A National Guard Chinook helicopter in America
The news item was nothing new. It was a virtual repeat of the age-old and familiar story — “India shops for 6 Chinook choppers” — a routine defence ministry initiative to upgrade and modernize the inventory of the Indian Air Force with the latest imported technology that always is an ‘ongoing process’. However, what may turn out to be yet another stuff of sensation in the future is the fact that the Americans are intruding into a highly profitable New Delhi turf which, till the other day, was thought to be the captive market of the former Soviet Union, and of its successor, Russia. That country’s manufacturers of military machines almost held monopoly in the Indian defence market. The report further states: “A half-dozen CH-47 Chinooks, a twin-engined helicopter capable of carrying 50 troops or 6.5 metric tonnes of cargo, will carry a price tag of about $500 million (3,200 crore).” This makes the proposed unit cost of the Boeing-made helicopter $83 million plus or Rs 500 crore plus. That is interesting. This would create yet another controversial case in which the government, importing machines to be used by the armed forces of India, would tread the now familiar path of paying a price for these war toys that would be considerably higher than what other importing nations would be paying for, or have paid thus far, for identical military hardware, imported from the same companies, originating from the same nation.
Indeed a careful scrutiny of the (available) open source information, gleaned from the universally accepted and credible Jane’s All the World’s Aircraft: Development & Production reveals the following: “Unit cost of CH-47SD [the export variant] quoted as US $30-32 million (2002), with CH-47F [improved cargo helicopter] unit price said to be about US $30 million (2007).” Even if one takes into account the in-built cost escalation factor of the Boeing helicopter during the last 10 years, is it possible to visualize or to accept the unit price rising from $30-32 million to $83 million, as has been reported by the Indian media? It seems to be a highly unlikely, unrealistic and too exaggerated an information, from a questionable source.
Why is this so? Because, when a time-tested and sophisticated military product from Boeing is sold to, and used by, more than 10 overseas customers, there has to be some visible uniformity in the price tag, minor variations thereof notwithstanding. Although Boeing’s Chinook helicopter has several variants/models, the producer would always try to maintain a balanced and ‘affordable’ price tag owing to the future needs and demands of customers and the continuation of the manufacturer’s production line.
A look at the list of Chinook users (Argentina, Australia, Canada, Egypt, Greece, Italy, Japan, Morocco, Netherlands, Nigeria, Singapore, South Korea, Spain, Taiwan, Thailand, the United Arab Emirates, the United Kingdom and the US) shows that there are at least eight production models which are broadly referred to as the “medium-lift helicopter”, the design of which was made in the 1950s for it to serve as an all-weather transport for the US army. A further look at the cost of this product for various users gives us this picture: “Unit cost of CH-47SD quoted as US $30-32 million (2002), with CH-47F unit price said to be about US $30 million (2007).”
That cannot be pleasant news for India. Instead of price rise, there seems to be a price fall. How? One does not know for sure. But that could be a possibility, since when goods are produced in mass quantity with an assured demand and return structure, the price could be stabilized or even reduced. Of course, this formula of price stability or price reduction may not normally be applicable to Third World developing consumer countries, as they are adept at buying high-tech, West-produced military hardware at a premium to impress their ignorant subjects with the convenient and convincing logic that technology from the West comes at a price and for the maintenance of the defence preparedness of the country, one has to pay that price.
Coming back to the price factor, one finds, “The US Army’s estimated cost of CH-47F programme, including research and development, production of 55 new helicopters and upgrade of 397 Chinooks, [is] US $11.4 billion (2004).” Again, the “Financial Year 2012 budget request comprised US $936.4 million for 33 new-build helicopters.” Thus, whatever way one looks at or tries to calculate the unit price of Chinook of any model, the price remains between $30 and 32 billion, even as late as in 2012. In this scenario, if India really manages to purchase, (a clearly) over-priced $83 million per unit Chinook in near future, another defence scandal of India is guaranteed.
One, however, is not questioning the quality of the Boeing product. Far from it; Boeing is a universally accepted, and tested, brand. It is quality par excellence. Hence there is no reason to suspect India’s choice, if any, in going for this particular military hardware. In the past too, when the Bofors-Howitzer scandal had broken out in the 1980s, no one doubted the quality of the gun. In fact, subsequent events, like the Kargil war, proved the combat success and utility of the scandal-afflicted Bofors gun in the high hills of the Himalayas.
The Boeing-made Chinook helicopter price tag, therefore, is likely to pose a serious problem for Indian decision-makers on the eve of the Parliament elections. Additionally, as the shadow of unhappy Russian helicopter manufacturers is likely to loom large over the real possibility of their products being substituted by those of their arch rivals from the US, India is bound to face air-turbulence. Further heat could be generated as, traditionally, the US is more reluctant than other producer-suppliers to include technology transfers in export deals. This inflexible attitude has usually been considered to be one of the main obstacles to securing large export orders from India in the past. Nevertheless, the recent Indian orders for the US made 22 AH-64E combat helicopters, the US origin engine for both its indigenous Tejas combat aircraft, the modernization of 125 Jaguar combat aircraft, the 145 M-777 155-mm guns, six C130-J transport aircraft, twelve P-81 anti-submarine warfare aircraft are all indicative of the future trends in the Indian defence market.
As aircraft accounted for nearly 62 per cent of the volume of US exports in 2008-2012, there is little doubt as to which way the wind is blowing for the US defence contractors. In addition, as the US defence budget reduces, the defence contractors are looking more towards export markets to offset decreasing domestic demand. Hence the reality is that the US establishment itself is quite keen to facilitate export with India in mind, India being the leading purchaser of foreign (imported) military hardware from the West.
India today is universally acknowledged for its insatiable appetite for ‘imported technology’ as well as the kickback. And that constitutes a big advantage for the foreign merchants as they easily come to know the quantum of cash to be paid as bribe and the names and numbers of those collaborators who matter in the Delhi durbar. Hence, if India today really pays $83 million plus per unit to buy the Boeing-made Chinook helicopters through the US foreign military sales route, it may be no news to those who matter in the corridors of power, but it would imply another dubious defence deal. And that should be avoided.