Companies & Sectors
Renewed activities have begun at Hindustan Aeronautics Ltd

It is possible that work on Indo-French Rafale combat aircraft may start soon!


After a series of serious tests and studies, in 2012, India selected the Dassault Rafale medium multicore combat aircraft as suitable for the Indian Air Force. Almost two years have passed in sorting out various issues on the project.


Originally, the project covered the purchase of 126 Rafale fighter jets from France and the tender had stipulated that the first set of 18 jets should come in "fly-away" condition. The remaining 108 were to be manufactured by HAL (Hindustan Aeronautics Ltd) in Bengaluru by the Transfer of Technology (ToT).


While the full details of the ToT have not been made public, there seems to be trouble or difference of opinion with the IAF seeking a delivery guarantee for the HAL made aircraft. What percentage of goods will be actually manufactured? What percentage of goods would be supplied by France? All this is yet to be clearly stated.


Sadly, the projected cost has gone up from $10 billion to $30 billion in two years and the project is "still in negotiation." It is possible that the costs will escalate further in the coming years after the initial production starts.


In the meantime, the French Defence Minister, Jean-Yeves Le Drian met his Indian counterpart, Manohar Parrikar, to expedite the ongoing discussions in order to clear the differences on delivery guarantees, price and at the same time expand Indo-French strategic cooperation. Further details may be expected soon.


In the meantime, while speaking at the Eighth L M Katre Memorial lecture, organized jointly by Air Force Association, Karnataka Branch, HAL and the Aeronautical Society of India, Dr Tyagi, Chairman of HAL, stated that more than 70% of the manufacturing needs of the IAF are met by HAL.


He is reported to have further said that, with the help of the DRDO (Defence Research and Development Organisation) and BHEL (Bharat Heavy Electricals Limited), HAL is "contemplating development of aero-engines" and that it is "gearing up to emerge as a technology-driven company".


According to Dr Tyagi, HAL "already has a blue print in place for creation of new divisions, modernisation and expansion of the existing plants, providing increased thrust to indigenous technology development, productivity and quality improvements to meet the challenges."


There is seems to be little doubt that Dr Tyagi has robust plans in place to include the proposed Indo-French manufacturing plans for Rafale fighters over the next 7-10 years. However, a 200% increase in the initial estimated cost of the project, which has now ballooned to $30 billion, is too high and needs to be thoroughly re-examined, as the project still looks to be at the blue-print stage. The story may take another turn when the production starts.


Also, to ensure quality and delivery guarantees, a workable solution needs to be found by mutual discussions, but all these should be done with a clear timeline, and not dragged on for years. Otherwise, there ought to be sufficient provision that any changes made in Rafale fighters, back home in France, need to be automatically incorporated in the Indian version to be made in Bengaluru.


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)



Dr Anantha K Ramdas

3 years ago

Thanks for your comments, Mr Vishal.

The Government can also request or make it part of the agreement that the French collaborator makes "x" number of fighters every year, in Bangaluru, for exports to "agreed"
destinations. This will make them to take greater interest in the project; identify the range of parts/components that will be made available from France and those that will be "obtained" from Indian manufacturing sources. They will also have to identify the type of personnel they will recruit from India and train them, under/along with French technicians. For example, if this new JV gets a contract to supply Rafale fighters to the Sri Lankan (or any SAARC country, except Pakistan), the training for the buyer's technicians will also be given in Bangaluru.

This way, the project can become fruitful to both.


3 years ago

It is doubtful the present working
structure and the planning in HAL will be sufficient to meet the dead line in manufacturing these highly technological fighter planes. We certainly don't have some areas of development and the cost would go up every day if the project is delayed. The Government has to look in to the details once more.

Building India's growth by promoting MSMEs

The real drivers of employment and growth in India are not the exalted corporates, but MSMEs, its time to stop giving them a raw deal


The clock is ticking fast for action by the Bharatiya Janata Party (BJP) lead government's action on job-oriented growth. The BJP manifesto also focused on what needs to be done to go beyond the appointment of committees for the Micro Small and Medium Enterprises (MSME) sector as the driver of ‘Make in India’ campaign launched during the first six months of the new government.

“Not all the perfumes of Arabia will sweeten this little hand,” goes the old adage. Over the years, a number of committees were set up to strengthen the micro and small enterprises sector. From the times of Puri and Thombe Committees of 1970s to the Dr KC Chakrabarthy Committee of the Reserve Bank of India (RBI) and the recent PMO Committee of the previous government. None of these failed to mention MSMEs as engines of growth of the economy.

Dedicated Funds

Currently there are 32 national level funds which are in some way related to small enterprise development. Based on the Interim Report of the Committee on Financial Inclusion, the Union Budget- 2007-08 created two Funds of Rs500 crore each called: (a) Financial Inclusion Fund; and (b) Financial Inclusion Technology Fund, both with NABARD. Out of 32 existing Funds, 15 Funds were maintained/ implemented by NABARD and 7 by SIDBI. However, only 13 Funds were related to the MSME Sector.

