Representational photo.

Bengaluru: Defence PSU Hindustan Aeronautics Limited ’s (HAL) performance—in the backdrop of delayed deliveries and lack of quality as pointed out repeatedly by the Indian Air Force (IAF)—may have come under a cloud, but recommendations of a panel that had suggested some solutions has largely been lying in the cold storage since 2014.

Among other things, the committee headed by Air Marshal (retd) M Matheswaran, a former deputy chief of Integrated Defence Staff (DCIDS), had recommended that the defence PSU be completely freed from bureaucratic control, and be run like a corporate with limited government support.

Matheshwaran argues that the government must only behave like an investor and not have operational control over the firm through its departments like it is now.

“The recommendations were similar for other defence PSUs as well. I had recommended that the Department of Defence Production be shut down as it has no relevance today. Also, generalist officers in MoD (ministry of defence) do not have long-term vision. Instead, the recommendation was formation of a national aerospace commission which can draw up long-term strategies and also provide directions,” Matheshwaran told TOI.

The report was submitted to then defence minister Manohar Parrikar and the National Security Advisor (NSA) in 2014, although the committee itself was formed by the National Security Council (NSC) and NSA of the previous government in 2013.

“Parrikar had read the report fully, but nothing has come out. Some suggestions like the need to development new technologies and link research with PSUs too off, but the major ones that needed radical decision making have remained just recommendations,” Matheshwaran, who has also served as strategic advisor to HAL CMD in the past, said.

Arguing that the Indian private industry was not ready to taken on the responsibility, he said that the solution, therefore, was to make PSUs more efficient. “But so long as the government controls it the way it does now, that won’t materialise. It is conflict of interest even to have government-appointed directors on HAL board,” he said.

The air marshal also recommends that HAL be split up into various firms, and each firm be held accountable by all investors—including the government, which will be the principal investor—and allowed to function like any other company would.

“All Bengaluru divisions could be one firm, then the radar and avionics in Hyderabad, the Nashik unit, and the engine unit in Koraput must all be different companies. Each of this would be responsible for itself, and the PSU must be mandated with creating a market outside India and take care of it. The quality is not of international standards because the government has no mandate. And the blame is not only with HAL in its current avatar, the buck stops with the government,” he said.

We Are More Free Now

Neelakantan Iyer, a government nominated director on the PSU’s board told TOI: “You are talking about a company that has been around for 75 years, changes don’t happen overnight.”

Iyer, however, said that the board has been conscious about some of the issues and that the HAL management and board has a lot more freedom than earlier.

“By 2025, you will see a completely different firm,” Iyer said, adding: “Although IAF and armed forces will be first priority, the aim is (to) reduce HAL’s dependence on them. In few years, you will see that the government will not be the only major customer.”

He also argued that HAL will become more corporate—a natural extension of government divestment—and a host of reforms are in the offing. “HAL will took take wings, and you will see a completely different, more professional firm very soon that will have a market even outside India,” Iyer said.

