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HAL’s AMCA and IMRH programmes to be implemented under SPV model: Chairman

The provision for formation of the SPV for design development and production of major defence equipment is aimed at enabling concurrent engineering and production in faster timelines.

The MAFT test facility was inaugurated by Arup Chatterjee, Director (Engineering and Research & Development), HAL. (File)

Chairman of Hindustan Aeronautics Limited (HAL) R Madhavan said the defence PSU is trying to implement the next generation Advanced Multi-Role Combat Aircraft (AMCA) and Indian Multi Role Helicopter (IMRH) under the special purpose vehicle (SPV) model involving private players.

Speaking at the webinar ‘Aatmanirbharta in Defence: Call to Action’ organised by the Ministry of Defence on February 26, Madhavan said, “We are trying to implement the projects through the SPV route where we want the private players to have a majority stake so that it does not become a full government entity. The procurement process will also be easy. The advantage is that it will cut procedural delays. On AMCA, we are working with DRDO.”

Adding further he said, “SPVs cannot raise debts based on the sponsor’s assets. So, it has to create assets or they have to ensure that the financing institute has a say in the cash flows of the future. We have worked out on that. There are a couple of things which are required from the government as guarantees for the SPV to function.”

Explaining further, he said, “One is that there will be a fixed order quantity and it should be known to the SPV from the beginning. Suppose there are 400 helicopters; this has to be told to the SPV upfront by the government. Secondly, once the design development is over, there will be no delay in placing orders because any delay means the SPV will face a problem in paying back the debt as well as the investment that they have made. Private industries should also have confidence in Indian development, especially the defence public sector units. There is not much of a risk involved in the subsequent development of a new platform through the SPV route even if it is AMCA or IMRH.”

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IMRH will replace the Russian Mi-17 helicopters. Union Finance Minister Nirmala Sitharaman announced that the private sector will be encouraged to take up design and development of equipment in collaboration with the Defence Research Development Organisation (DRDO) and other organisations under the special purpose vehicle (SPV) model.

The provision for formation of the SPV for design development and production of major defence equipment is aimed at enabling concurrent engineering and production in faster timelines.

The announcement of 25 per cent of the defence research and development budget earmarked for engagement of industry, start-ups and academia was hailed by the experts.

First published on: 26-02-2022 at 12:55:59 pm
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