'Bold Step': Tata, Airbus Sign Rs 20,000 Cr Deal To Manufacture Military Aircraft

The Defence Ministry inked a nearly ₹20,000 crore contract with Airbus Defence and Space of Spain to procure 56 C-295 medium transport aircraft which will replace Avro-748 planes of the Indian Air Force.

The deal, which was struck on Friday, September 24, is part of a series of measures to promote the private sector and break the monopoly of state-owned entities in defence manufacturing.

It is said to be the biggest military order placed on the private sector. The long-pending procurement was cleared by the Cabinet Committee on Security two weeks ago.

16 Aircraft To Be Delivered In Flyaway Condition

Under the deal, 16 aircraft will be delivered in a flyaway condition by Airbus Defence and Space within 48 months of signing the contract. The remaining 40 planes will be manufactured in India by a consortium of the Airbus Defence and Space and Tata Advanced Systems Limited (TASL) within 10 years of signing the contract.

"All 56 aircraft will be installed with indigenous electronic warfare suite," the ministry had said on September 8 after the procurement was cleared by the Cabinet Committee on Security, as per Live Mint.

A large number of detail parts, sub-assemblies and major component assemblies of aerostructure are scheduled to be manufactured in India.

The deal has been in the works since 2012, with a push being given in the last year to see it through, after several delays. This is the first instance in which the public sector was explicitly left out to promote an alternate aerospace complex with the private sector.

Challenges that the ministry confronted included a single vendor situation as Airbus was left as the only contender after other competitors pulled out. The order is also expected to go beyond 56, with requirements from the coast guard, navy and other forces expected to come in the next few years.

Ratan Tata Hails 'Make In India'

Tata Trusts Chairman Ratan Tata hailed the Centre's push for 'Make for India' as the Defence Ministry formalised the acquisition of 56 Airbus C295 aircraft.

"The clearance of the joint project between Airbus Defence and Tata Advanced Systems to build the C-295 is a great step forward in the opening up of aviation and avionics projects in India. It envisages total manufacturing of the aircraft in India," said Ratan Tata in a statement.

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