Defence Ministry audit finds HAL’s jets costlier than foreign ones

New Delhi, Oct 20: A recent review of the Bengaluru-based Hindustan Aeronautics Limited (HAL) by the ministry of defence (MoD) has found that Fighter jets cost more than the same jets produced abroad by the original equipment manufacturer (OEM).

A Su-30MKI made in Russia cost Rs 269.77 crore whereas one made by HAL in India costs Rs 417.69 crore, almost "Rs 150 crore" more per aircraft, the review said.

The development comes amid the Modi government and Opposition slugfest on the state-owned company being excluded from the Rs 7.87-billion euro Rafale fighter jet deal under which Dassault Aviation will supply Indian Air Force (IAF) 36 units of the fourth-generation, twin-engine, all-weather, multi-role fighter jet under fly away condition. Anil Ambani's Reliance Group will be the offset partner in the pact.

The opposition has alleged that HAL was sidetracked from the deal to benefit the Anil Ambani's Reliance Group.

Similarly, there is a huge cost difference between the cost of the Hawk trainer aircraft manufactured by British Aerospace and those made HAL.

HAL disagrees with the interpretation of the report. Responding to queries, a spokesperson said "Cost escalation from 2005 (for the Hawk jet) is normal. We also need to take into account the life-cycle cost of each product against off the shelf purchase from overseas. The indigenous benefits, the ecosystem HAL creates for the larger benefit of the country should be factored in also.

The NDA's decision to enter a USD 8.7-billion government-to-government deal with France to buy 36 Rafale warplanes made by Dassault was announced in April 2015, with an agreement signed a little over a year later. This replaced the UPA regime's decision to buy 126 Rafale aircraft, 108 of which were to be made in India by the state-owned Hindustan Aeronautics Ltd.

The deal has become controversial with the Opposition claiming that the price at which India is buying Rafale aircraft now is Rs 1,670 crore for each, three times the Rs 526 crore, the initial bid by the company when the UPA was trying to buy the aircraft. It has also claimed the previous deal included a technology transfer agreement with HAL.