The Dr KC Chakrabarthy Committee appointed by the RBI itself failed to give the required impetus for rehabilitation of a number of sick units. In fact, several bankers say that there are sick enterprises and healthy entrepreneurs driving Mercedes cars.

This sector employs on average of 4 persons for every one crore of rupees invested while for the same 4 persons a larger enterprise invests Rs50-100crore.

SIDBI, a specially created institution for the SSI/MSMEs, did not change its legacy as an outfit carved out of IDBI, dedicated to work for the large sector. In fact, the MSME ministry did compensate with several rightful interventions at different points of time both for entrepreneurship development and clusterisation as a panacea for several ills of the MSME sector.

Even today no bank branch displays the terms and conditions of financing MSMEs; no bank branch lends money without asking for collateral, save exceptions, notwithstanding the agreement with the Credit Guarantee Fund Trust for Small and Micro Enterprises (CGTMSE) that allows a Rs10 lakh loan without collateral or guarantee. Several Prime Minister's Employment Generation Programme (PMEGP) targets are either not met at all or half-met. This is in spite of relatively lower NPAs in this sector, when compared to all the other priority sectors and endemic NPA-hold of the corporate sector.

There are three distinct categories in the MSME sector that deserve careful inquiry and out-of-the-box solutions:

• The Micro enterprise sector consisting of artisans, village craftsmen, micro entrepreneurs and small service operators: These operate from cultural domains and inherited skills and locally available raw materials. These are all built on inherited skill-sets and keeping the artists and craftsmen barely on subsistence incomes. These are all treated as unorganized and high risk ventures by the lenders, which needs to change.

• The second category is the manufacturing sector in the micro segment: These include the carpenters, the cobblers, the blacksmiths and copper smiths in villages. Several of these categories are in the proven inefficient Khadi and Village Industries Commission (KVIC) umbrella. KVIC as intermediary financier is the biggest single NPA holder in the MSE lending portfolio of the PSBs. KVIC is the implementation window of PMEGP schemes. The targets were met to the extent of 30%-40% on an average and several evaluation studies revealed a list of benami borrowers that hurt the banks. The sooner this expensive outfit is reformed the better would it be for the country.

• The third important category is Manufacturing SMEs: In the event of a large enterprise failing due to market forces, inefficient management or lower growth of the economy, the supply chain is broken and the small and medium enterprises are hit. While the Debt Restructuring mechanisms work for corporates, it doesn't for the SMEs. SMEs should get access to these tools of debt management like larger corporates.

Grave injustice has been done to the sector in clubbing the first two categories with the third category. In fact, if one were to look at the lending mat for the sector one would realize that 85% of the MSME lending categorised as such under the priority sector took place in just 12 states in the country.

District Industries Centre, the delivery outfits of the state governments, save exceptions are working with outmoded ideas and support systems. The industrial extension officers hardly provide extension support. Some states like Tamil Nadu have revamped but much more is needed.  

The task before the present government is huge but has to be attended with a sense of urgency if the ‘Make In India’ and Made in India have to move into high growth hemisphere. The first, of course, as the Finance Minister rightly identified is redefining the sector. The second is making guarantee mechanisms really work for the sector. The third is making the financial institutions leave off the hypocrisy while appraising the needs of the sector. Exceptional problems require exceptional solutions. India has tremendous opportunity to build a brand image around the MSME sector like never before. Acting in time is the essence.

(Dr Yerram Raju Behara is a former senior executive of SBI and former Dean of Studies at Administrative Staff College of India (ASCI). He is presently visiting Professor at Institute of Small Enterprise Development, Kochi and Advisor, KESDEE Inc, the E-Learning Centre at San Diego. The views expressed in the article are his personal.)




1 year ago

The article lacks specific details and only touched the issues.

‘Cellphones can be searched in Canada without a warrant’

The case concerned a jewelry heist in which police arrested two suspects and, upon searching one of their cell phones, discovered an incriminating text message and a photo of a handgun


Police in Canada don’t need a judge’s permission to search a suspect’s cell phone so long as they follow certain steps, the Supreme Court of Canada ruled on Thursday, reports a the technology website Gigaom. This was a split decision and comes as a setback for privacy advocates.


The case concerned a jewelry heist in which the police arrested two suspects and upon searching one of their cell phones, discovered an incriminating text message and a photo of a handgun. This was used as evidence to convict the criminals.


The suspects took the defence that since their privacy had been breached and the search took place without a warrant, it violated their constitutional rights against unreasonable search and seizure, since cell phones contain personal information.


The judges overruled the argument and concluded that the balance between privacy and security favoured the police in this case. They ruled that a warrant was not necessary so long as the police limited the scope of their search, and so long as they took notes of what they were doing.


Social media and personal gadgets are increasingly being used by law enforcement, with agencies at all levels scouring postings for evidence of crimes, giving the courts an opportunity to decide what restrictions are needed to safeguard privacy.


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