Private Sector Hesitation Leaves Govt to Steer India's AMCA Jet Program

India's ambitious Advanced Medium Combat Aircraft (AMCA) program, aimed at developing a 5th generation fighter jet, has hit a snag due to reluctance from private companies to take on a major role.

The Ministry of Defence's proposal for a Special Purpose Vehicle (SPV) model, with private companies holding a majority stake and managing production and the supply chain, has not garnered the expected enthusiasm. Private aerospace companies are wary of the long development timelines associated with advanced fighter jet programs, citing concerns over the investment risk.

While expressing interest in participating at a later stage when the aircraft design is finalized and orders are confirmed, companies are cautious about investing heavily in a project that might take years to yield results.

A significant concern is the size of the Indian Air Force's (IAF) order, with private companies indicating that a larger order of around 200 AMCA MkII jets is needed to ensure commercial viability and a healthy return on investment.

Private companies are, however, open to contributing to the AMCA program by participating in the supply chain, manufacturing key components like fuselages and electronic systems.

With private sector hesitation, the AMCA program is likely to remain primarily under government control, with the Aeronautical Development Agency (ADA) and Hindustan Aeronautics Limited (HAL) taking the lead. The possibility of increased private sector involvement may hinge on the IAF increasing its order for AMCA MkII jets.

 

[sanket]

Pvt players are more Interested in Copy paste work so that they can get good return & safe Business.

 

[Deepak Hegde]

Perfectly logical response from the private sector and their concerns are absolutely genuine. Which private company will be willing to invest 10-15 years ahead of the requirement and why ? What is in it for them? The blackhole DPSU's are funded by the Govt on taxpayer's money and the DPSU's have no accountability either for timelines or deliverables, so it works perfectly for them. The private sector is absolutely right to say they are willing to participate once development is completed and firm orders are placed for the planes. That way they are only accountable for what is expected of them.

 

[Deepak Hegde]

Pvt players are more Interested in Copy paste work so that they can get good return & safe Business.

DPSU's are only interested in free funds without any accountability of deliverables and timelines !

 

[Aloo]

Perfectly logical response from the private sector and their concerns are absolutely genuine. Which private company will be willing to invest 10-15 years ahead of the requirement and why ? What is in it for them? The blackhole DPSU's are funded by the Govt on taxpayer's money and the DPSU's have no accountability either for timelines or deliverables, so it works perfectly for them. The private sector is absolutely right to say they are willing to participate once development is completed and firm orders are placed for the planes. That way they are only accountable for what is expected of them.

Coz they receive fund that's why they are DPSU.

Will private companies give majority stake to GoI if they want to receive full funding for development? Would they like USPC babuji to meddle in their affairs?

I know this sounds stupid but so is comparing DPSU and Private company on government funding.

 

[Avada kedavra]

If there are no private players this could be a much worse disaster than tejas itself.

 

[Aloo]

DPSU's are only interested in free funds without any accountability of deliverables and timelines !

But that doesn't make private sector any good regarding R&D (Big ones which can make AMCA not small startups)

DPSU nalayak, nikamma, True
Private screwdriver, also True

NSRT, Sagar, Tonbo, Veda invest in RnD L&T, TASL, Adani don't, they do token investment.

 

[NSR]

Plainly speaking there are no private companies in India making fighters to join SPV on their own and risk their company financial well-being.
Private companies are accountable to its shareholders.
So GoI must hand hold them for them to establish themselves.
Try to rope in willing partners.

 

[kumar]

Pvt players are more Interested in Copy paste work so that they can get good return & safe Business.

Private sector wants only easy money. Even big companies won't take risk.

 

[Deepak Hegde]

But that doesn't make private sector any good regarding R&D (Big ones which can make AMCA not small startups)

DPSU nalayak, nikamma, True
Private screwdriver, also True

NSRT, Sagar, Tonbo, Veda invest in RnD L&T, TASL, Adani don't, they do token investment.

