India signs mega deal for 56 Airbus C-295 aircraft — here’s what lies ahead

The aircraft have a 5-10 tonne capacity, are capable of operating from semi-prepared strips and has a rear ramp door for quick reaction and para dropping of troops and cargo.

The C-295 aircraft | Airbus.com

New Delhi: India Friday signed a nearly Rs 21,000-crore deal with Airbus Defence and Space, Spain, for the acquisition of 56 C-295MW transport aircraft for the Indian Air Force (IAF) with 40 of them set to be made in India by private firm Tata Advanced Systems Limited (TASL).

This is the first time in Indian history that a private firm will be manufacturing complete aircraft in the country.

The project, which seeks to replace the ageing fleet of the Avros transport aircraft that first flew in 1961, has been in the works since 2010.

While cost negotiations of the contract were completed six years ago, the deal was stuck due to finance issues and prioritisation of various other projects. There has not been a price escalation by Airbus since 2014.

The aircraft, which has a 5-10 tonne capacity, is capable of operating from semi-prepared strips and has a rear ramp door for quick reaction and para dropping of troops and cargo.

It will give a major boost to the IAF’s tactical airlift capability, especially in the Northern and North-Eastern sector and Andaman & Nicobar Islands, noted the defence ministry in a statement.

“This is a momentous day. It has been 11 years since Airbus and we first agreed to partner for this project. This project is the deepest ‘Make in India’ project that I am aware of in the private sector,” said Sukaran Singh, managing director and chief executive officer of TASL, at a briefing of select group of reporters after the inking of the contract.

“We will literally take raw materials, aluminum blocks from one end and flying aircraft in the other end. This has not been done in the private (sector). Tata has extended itself to software to cars to making planes now,” Sukaran added.

Meanwhile, Ratan Tata, former chairman of the Tata group, said the joint project is a “great step forward” in the opening of aviation and avionics projects in India, in a statement released on Twitter.

This project was also one of the last that the former chairman had put together while he was in office.

Jean-Brice Dumont, executive vice president (Military Aircraft) at Airbus, said the signing of the contract rolls out an industrial journey. “This is the start of the new chapter which is the first in India,” he said at the briefing.

Location for project yet to be decided

While this is a big private sector project that will result in creation of about 15,000 direct jobs and another 10,000 indirect jobs, according to calculations by Airbus, its location is yet to be decided.

The Tata group already has aerospace facilities in Hyderabad but there have been strong suggestions that the final assembly line could come up in another state.

Sources in the defence and security establishment indicated that the state of choice is likely to be Gujarat. Besides Gujarat, other states like Uttar Pradesh, Telangana and Karnataka are also vying to host this mega project.

At the briefing, Singh also responded to questions on the project’s location in a guarded manner.

“As far as the location is concerned… there are more than 100 locations in the country which the Tata and Airbus team has diligently looked at. Each one of them has been looked at from the length of the airstrip, infrastructure, weather, social indicators and so on. For a project of this size, we need to ensure that all stakeholders are happy. This includes Tata, Airbus, locals and the government,” he said.

Tata will initiate the manufacture of various parts of the aircraft over the next four months, to prepare in advance. Sources indicated that a large portion of the early stages of indigenisation is likely to be done in existing facilities.

The final assembly line, meanwhile, may come up in another state.

Delivery of Made in India aircraft within five years

Under the contractual agreement, Airbus will deliver the first 16 aircraft in ‘fly-away’ condition from its final assembly line in Seville, Spain. The entire delivery of the 16 aircraft is to be completed within the next four years from the day of the signing of contract.

The subsequent 40 aircraft will be manufactured and assembled by TASL in India as part of an industrial partnership between the two companies.

According to sources in the defence and security establishment, the entire contract is to be completed in the next 10 years and the delivery of the first ‘made in India’ aircraft to the IAF will take place within five years.

The contract notes that the detailed parts of the first few of the 40 aircraft, set to be manufactured in India, will be made domestically. This will eventually escalate to aero structure assembly and then the final assembly line.

“Tata is responsible for the 40 aircraft. We have to start… (indigenisation) from the 17th aircraft onwards. While this is progressively increasing, we will exceed these requirements. We will be able to produce all the sub-assemblies of this aircraft sooner than what is required by RFP (Request for Proposal). In a sense, the 40 (aircraft) will be meaningfully done in India,” Singh said.