After a decade of dithering, the ministry of defence (MoD) signed the contract with
The contract requires Airbus to supply 16 C-295MW aircraft in a fly-away condition within four years and manufacturing another 40 aircraft in
Besides plugging an operational void, this deal will generate direct and indirect employment -around 25,000 by some estimates- and give a fillip to the private sector in
The deal is a befitting reward for the Airbus's remarkable perseverance since 2013 when the Request for Proposal (RfP) was issued for acquisition of medium transport aircraft. It is also a big boost for the
The time taken for the contract to be inked has been very long, but considering the circumstances in which this project was conceived and the headwinds it faced on several occasions, it is no mean achievement that the deal has eventually seen the light of the day. This unique contract breaks many a myth, creates a new and simpler paradigm for future deals, and provides invaluable lessons.
First, it breaks the myth that the MoD is comfortable dealing only with the public sector companies which prevents the private companies from performing to its full potential in the defence production sector. In the present case, the
It also breaks the myth that the MoD is uncomfortable with the single-vendor situations. This perception has persisted despite there being no absolute bar on single-source procurement in the successive procurement manuals. In the present case, there was only one response to the RfP from Airbus which initially did cause some hesitation, but to the MoD's credit, all misgivings on this count were later overcome.
Second, it demonstrates that a make-in-
Both local industry and the foreign manufacturers evinced great interest in the project when a sub-committee formed by the MoD interacted with them while the proposal was being processed for approval. It, therefore, came as a surprise when only Airbus responded to the RfP issued by the MoD. Some contemporaneous media reports also pooh-poohed the project as being commercially unviable but, as mentioned earlier, Airbus did not dither and has now been rewarded for its perseverance.
It demonstrates that even if the MoD's requirement is insubstantial, the foreign equipment manufacturers may still be interested in setting up a manufacturing base in
Third, the trust reposed by Airbus in TASL as the IPP should inspire confidence among other foreign manufacturers, some of which continue to harbour reservations about the capacity of the local private sector to absorb technology and undertake complex manufacturing. It is also often argued that control over the management of the local production agency is essential for a foreign manufacturer to deliver quality products. The collaboration between Airbus and the
Fourth, the decision to permit the foreign vendors to tie up with the Indian private sector companies of their own choice to manufacture the aircraft in
The inevitable conclusion is simple and straightforward. While every procurement project throws up unique challenges, it is possible to overcome them by out-of-box thinking and boldness in decision-making, which are sine qua non for ensuring that every project fructifies within the prescribed timeframe, provided sufficient funds are available for procurement.
This article was previously published in Raksha Anirveda.
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