You are comparing apples and oranges ! Any company will only work to its strengths. The earlier companies you mentioned have their strength based on the technical experience of their founders. They can never compete at the scale of manufacture of the latter companies. Similarly the latter companies are leveraging their strengths in manufacturing based on where they are in their life cycle.

 

[RalphRearden]

The biggest issue as highlighted, the pvt sector cant put up a manufacturing facility, order all the machines, employ and train the workforce and wait for 5 years sitting idle while DRDO and ADA develops with constant delays....nobody will and should be doing that....look what happened to L&T...they manufactured Vajra ahead of time and the facility is sitting idle for 3 years while MoD think about ordering another 100 despite army saying they need them....so all in all its nobidy's fault.

Lastly, for those saying pvt sector only wants easy work...thats incorrect....pvt sector wants "definite" work...they would invest in defence R&D if "they own the IPs" and can "control the outcome"....in this so called JV as proposed by the Indian Govt...would pvt sector be able to pressurize ADA to speed up development ...answer is no.....truth be told....pvt sector would have absolutely no say in anything related to dev timelines and hence they have decided to wait....

Asking them to participate is equivalent to me coming to you and saying that give me your savings and i will invest them and will give you good returns....but when those returns will come, I dont know...maybe 5, 10 or 15 yrs.....would you give me even a single rupee??

 

[GMR]

Private firms r correct as they will seek +ve ROI to answer to their stake holders. With the historic inability to meet development timelines & unpredictable demand by users, SPV model will never workout in our defence procurements..

 

[Aloo]

You are comparing apples and oranges ! Any company will only work to its strengths. The earlier companies you mentioned have their strength based on the technical experience of their founders. They can never compete at the scale of manufacture of the latter companies. Similarly the latter companies are leveraging their strengths in manufacturing based on where they are in their life cycle.

If apples and oranges apply then why did you compared DPSU and Private companies in first place?

Yes pvt are amazing in manufacturing, truly appreciate. But we are talking about RnD.

You are diverging from that topic. Private companies (big ones) don't invest in RnD, that's a truth. They can never blame DPSU for that. They don't even learn to invest from small startups.

 

[raviteja papana]

Private sector always hesitates. When PSUs work silently without claiming any recognition, private players simply copy paste without any real R&D and claim all the credit using paid media .

 

[SK]

It makes sense as Indian Private Sector lacks the expertise to build such an Advance Combat jet so AMCA should've been a Govt-led Program from the very beginning.

Indian-Govt should consider to encourage (pressure) both IAF & IN to establish a JV to invest in:-
(1) TEDBF (ORCA)
(2) AMCA

This will boost Logistical synergy & Economy of Scales for both the Military & Indian Aerospace industry.

F-35 & other 5th Gen jets are a good example of high MRO requirements for such Advance jets especially due to their Stealth Coatings, expecting India to develop a Stealth Coating material much more advance then USA is way too unrealistic expectation as neither India nor it's closest partner Russia has any history in using Stealth Aircraft where USA has been operating Stealth Aircrafts for Centuries.

IAF will required replacement of Su-30MkI with a twin-engine combat jet for Long range Air Superiority Missions like ORCA whereas AMCA will be focused on First Strike & Nuclear strike Missions.

 

[Parimal Pandya]

Substandard output of the rural areas destroyed cooperative banks to default textile industry few decades ago and it's predicted same fate of the IT industry nowadays as per current affairs. How much expected to get a competitive industries from them

 

[Vijigishu ( विजिग्शु )]

It makes sense as Indian Private Sector lacks the expertise to build such an Advance Combat jet so AMCA should've been a Govt-led Program from the very beginning.

Indian-Govt should consider to encourage (pressure) both IAF & IN to establish a JV to invest in:-
(1) TEDBF (ORCA)
(2) AMCA

This will boost Logistical synergy & Economy of Scales for both the Military & Indian Aerospace industry.

