C-295 transport plane clears cost negotiations. TATA-Airbus aircraft to replace Air Force’s ageing fleet of Avros

The Defence Ministry has concluded cost negotiations with TATA and Airbus for the purchase of Airbus C-295 transport aircraft as part of the long-delayed Avro replacement programme of the Indian Air Force (IAF).

“Cost negotiations for the C-295 deal have been completed. It is now being processed to put it up for clearance from the Cabinet Committee on Security (CCS). It is expected to be signed in the next few months,” a senior Defence official said.

Initially, after the completion of cost negotiations, it was felt that a waiver from the Defence Acquisition Council (DAC) would be needed on some technical issues. But Defence sources said the issue “has now been resolved.”

The IAF has 56 Avro transport aircraft which are in urgent need of replacement. A further six aircraft for a maritime mission role for the Indian Coast Guard have been added taking the total number required to 62, estimated to cost upwards of $3 billion.

Funds Crunch

While sources expressed optimism that the deal would be signed in this financial year, it is contingent on the availability of funds. The IAF has a situation where committed liabilities for this year are more than the capital allocation in the budget and few big ticket deals are on the agenda. For instance, the IAF recently concluded a deal for five additional Akash Surface-to-Air systems and a deal for 83 Light Combat Aircraft (LCA)-MK1A is expected to be concluded this fiscal.

As part of the deal, 16 aircraft will be built by Airbus at its manufacturing facility and delivered in fly away condition and the remaining will be built locally by the TATA-Airbus joint venture under transfer of technology.

The sole bid by Airbus and TATA with the C-295 aircraft for the Avro replacement programme was approved by the DAC in May 2015, but the contractual negotiations have been repeatedly delayed. The Request For Proposal (RFP) was issued to global firms in May 2013.

This deal has become even more critical as a separate project to jointly co-develop and produce a Medium Transport Aircraft (MTA) of 20 tons with Russia to replace the An-32s in service was scrapped after initial design discussions.

While the An-32s are being upgraded and are not due for immediate replacement as they have residual air frame left, the IAF has no future MTA lined up. In the absence of a new MTA development project, there is discussion on making the C-295 the replacement for the An-32 fleet in future.

Building The Aircraft

The MTA program envisages the direct import of 16 C295s and the local assembly/licence-building of the remaining 46 aircraft at a facility set up by the JV near Bangalore. In keeping with the 2013 MTA tender, 24 of these will be imported in kit form for local assembly and include a 30% indigenous content. The level of indigenous content is then expected to double to 60% in the remaining 22 platforms.

Delivery of the first locally assembled C295 is expected to begin within 60 months of the contract being signed, industry sources said.

Senior IAF officers said that while the IAF's C295 version will fulfil its requirement for a tactical airlifter, the ICG variant is expected to operate as a multi-mission maritime aircraft.