HAL has supplied helicopters like Cheetah, Chetak and Dhruv, and two Dornier aircraft in maritime version to Mauritius in the past
NAGPUR: Tata Group's TAL Manufacturing Solutions, which has a unit at Mihan-SEZ, was recently approached by Bangalore-based defence PSU Hindustan Aeronautics Limited (HAL), for making floor beams and other similar components for Sukhoi fighter aircraft. This is the second time HAL and TAL are looking for a manufacturing arrangement. An earlier plan did not work out due to issues related customs duty payable by TAL.
TAL, which makes floor beams for Boeing's Dreamliner jets, recently delivered 5000th beam to the aircraft maker. In the same period, HAL also came up with a proposal for the company to revive the old deal. Even an order was placed by HAL in 2014 but it did not work out. This was because TAL has a unit in a SEZ, and the end product being supplied to HAL was in the domestic tariff area which attracted customs duty. This is a typical problem faced by the units in a SEZ. Technically any supply from a SEZ to a domestic unit is taken as an import to the buyer and a customs duty is charged.
Though TAL completed the initial order by bearing the duty cost, the deal was not taken further as it hit the margin. There was hardly any margin for TAL after paying the duty which was not passed on to HAL, said a source. The case was taken up by the ministry of commerce that governs SEZs requesting that duty should be exempted as it was a project of national interest. The plea was turned down, a source said.
Now as HAL has come up with a fresh offer, there are plans to once again take up the case with government. It will be taken up with ministries of defence, commerce, and finance. Since the order is for fighter aircraft being used by the Indian Air Force (IAF), defence ministry will have to be involved. The ministry of commerce will come into the picture because SEZs come under it. However, the final decision on waiving customs duty lies with the ministry of finance, said a source. If the work is outsourced, HAL's pressures will be eased and it may be able to make deliveries faster.
TAL is looking to capitalize its expertise in using composite material. There are plans to jointly bid for more orders with Swiss component maker RUAG Aviation which is a Tier 1 supplier to Airbus. The company is also banking on the advantage of low cost of production it has in the country.