F-35 & other 5th Gen jets are a good example of high MRO requirements for such Advance jets especially due to their Stealth Coatings, expecting India to develop a Stealth Coating material much more advance then USA is way too unrealistic expectation as neither India nor it's closest partner Russia has any history in using Stealth Aircraft where USA has been operating Stealth Aircrafts for Centuries.

IAF will required replacement of Su-30MkI with a twin-engine combat jet for Long range Air Superiority Missions like ORCA whereas AMCA will be focused on First Strike & Nuclear strike Missions.

You don't understand the issue. Making of AMCA as a product is already being done by ADA and HAL. The involvement of Pvt sector is for assembling and managing the supply lines. It seems easy but is very complex task, requires competent management skills which DPSUs severely lack.

 

[SK]

You don't understand the issue. Making of AMCA as a product is already being done by ADA and HAL. The involvement of Pvt sector is for assembling and managing the supply lines. It seems easy but is very complex task, requires competent management skills which DPSUs severely lack.

Such partnerships as are already happening or in progress.

It's easier to develop Supply Chain Management skills in comparison to creating Technical Expertise of such advance technologies.

 

[Vijigishu ( विजिग्शु )]

Such partnerships as are already happening or in progress.

It's easier to develop Supply Chain Management skills in comparison to creating Technical Expertise of such advance technologies.

As I already said, technical expertise is mainly handled by dpsu. Don't know what your point is.

 

[Akshat]

But that doesn't make private sector any good regarding R&D (Big ones which can make AMCA not small startups)

DPSU nalayak, nikamma, True
Private screwdriver, also True

NSRT, Sagar, Tonbo, Veda invest in RnD L&T, TASL, Adani don't, they do token investment.

L&T is making the light tank, investing in FICV and what not. Tata has invested in Whap, ATAGS, bought IPRs for Grob and are modifying it now, made vertical lift drone etc. Adani is investing mostly in manufacturing indeed. But even they are doing a better job than OFBs in it.

So is the private sector screwdriver? Not true at all.

Secondly, worldwide, any company first creates fixed sources of revenue and profits, and then diverts those profits to R&D to generate even more profits. Initial investments in R&D are always low. But our private sector isn't getting enough orders. DPSUs still take away 70% of the orders and private companies get only about 15%. DPSUs still don't plough it back into R&D. Private companies do.

 

[Akshat]

If apples and oranges apply then why did you compared DPSU and Private companies in first place?

Yes pvt are amazing in manufacturing, truly appreciate. But we are talking about RnD.

You are diverging from that topic. Private companies (big ones) don't invest in RnD, that's a truth. They can never blame DPSU for that. They don't even learn to invest from small startups.

Not at all the truth, as proven above with examples.

 

[Akshat]

Coz they receive fund that's why they are DPSU.

Will private companies give majority stake to GoI if they want to receive full funding for development? Would they like USPC babuji to meddle in their affairs?

I know this sounds stupid but so is comparing DPSU and Private company on government funding.

In any private company, when a product is being developed specifically for one single client, then that client always pays advance. This is true for something as simple as dyed cloth to as complex as a satellite. And it's true for defense industries as well, globally.

 

[Akshat]

Private sector always hesitates. When PSUs work silently without claiming any recognition, private players simply copy paste without any real R&D and claim all the credit using paid media .

When do PSUs work in the first place? 🤣🤣🤣 IAF is still waiting for the 8 Tejas trainer jets.

 

[Sam]

As known to everyone the rate intellectual capacities of Indian engineers it's a very normal return from Indian partners associated with the development program.

 

[Aloo]

The biggest issue as highlighted, the pvt sector cant put up a manufacturing facility, order all the machines, employ and train the workforce and wait for 5 years sitting idle while DRDO and ADA develops with constant delays....nobody will and should be doing that....look what happened to L&T...they manufactured Vajra ahead of time and the facility is sitting idle for 3 years while MoD think about ordering another 100 despite army saying they need them....so all in all its nobidy's fault.

