Two weeks after being cleared by the Indian government’s Cabinet Committee on Security, a $2.5 billion contract was finally awarded to Airbus Defense & Space for the order of 56 Airbus C-295 military transport aircraft under a project intended to replace the Indian Air Force’s (IAF’s) obsolete, locally constructed Avro HS 748 airlifters.
Under the deal, the first 16 units will be produced in Spain and delivered directly to the IAF within four years. The remaining 40 units will be manufactured in India by a consortium led by Tata Group. The contract marks the first time military aircraft are being produced in India under technology transfer by a private company. The significance of this is hard to underemphasize, as state-owned Hindustan Aeronautics Ltd (HAL) has held a virtual monopoly on aircraft manufacture in India.
This is BiG!!!
Airbus C-295 ,🇮🇳-🇪🇸
First ever private sector manufacturing of Military Aircraft in India pic.twitter.com/mcna93HBkm
— Maverick (@MaverickBharat) September 24, 2021
The IAF fleet of Avro HS 748s has long been in need of replacement. The Avros were brought into service in the 1960s and are badly in need of a modern successor. However, funding limitations in the defense equipment budget and the government’s insistence on local involvement in the project continued to serve as obstacles to any forward momentum on the program.
The Avro replacement project dates back to 2012, when the Ministry of Defense first cleared an IAF request to launch a search for a successor. While tenders were sent out to multiple companies in 2014 – including Lockheed Martin, Saab, Ilyushin, Embraer, and Alenia Aeronautica – only Airbus (under a joint venture partnership with Tata Group) provided a bid. The MoD cleared that bid in May 2015.
However, negotiations between the Indian MoD and the Airbus-Tata partnership – begun in early 2017 – continued to falter over cost concerns, localized content issues, offsets, and performance-based logistics issues. According to India’s MoD, those stumbling blocks have each been ironed out.
Now, with the Airbus contract concluded, a separate $500 million contract with Tata subsidiary Tata Advanced Systems Limited (TASL) will be followed up on at a later date. This separate contract is for performance-based life-cycle support of the IAF C-295 fleet.
Delivery of all 56 units is expected to be completed within 10 years.