BS READS: Inside story of Plane X, India's dead civilian aircraft project

An ambitious Rs 7,555-crore project to develop an indigenous civilian aircraft failed because of scared investors, bureaucratic hurdles and dithering governments

In its first five-year term, the Narendra Modi government embraced many programmes and projects launched by predecessor Manmohan Singh’s regime. Some – like the one to provide biometric-based unique identity to all citizens, the employment guarantee programme, and the right to education – were implemented with greater gusto. But not all schemes of the Singh government were so fortunate. The Rs 7,555-crore project to develop an indigenous civilian aircraft was among the unfortunate ones. How and why this project, mooted by the Singh government, was dropped by the Modi regime without much ado, is a fascinating story of officialdom and politics.

Sometime around 2009, the political leadership under Manmohan Singh was given to believe that India needed to develop its own civilian aircraft to meet future needs of regional flying. There were concerns that the country’s aviation sector, poised for a boom, would see a spurt in demand for planes, and lead to billions of dollars worth of aircraft imports. That might have been a problem, given the country’s total dependence on imports for civilian aircraft. Aerospace scientists and the top political leadership, therefore, decided that India should launch a civil aircraft development project “without any further delay”. A few of India’s top scientists and some industrialists came together to work out the modalities of the programme, which was to be launched in January 2012.

The plan was to build a 70-seater aircraft – and a 90-seater version that could be re-configured to add 10 more seats, should the need arise – at a project cost of Rs 7,555 crore. After various stages of prototype building, designing and testing, the first test flight was to be undertaken in July 2016. The final certification of the aircraft was to be completed by January 2018. And the first aircraft, produced in collaboration with a private company, was to be delivered to the first customer by January 2019.

In seven years, it was believed, India would join the elite club of nations like the US, Brazil, Russia, China and others with the capability to produce civilian aircraft domestically. 

Since this was to be the first civilian aircraft built in the country, cooperation of several ministries would have been required. The Ministry of Science and Technology, under which function the Council of Scientific and Industrial Research (CSIR) and its much treasured arm, the National Aerospace Laboratories (NAL), was to design and test the aircraft.

The Ministry of Civil Aviation, which was to be the certifying authority for the proposed aircraft, was asked to play a proactive role to establish a market for the aircraft in the face of stiff international competition. The role of the Ministry of Defence, under which operate Hindustan Aeronautics Limited (HAL), Aeronautical Development Agency (ADA) and Defence Research and Development Organisation (DRDO), was also crucial, because a lot of technology for the civilian aircraft was to come from these institutions.

It was emphasised that the Ministry of Finance would have to release funds in a timely manner, as the entire project up to the production phase was to be funded entirely by taxpayers’ money. “A lot of discussions about these requirements took place with Montek Singh Ahluwalia, then the deputy chairman of the Planning Commission. Our aircraft demand projections at the time were much lower than what the scenario would be 10 years from then. There was no plan to develop an indigenous engine for the aircraft. They would have been bought from global manufacturers,” recalls Samir Bramhachari, former director-general of CSIR.

But, the plane project was shelved

In spite of such grand and elaborate planning, the project, labelled the National Civilian Aircraft Development (NCAD), died a silent death, not going past even the preliminary design phase. The Rs 7,555-crore project had first received a ‘budget line’ in the Union Budget for 2012-13, where a nominal amount of Rs 10 crore was allocated to CSIR specifically for this programme. No money, however, was ever actually sanctioned by the central government. The last time the NCAD project ever found a mention in a Union Budget was in 2014-15, the first to be presented by Arun Jaitley as finance minister in the newly elected Modi government. A nominal amount of Rs 1 crore was allocated, but never actually paid. In the very next Budget, the NCAD’s mention was dropped altogether.

The programme hasn’t reappeared in Budget documents since. Some officials in the organisations that were involved in the project, not willing to be named, told Business Standard that “nothing concrete has happened” and that writing anything about the project “would create unnecessary controversy”.

While many big Indian corporate houses have entered the defence business, the NCAD project is still to find support from anyone. In 2018, a departmentally related Rajya Sabha standing committee, headed by Congress leader and former Union minister Anand Sharma, expressed its dismay. It said: “The committee is unable to understand why this project has made no headway in so many years. The committee also expresses its deep concern over the fact that we have mastered space technology indigenously but still not been successful in making civil aircraft for the country. The committee, therefore, recommends that proper and realistic planning be made for this project along with adequate budgetary provision so that this project could take off. Further, the committee also recommends that the nodal ministry/department for taking the whole responsibility be identified and decision on the commercial partner be taken for strategically launching the project at the earliest.”  

Business Standard spoke with several people – key officials who previously worked on the project, officials serving at various organisations involved in the project, scientists, bureaucrats and officials in the Ministry of Civil Aviation – to get details of one of the most ambitious manufacturing programmes ever conceived in India, and how it died silently.