Lastly, for those saying pvt sector only wants easy work...thats incorrect....pvt sector wants "definite" work...they would invest in defence R&D if "they own the IPs" and can "control the outcome"....in this so called JV as proposed by the Indian Govt...would pvt sector be able to pressurize ADA to speed up development ...answer is no.....truth be told....pvt sector would have absolutely no say in anything related to dev timelines and hence they have decided to wait....

Asking them to participate is equivalent to me coming to you and saying that give me your savings and i will invest them and will give you good returns....but when those returns will come, I dont know...maybe 5, 10 or 15 yrs.....would you give me even a single rupee??

JV is mainly between Hal & Private company. The SPV will use HAL facility, private sector is not expected to make any.

Pvt is asked to do below mentioned things:

1. Manage project to eliminate bureaucracy at every step
2. Invest ₹2500 crore (Acc to year 2020-21)
3. Participate in structural development, testing
4. Their main aim is manufacturing

₹2500 crore will be significantly reduced by using HAL Nashik plant as proposed by HAL.

Even this facility is needed only when serial production starts, prototype will be fabricated at existing (Not even Nashik but Banglore) facilities & tested at HAL airport. Your claim of 5 year idle facility is idiotic, as it will be made only after testing is complete.

IP is not given even by foreign companies in MRFA Or any other project, it's not an issue. Development fund will be given by GoI anyway.

Risk is associated in product, it's the company's decision to take or not. None to blame.

 

[Anurag]

L&T is making the light tank, investing in FICV and what not. Tata has invested in Whap, ATAGS, bought IPRs for Grob and are modifying it now, made vertical lift drone etc. Adani is investing mostly in manufacturing indeed. But even they are doing a better job than OFBs in it.

So is the private sector screwdriver? Not true at all.

Secondly, worldwide, any company first creates fixed sources of revenue and profits, and then diverts those profits to R&D to generate even more profits. Initial investments in R&D are always low. But our private sector isn't getting enough orders. DPSUs still take away 70% of the orders and private companies get only about 15%. DPSUs still don't plough it back into R&D. Private companies do.

Where are the order of atags and whap??
L&T still waiting for further k-9 vajra orders!!!

 

[Ashish Sandhu]

Has the AMCA design completed or under development?

 

[Akshat]

Where are the order of atags and whap??
L&T still waiting for further k-9 vajra orders!!!

The army's original requirement for K9 was of 100 units. So if any orders are given now, they will be additional. Army is not bound to give any. The cost of the original 100 units and the entire contract was designed to be viable with the order size.

As for ATAGS, DRDO's fault. The design is too bulky and right now Army is buying new trucks. As such ATAGS fails army's needs and Army is actually rigging the whole deal so that ATAGS can win. The original tender said "...the gun should be compatible with the existing GTVs of IA...". ATAGS is not. So now first they have to buy new GTVs.

As for Whap, the design was given to 2 private players (at least). The second one is still not ready. So can't give orders till the time both are ready. After that if they meet the requirements, then army will place orders.

And why this notion that just because something has been developed in India, armed forces MUST order it? If it doesn't meet their requirements, why should they? In fact, ATAGS shouldn't be ordered (but it will be as the tender for new trucks show). They should in fact punish every single DRDO scientist involved with ATAGS' design for wasting resources and time.

 

[Sandeep]

Unfortunately the private sector doesn’t have the experience, expertise, knowledge or willing to risk a large amount of money to try and manufacture an advanced stealth jet.

HAL is the only company that can do that. We should get HAL to start developing the infrastructure, production lines and creating the supply chain so the private company can just make what they can and HAL can just assemble it.

 

[Baka007]

Pvt sector only happy with screw driver work
(low cost high gain no risk)
We need Putin's style to deal with them