HT pored over a series of reports on HAL’s performance by parliamentary standing committees and the CAG, the government auditor, over the last decade and the common thread of all the findings was the firm’s ability or inability to deliver on several fronts

by Rahul Singh 

A series of reports by parliamentary standing committees and the Comptroller and Auditor General of India (CAG) on the performance of Hindustan Aeronautics Limited (HAL) paint a grim picture of the state-owned military plane-maker on several fronts, documents reviewed by HT show.

HAL’s capabilities have come under the glare of public attention because of the controversy around the Rs 59,000-crore Rafale jet fighter purchase and Dassault Aviation of France choosing Anil Ambani’s Reliance Group rather than HAL to implement a part of its offset obligations.

In an interview with HT last month, recently retired HAL chairman and key Rafale negotiator T Suvarna Raju said the company could have built the fighter jets in India had the government managed to close the original negotiations with Dassault Aviation for 126 warplanes , triggering a fresh debate over the deal.

The National Democratic Alliance (NDA) government’s decision to enter a government-to-government deal with France to buy 36 Rafale warplanes in a fly-away condition was announced in April 2015 with the deal signed a little over a year later. This replaced the previous United Progressive Alliance (UPA) regime’s decision to buy 126 Rafale aircraft, 108 of which were to be made in India by HAL, using parts imported from France.

The Congress party has attacked the government for allegedly overlooking the interests of HAL and alleged that it was done to provide Ambani the opportunity for an offset deal, under which foreign military suppliers are required to source components worth a certain portion of the contract value locally. Both the government and the Reliance Group have repeatedly denied this.

Indian Air Force chief BS Dhanoa recently questioned the ability of HAL to deliver fighter jets on schedule, detailing the time overruns is several crucial programmes including the local manufacture of Sukhoi- 30s, Jaguars, Mirage-2000s and the Light Combat Aircraft (LCA).

HT pored over a series of reports on HAL’s performance by parliamentary standing committees and the CAG, the government auditor, over the last decade and the common thread of all the findings was the firm’s ability or inability to deliver on several fronts. Here are some of the pertinent remarks, reproduced verbatim.

Standing Committee on Defence report (2007): The committee was concerned by time and cost overruns in a large number of projects undertaken by HAL. In cases like the LCA, very small improvement appears to have been made even after 15 years of effort. The Committee also noted that, in some cases, delays had taken place due to changes in the scope of the work involved. The Committee said that due to time overruns, the user is tempted to ask for the latest changes to be incorporated in the product given that the project has not been completed in time. The Committee also noted that the export market for HAL products was confined to small developing countries viz. Nepal, Thailand, Malaysia etc. The monetary value of actual exports over the past few years has been insignificant and shown a declining trend after 2003-04.

CAG Report (2010): Despite getting the first prototype of the Advanced Light Helicopter (ALH) utility version in 1992, till date HAL has not met the technical requirements of the defence services, which changed too often, impacting the development process and necessitating a large number of modifications. Seventy-four helicopters supplied to defence customers are flying with concessions. Under its concept of ‘concurrent technology,’ the company failed to consider infrastructure imbalances. The development of a high-powered Shakti engine has been delayed. Defects and quality issues resulted in grounding and unserviceability of helicopters for a long period, affecting the operational necessities of the customer. In the absence of international certification, the company could not establish its product in the overseas market. The envisaged indigenisation level of 50%, is yet to be achieved.

CAG report (2014): Neither has HAL ensured timely delivery of aircraft, despite outsourcing, thereby depriving the IAF of the full quota of flying hours nor has it ensured total compliance with standards of preparation and foolproof quality. Compression of the delivery schedule warranted preparation of a revised detailed project report, but HAL did not comply with it. There were instances of inadequate planning and contract management which resulted in additional expenditure, loss and untimely procurement of materials.

CAG report (2015): Prototype version (PV) and Limited Series Production (LSP) of the LCA built by HAL had low serviceability because of delay in the analysis of snags, slow recovery of aircraft from rectification, shortage of critical LRUs (line replaceable units) at flight hangars, aircraft being used as test rigs, and a large number of unproductive sorties etc., which impacted the availability of aircraft for flight testing and contributed to delays in development of the LCA. Even LSP-8 aircraft fell short of the ASR (air staff requirement) in terms of weight and speed, for which permanent waivers had to be granted by Air HQ when the LCA achieved IOC (initial operational clearance).

CAG report (2015): Joint venture companies (JVCs) were formed without availing of the services of professionals and experts. Five JVCs did not achieve the objectives for which they were formed. HAL failed to protect its interests while dealing with JVCs and also had no effective monitoring mechanism to oversee their operational performance despite being a major shareholder/equal shareholder in the JVCs.

Standing Committee on Defence report (2018): The profit made by HAL over the years is inconsistent and during 2015-16, it dipped to Rs. 1,998 crore. The committee wanted to be apprised of the reasons for such low profits and the steps taken to arrest the decline.