huge cost, any business house would undertake the Risk Assessment, Feasibility Analysis for supporting the decision-making process to analyse and develope a structured financial business case to justify investment against economic returns. New helicopters plant require large investments in order to design, develop, test, certify and bring the product to market a process that can take over five years. Other inputs to be considered include: the number of helicopters planned for manufacture per annum over a 20-year period; recurring helicopter unit costs per system / subsystem; unit prices for different helicopter configuration etc.
Opportunities For Indigenous Manufacturing: Helicopter Avionics & Engines
The opportunities in the helicopter avionics and engines are also likely to increase multifold providing lucrative opportunity to the domestic companies to venture into this segment by either opening up a manufacturing facility for these products on its own or by opting for the Joint Venture (JV) route with foreign OEMs. Few of the emerging sectors are:
Engines: India has over 1500 units of engine requirements in coming years. Ardiden1H1 Shakti engine has been jointly developed by Hindustan Aeronautics Limited and Turbomeca.
Cockpit & Avionics: Glass cockpits with multi-functional displays are in huge demand. HAL and IAI have jointly developed glass cockpit for HAL Dhruv helicopter. Avionics suites consisting of a HF/UHF communications radio, identification, friend or foe (IFF) recognition, Doppler navigation, and a radio altimeter; a weather radar, navigation radars and also avionics for day-and-night flight observation are also in huge demand. Samtel and Thales have formed a joint venture in 2010 for production of Helmets Mounted Sight & Display (HMSD) and other Avionics Systems for India.
Electronics Warfare (EW) systems: Saab Compact Integrated Defensive Aids Suite (CIDAS), has been selected by HAL for its Dhruv, Rudra and LCH helicopters. Saab has signed a MoU with HAL in 2011 to form joint venture for Airborne Electronic Warfare systems. Similarly, Bharat Electronics Ltd & Elbit Systems-Elisra are working together on Airborne electronic warfare programmes for Indian defence requirements.
Optronics & Targeting Systems: Elbit Systems Compact Multi Purpose Advance Stabilization System (CoMPASS) & opto- electronic suite for reconnaissance and target acquisition are in use in HAL Dhruv, Rudra & LCH helicopters. In 2013, Bharat Electronics signed a Memorandum of Understanding (MoU) with Elbit Systems Electro-optics-El Op of Israel, for the joint production of CoMPASS payloads for Naval helicopter applications.
Weapon & Missiles: Nexter THL-20 chin mounted gun turret and MBDA Mistral short-range Air-to-air missiles are in use in HAL Rudra and HAL LCH helicopters. There are requirements for helicopter launched 4th generation anti-tank guided missiles. There are also more requirements of helicopter turreted cannons, air to air missiles in coming years.
Aero composites: HAL composites manufacturing division manufactured the composite structural parts for Dhruv , Light Combat Helicopter (LCH). Also, Indian companies like Tata advanced materials ltd, Larsen Turbo HED Aerospace division , Mahindra Aerospace are also in aero composites manufacturing sector .Market for aero composites is growing at a huge scale.
Maintenance Repair & Overhauling (MRO) and Other Infrastructure: Growth in the general aviation market is expected to be around 12-15 percent in the coming years offering ample opportunities for everyone. The MRO space is almost untapped. With more than 2000+ helicopters expected in the next decade, there is also a huge potential on the maintenance side. Infrastructure development, flexibility in regulatory framework, government focus in structuring the air charter business, easing taxes/duties and construction of dedicated general aviation airports can take air charter operations in India to new highs. Presently, only HAL does maintenance repair & overhauling, logistics and services for armed forces helicopters. It is a multi-million dollar segment in Indian military helicopters sector.
Suggested Way Forward
There exists a huge requirement of both civil and military helicopters in India coupled with the fact that at present, there exists much of vast gap between supply and demand which is increasing year on year. With such a huge demand the risk seems to be minimal for the domestic companies to undertake huge investments. Though no doubt the initial cost of setting the infrastructure is relatively high but it would be able to earn substantial profits within 5 years after setting of the infrastructure if it wins any one of the tenders for military helicopters by the Indian Government under “Buy-Make (Indian) category. Further, the silver line being that there would be continuous requirement of helicopters (besides exports) for next 20 years for such a venture. Thus the private sector should not hesitate to invest rather on the contrary it should take the initiative and form the required JV with the foreign OEMs to tap such a lucrative and growing market.
The Government is also considering that the private sector being new and not having the required investment/infrastructure should also think on sharing the existing infrastructure with private sector on Govt Owned Company Operated (GOCO) model or any other suitable arrangement that is being followed in various foreign countries. The GOCO model envisages the renting and utilization of existing infrastructure presently with IAF / HAL to the private companies by the Government. This would definitely boost the private sector participation which is much required to meet the urgent huge requirement of the Armed Forces.