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.

 

[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

 

[Franklin D'souza]

I am truly disappointed. Mahindra and Tatas have good design centers under Aerospace. I would have hoped they would have taken this risk.

 

[Aloo]

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.

Question is why pvt company get funds like DPSU without giving control to GoI like DPSU?

Topic hi badal diya kuch bhi bolne ko 🤡

Talking vague like cloth or satellite to run from answering on AMCA ?

Pvt doesn't want to come due to lack of definate orders. When there are no orders, from where does advance payment came in picture 🤡

Wow Akshat wants advance payment but doesn't want private companies to invest in SPV 🤣🤣🤣 when GoI will burden most cost of development and still give Pvt sector majority stake just for ₹2500 crore which will be further reduced by ₹1000 crore by using HAL Nashik plant.

 

[Akshat]

Question is why pvt company get funds like DPSU without giving control to GoI like DPSU?

Topic hi badal diya kuch bhi bolne ko 🤡

Talking vague like cloth or satellite to run from answering on AMCA ?

Pvt doesn't want to come due to lack of definate orders. When there are no orders, from where does advance payment came in picture 🤡

Wow Akshat wants advance payment but doesn't want private companies to invest in SPV 🤣🤣🤣 when GoI will burden most cost of development and still give Pvt sector majority stake just for ₹2500 crore which will be further reduced by ₹1000 crore by using HAL Nashik plant.

Whenever you are given examples they seem vague to you.

The question being discussed here is why should private sector get funds from GoI for R&D. My answer is that whenever a development is being done specifically for one client, like in case of AMCA, then the client shall bear the cost of development and pay it in advance. That's the industry standard. For this the company doesn't give equity.

Now coming to SPV. I gave you direct evidence. ACM Bhadoria's interview. There is no tender so how can the private sector invest?

And please show the proof for the 2500 crores and 1000 crore values.

 

[Kunung]

It will remain Govt led untill Ambani or Adani companies gain expertise. When they do, everything will go to only those two companies.

 

[Tanishq Bafila]

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.

Yep , there are two provisions one is to use the existing facility of DPSUs and other is to make their own facility by scrath.. See to be honest I have zero confidence in private companies other than TATA technologies but I was suprised when last year reports were coming that not even TATA is intrested.

2500crore is not that much big amount when you are talking about manufacturing of 150+ 5th generation jet ( Mk1 & mk2 ) ... Not to forget they will get technology technology without any hurdles from DPSUs and that's is something big...

UTTAM is ready with 900+ TR modules , Engine will be imported for the Mk1 batch , We are currently making our own EW suit , avionics , missiles , Indigenous cockpit systems and what not... And those who say that AMCA will fly by 2040 is just nonsense...

Just see the progress of various systems then they should comment. Though it will take atleast 4 years of testing

 

[Aloo]

Don't do gol mol. Condition is Private sector has to invest with no guaranteed orders. They can join if they agree. Why will IAF change condition for Private company to commit gurantee of order?

There is no tender so how can the private sector invest?

If tenders matter so much to you then why discuss?

And please show the proof for the 2500 crores and 1000 crore values.

These are expected numbers on news articles as official documents are not released. Neither did I claim to be exact. So why are you asking proof ?

RKS Bhadoria said many things which are you talking about? Him blaming ADA as you said in another thread is not true.

 

[Aloo]

Yep , there are two provisions one is to use the existing facility of DPSUs and other is to make their own facility by scrath.. See to be honest I have zero confidence in private companies other than TATA technologies but I was suprised when last year reports were coming that not even TATA is intrested.

2500crore is not that much big amount when you are talking about manufacturing of 150+ 5th generation jet ( Mk1 & mk2 ) ... Not to forget they will get technology technology without any hurdles from DPSUs and that's is something big...

UTTAM is ready with 900+ TR modules , Engine will be imported for the Mk1 batch , We are currently making our own EW suit , avionics , missiles , Indigenous cockpit systems and what not... And those who say that AMCA will fly by 2040 is just nonsense...

Just see the progress of various systems then they should comment. Though it will take atleast 4 years of testing

Yes. The thing is AMCA is business. Like any business it has risk associated.

Now it's up to private company to take decision whether to join or not. They can surely bargain in their favour, it's their right. But if they join it's joint risk.

Private companies led by mature businessmen understand this, but some people here blindly want private based on preconceived notions.

I would personally like a pvt company to lead but it's up to profits. 🤑🤑

 

[Akshat]

Don't do gol mol. Condition is Private sector has to invest with no guaranteed orders. They can join if they agree. Why will IAF change condition for Private company to commit gurantee of order?

If tenders matter so much to you then why discuss?

These are expected numbers on news articles as official documents are not released. Neither did I claim to be exact. So why are you asking proof ?

RKS Bhadoria said many things which are you talking about? Him blaming ADA as you said in another thread is not true.

"GoI will burden most cost of development and still give Pvt sector majority stake just for ₹2500 crore which will be further reduced by ₹1000 crore by using HAL Nashik plant." - Your own exact words. Now please show the proof. Nowhere is it written that this is not an official number. You have indeed claimed that this is exact.

"If tenders matter so much to you then why discuss idiot?" - Ain't we all here to discuss? If you are spreading a lie, why won't I come and reveal your lies?

And regarding the first paragraph. I ask again. Why shouldn't private sector ask for either guaranteed orders or funds for R&D? The product is being developed specifically for Indian military and hence the developer has full rights to ask for upfront payment. That's the industry standard for all tailor made products across the industry. In fact, even Indian Army does that. It is being done in FICV, as well as with drones (Mehar baba competition, for example). We also did it for the ISE of Rafale. We were also doing it for FGFA. So why not for AMCA? You should in fact answer why this shouldn't be done when it is the industry standard.

 

[Kush Kashyap]

Pvt corporation don't have r&d first give them Tejas mk2 to produce along with hal after that they can work in AMCA mk1 for mk2 both hal and Pvt company will need to do r&d and produce and so on for 6th gen fighters

 

[Pad UwU]

Private sector are correct, they don't want to risk it's company's future to a high failure venture if it's partner (GoI+ it's research department) can't assure a future proof plan and obligation to further sign it's order will still be implemented whatever it takes.... Yeah sure private sector are more willing to do screwdriving contract than risking full fledge manufacturing to order hightech machineries, training people, ordering material resources and many that will be stuck in warehouse if the government goes 360° turn to it's contract with them😹😹😹

AMCA on paper is like a sinking ship without a proper ship design, captain, navigator and crew plus enough funding to sail in high seas🙃🌞