India Likely to Produce Next Generation Fighter Jets in A Private Sector-Led Joint Venture

NEW DELHI: India is likely to produce its next generation of fighter jets in a private sector-led joint venture, which could require investments of over Rs 2,500 crore from the selected company but would catapult it into a select league capable of manufacturing cutting edge aeronautical systems.

India’s leading aero manufacturer, state-owned Hindustan Aeronautics Ltd NSE -0.84 % (HAL) is currently working out the costs involved and the structure of the planned JV for the production of the fifth generation Advanced Multirole Combat Aircraft (AMCA), with an ambitious target for 2028.

HAL chairperson R Madhavan told ET that the preferential model is to give the private sector a controlling stake in the joint venture and the option to take existing manufacturing infrastructure on lease to keep capital investment at a minimal.

“We will be forming a JV between DRDO, HAL and a private party. HAL will provide the infrastructure wherever possible so that the total capital cost is reduced for the private partners. Preferably, we want to keep our share below 50% so that it becomes a private entity,” the top official said.

Costs are currently being worked out and would depend on the model planned and whether the prototype of the next generation fighters will be made by the JV or fabricated by HAL before the serial production starts.

“The expectations is that the private sector will have to invest Rs 2,500-3,000 crore but the number could vary. We are suggesting that the prototype manufacturing be kept outside the JV so that the capital requirement can be reduced,” Madhavan said.

While the investment is high, the possibility of manufacturing next generation fighter jets is a huge opportunity for the private sector, which has still to produce any major aviation platform. All major western defence manufacturers are privately held and are supported by government-funded labs and institutions whenever required.

In the new defence acquisition procedure, a new category of procurement has been added to cater for technology transfer from DRDO and PSUs to the private sector for manufacturing of weapon systems.

Details are being worked out but HAL is likely to offer its existing facilities in Nasik to the private sector partner for manufacturing the AMCA in the future. “Most likely the prototypes will be made in Bangalore and the production could take place in Nasik. We are looking around 2028 to start production and we want that the private sector gets the capacity of investing and creating a new ecosystem and HAL does not remain to be the only production partner,” Madhavan said.

While talks with potential industry partners has not yet started, the plan has generated interest in major players that have ventured into the defence sector. Only a handful of Indian companies have the capacity to invest into such a venture but on the plus side, there is set to be a defined and assured order book, besides the business opportunity of maintaining the aircraft that would stay in service for over three decades.

Source: ET