So what killed India’s indigenous aircraft project?

With everything in place, everybody suddenly seemed to have lost interest in the civil aircraft project in 2012 itself. The government failed to provide any money and interest in the private sector simply vanished. “I think there were three primary reasons for this. First, the Saras aircraft crash in 2009 made many sceptical about India’s capabilities in designing a civilian aircraft. Even so, despite the setbacks, India successfully developed Saras. Second, by 2012-13, the mood in the country was very negative. Due to various scams, the public-private partnership (PPP) model had become a dirty word. Businesses were scared at the time to enter into any partnership with the government. And third, we could not get a champion talent to head the project. Every project of national strategic importance needs one,” CSIR’s Samir Brahmachari said.

People who had worked on the project told Business Standard that there were other reasons for the death of the ambitious programme, indicating bureaucratic hurdles. The Manmohan Singh government could not decide on a nodal ministry for the programme. With four different ministries, including the defence ministry, expected to play key roles, there were multiple pulls and pressures. Ajit Seth, then the cabinet secretary, was to provide guidelines to the CSIR on the transaction of business rules. But, with little clarity on the nodal ministry to execute the project, no progress could be made. Since the project involved four ministries, no decision could be taken or any order issued until all departments of the respective ministries concurred on a matter. In addition, the Ministry of Law had to be consulted for the contract which the government would have to enter into with a private company for joint venture.

The law ministry was treading judiciously on contracts in the aftermath of various scams like 2G, coal, Commonwealth Games and others. All of these involved serious allegations of favours extended to private companies by ministers and government officials. The government of the time, stuck in a veritable minefield of scams, dithered on moving forward either in a bubble-up manner or by providing a big push. No decision was taken even on the structure of the organisation for the design and development phase, which was to be entirely funded by public money. 

No decision was taken on choosing between a holding company model and an autonomous body. The holding company model had envisaged a 20 per cent stake in the company to be held by a private partner to oversee design and development of the aircraft. The autonomous body was to comprise secretaries in the civil aviation, defence, science and technology and finance ministries, in addition to eminent scientists and industrialists. This authority was to be placed under a nodal ministry that would seek government approval for the project. 

Who would have bought the plane?

Before the planning for building India’s very own civilian aircraft had begun, the Ministry of Civil Aviation had helped the high-powered committee gauge the market potential for the plane. “The general consensus was that making the plane was the easy part. Selling it was the tough one. ATR had a virtual monopoly in supply of short-haul aircraft in India. Moreover, airlines were buying more commercial jets which they were deploying even on short-haul routes simply because owning a different plane came with its own set of crew challenges and cost escalations,” said a former official in the Ministry of Civil Aviation.

While the Modi government’s Ude Desh ka Aam Nagrik (UDAN) scheme for connecting smaller towns with one another and to metro cities was unheard of a decade ago, there was acknowledgment of the fact that the “next wave” of expansion in Indian aviation would be between regional hubs and Tier-II or -III towns. People behind the aircraft programme acknowledged that while two-thirds of Indian airports were within 1,000 kilometres of one another, air traffic was dominated by metro-to-metro routes beyond that range. The average block distance between two airports was 700 kilometres. This required deploying regional aircraft, and the 90-seater aircraft plan fitted the bill.

The regional aircraft fleet in India was expected to be 250 to 275 planes in 2025, from 46 aircraft in 2010. It was also believed that many airlines like Alliance Air and others that were operating older ATR-42 aircraft and the 115-seater Boeing B737-200 aircraft on shorter routes would need to replace these aircraft. The demand from India’s armed forces to replace their ageing Antonovs and their requirement for smaller five- to 10-tonne payloads was also taken into consideration, with the proposed regional transport aircraft fulfilling that demand. This was to be achieved by removing the seats and converting the same planes into freighters for the military.

Overall, the demand for regional aircraft in civilian and military markets in India was estimated to be around 500 planes by 2035. Globally, the demand for such aircraft was pegged at 7,000 planes for the same period. With these projections, airline operators flying ATRs and other smaller aircraft were approached. A meeting was facilitated in September 2010 between airlines and members of a high-powered committee, by the ministry of civil aviation then headed by Praful Patel. 

Airlines listed various criteria for buying the aircraft. In addition to lower operating costs, airlines wanted the new aircraft to have an improved after-sales support, better cabin comfort, and lower noise levels than turboprops, larger overhead bins, better range, reliability and cruise speed, and more support in financing purchase or lease of an aircraft. In the end, the general consensus was that a 60- to 120-seater aircraft was an attractive idea. India would have been the biggest market where this aircraft would be sold.

But all these factors failed to make an impact on the Modi government. Even the argument that the aircraft project would meet the goals of the new government’s ‘Make in India’ programme failed to cut much ice.

Part 2: The 90 seater plane that India could never build. Read it here

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