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SOURCE: ANITA DESAI / FOR MY TAKE / IDRW.ORG

Newly appointed Chief of Defence Staff (CDS) General Bipin Rawat said 114 fighter jets for the Indian Air Force need to be purchased in small batches so that technological obsolescence along with high procurement cost required for such a mega order can be avoided due to the stalled budget but that also means Making in India 114 jets of foreign origin will also make it more expensive for India due to batch orders over the years which will need to be adjusted for material and manpower cost inflation over the years.

State-owned Hindustan Aeronautics Limited (HAL) is currently producing the Su-30MKI at a flyaway cost of around $62 million per aircraft, which according to our Parliament is around $22 million higher than the Su-30 jet supplied by Russia. Over 272 jets were produced over the years in batch orders but it simply never translated into a cheaper jet for India from then directly buying from Russia.

50 Su-30MKI was supplied directly by Russia and then license-production of 140 Su-30MKI locally in Nashik was cleared and 40 Su-30MKIs was placed and later another 42 Su-30MKI was also placed but owing to the low volume of production line of the Indian SU-30 MKI which was producing at peak only 12 jets per year as compared to the Russian SU-30, economies of scale came into play, which meant each jet was costing India $22 million higher than what we could have got from Russia directly.

It was expected that even if India had placed orders for 114 jets in one go, adjusting material cost inflation and additional funding required for creating additional manufacturing facilities in India could mean that cost of this jets could always be higher then jets which were directly procured by India, but this new methodology of procuring 114 jets in small batches could mean that production line at its peak will be even lower and Indian made jets will be 30-40% more expensive then direct import.

India should rather be focusing on the assembly of these jets should instead focus on building local spare supply chain ecosystem of the winning jet which should come out cheaper than what OEM could have provided. India’s Su-30MKI local license agreement has shown that we can get Transfer of Technology from the OEM but really can never use them in our local programs since OEM will ensure that most of the technologies can’t be replicated nor it can be reused in other projects.

If our main objective is to develop local work expertise to be truly independent of import and this is what we’re are targeting then private companies should be encouraged to be part of India’s fighter jets programs like Tejas Mk1A, Tejas Mk2, ORCA and AMCA instead of them being part of some foreign OEM which will cost India more.

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