Questions raised as HAL outbids Adani Defence, Bharat Dynamics in Isro's ‘privatisation' attempt
New Delhi: Almost three years since its first demonstrator mission launch, a ₹511-crore contract to privatize Indian Space Research Organisation's (Isro) small satellite launch vehicle (SSLV) was awarded toHindustan Aeronautics Ltd by the government's nodal space agency on Friday.
However, considering that HAL is a public sector undertaking overseen by the defence ministry, analysts, observers and proxy advisory firms are questioning the efficacy of the announcement, insisting it does not truly qualify as 'privatization' of the government-built rocket.
The contract will see HAL take full ownership of the rocket that Isro built and first launched in August 2022.
Pawan Kumar Goenka, chairman of Indian National Space Promotion and Authorization Centre (In-Space), said the project is 'not just a manufacturing contract—HAL will do end-to-end manufacturing, supply chain procurement, winning orders from clients, (and ) launching and maintaining the rocket in the long run".
Isro will handhold HAL through the making and validation of the small rocket for two years. Beyond this period, Goenka said HAL can onboard Isro as an advisor on a commercial contract basis.
As of 20 June, the Union government holds a 71% stake in HAL.
Also read | Hindustan Aeronautics: Here's all you need to know before investing
'The bid from HAL was carefully selected by In-Space, Isro, and NewSpace India Ltd (NSIL) through two bidding rounds. The first round saw the participation of nine companies, from which six were shortlisted. In the second round, three of the bidders dropped out, leaving HAL, and two consortiums—led by Alpha Design Technologies and Bharat Dynamics—as the finalists," Goenka said.
Alpha Design is owned by Adani Defence Systems and Technologies Ltd.
Neither HAL, NSIL or In-Space disclosed the cost of making the small rockets.
Radhakrishnan Durairaj, chairman and managing director of NSIL, which is Isro's commercial space operations division, said the information 'would allude to SSLV's competitiveness on a global scale" and thus could not be disclosed.
Industry stakeholders said the decision may not bode well for Isro's privatisation in the long run.
Shriram Subramanian, founder and managing director of proxy advisory firm InGovern Research, said the move is 'strange, seeing that the contract was delivered to HAL without validating the firm's capability of delivering space projects as per timelines".
Also read | How ISRO's 100th mission reflects its original startup spirit
One hand to the other
HAL, in partnership with Larsen and Toubro Ltd, was previously awarded an ₹860-crore contract to manufacture five units of Isro's larger rocket variant—the Polar Satellite Launch Vehicle (PSLV)—in September 2022. The initial timeline to deliver the first of the five PSLVs was two years.
'We are on track with the engineering efforts, and results from the PSLV contract will be seen very soon," said Barenya Senapati, director of finance at HAL, fielding questions on the company's space contract execution capability during Friday's announcement.
'Our air force engineering division is separate from our new space business, so the two work very differently and are not interconnected," Senapati said, without disclosing when the first PSLV will be delivered.
The SSLV award may compound pressure on HAL at a time when the public sector undertaking has been in the firing line of the Indian Air Force itself in terms of its failure to deliver its contract of indigenous 'Tejas' combat aircrafts.
'In a way, this is a good thing for the other private startups," said Narayan Prasad Nagendra, space industry consultant and chief operating officer of Dutch space supply chain firm, Satsearch.
'HAL's contract is essentially a representation of a government contract shifting funds from one hand to another without specifically achieving anything. If at all, given HAL's current track record in space, this will make way for private startups such as Skyroot Aerospace and Agnikul Cosmos to win more clients and take a market lead," he added.
Also read | Space tourism: Can Isro beat Blue Origin?
On the flipside, others said the move may have come out of necessity.
Chaitanya Giri, space fellow at global think-tank Observer Research Foundation, said that 'since the other two final bids for the SSLV were through consortia, In-Space and Isro were really left with only one choice to execute a clean, simple contract for the SSLV".
However, Giri added that 'the move to award the contract to HAL cannot strictly be called privatization—it is better to be referred to as commercialization by bringing a legacy Indian industry name into the nascent field".
'It also shows that the Indian government is not yet fully confident in India's private space firms, which could be another reason behind HAL winning the small rocket contract," Giri added.
In-Space's Goenka, however, said HAL winning the contract 'was not a subjective decision".
'HAL was the highest bidder, and also cleared In-Space and Isro's technical evaluation process in terms of its capability under all parameters, thereby emerging with the contract as per the official process," he said.
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