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By Bulbul Singh

17 Sep 07. While the Indian government draws a big list of hi-tech systems to be transferred in the $10bn Medium Multi Combat Aircraft (MMRCA) deal, foreign vendors say the Indian industry cannot absorb the hi-tech technology. The Technology issue is likely to be a big drag on the MMRCA program which could lead to endless delays in finalisation of the contract.

To ensure a high level of technology to be transferred to the domestic industry by the Original Equipment Manufacturer(OEM), the vendor will need to take clearance from their respective governments on an item-to-item basis on the technology to be transferred. An executive of a foreign company based in New Delhi participating in the global tender said in private that it is not possible for the Indian domestic industry to absorb the levels of high technology transfer being sought. The Indian government is trying to ensure a continued supply of spares for the aircraft, after their bitter experiences in the past, especially in the case of Russian equipment when the spares were not easy to access as their had been very little technology transfer sought.

The state owned aircraft manufacturer, Bangalore-based Hindustan Aeronautics Limited (HAL)is to be the lead production agency for the license production of the Medium Multi Combat Aircraft to be bought. However, the choice of the Indian industry to participate in the relevant technology products to be produced in India rests with the vendor.
Currently, the 39 state-owned Ordnance factories, about half a dozen state-owned defence companies, and another 4 to 5 private sector companies are engaged in the production of weapons and equipment.

The Ordnance factories are archaic while the state-owned defence companies need to set up high level collaborations with overseas companies to co-produce the hi-tech technology products. The private companies are themselves in a quandary as they were allowed only privatised in 2001 and have yet to establish the necessary infrastructure for defence production. The Indian government has demanded that Transfer of Technology (TOT) will be provided to the Indian production agency for manufacturing, repair, and overall and of the complete aircraft, engines, avionics, systems and ground support equipment.

Some of the key technologies which will required to be transferred include robotic riveting, composite radomes for Airframes; Full authority Digital Engine Control, Thrust vectoring, Radio crystallography for the Engines; Weapon Control radar, Mission Computer and the FLIR system.

Sources in the Indian defence ministry admitted that government-to-government level negotiations will also have to take place in the ToT, particularly in the case of United States which has to be very careful to ensure that the technology is not further transferred to any other country.

Whereas a number of global defence majors are identifying their partners in India to set up co-production facilities, so far no major joint venture tie-ups have been struck. About a dozen MoUs have been signed between various Indian companies and overseas majors, which will not serve the purpose. The foreign vendors through their executives say in private that the government will need to be fast in giving incentives to the domestic industry especially in the private sector to create the necessary infrastructure. More so, the Foreign Direct Investment (FDI) norms will also need to be changed as the current level of 26 per cent FDI limit is not in synch with the requirements on the ground. The FDI limit will also be need to be increased cent so as to allow big defence majors to set up co-production bases in India with adequate equity stake.

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