The Telegraph
Since 1st March, 1999
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Big shopper of lethal toys
- At $10bn, Delhi clears world’s largest tender for fighters
MiG 35

New Delhi, June 29: The government today cleared a global tender to buy 126 multi-role combat aircraft for a deal estimated at $10 billion-plus (Rs 42,000 crore), the largest of its kind in the world.

The tender will say that 50 per cent of the contracted amount will have to be ploughed back into Indian industry.

The earliest the Indian Air Force can expect the first of the aircraft from among six contenders is 2012. The last major acquisition by the IAF — of 66 Advanced Jet Trainer aircraft — was in the works for 20 years.

The first squadron of 18 aircraft will be bought in “flyaway condition”.

The balance 108 will be manufactured under licence from the producer with transfer of technology. Defence public sector unit Hindustan Aeronautics Limited has been designated the “systems integrator” and will have an assembly line.

The tender, called a Request for Proposals, will be sent to the six makers in the first week of August.

“Transparency at all stages must be ensured,” defence minister A.K. Antony told the Defence Acquisitions Council that cleared the tender.

Even as the defence ministry went into a final round of discussions this month on the tender, US aviation giant Lockheed Martin has upped its offer with the latest variant of its F-16 Fighting Falcon aircraft — Block 60. So far, Lockheed Martin was pitching the F-16 Block 50/52.

The other contenders are Boeing (US) with the F/A 18-E/F Superhornet, Saab (Sweden) with the JAS 39 Gripen, RSK Mig Corporation (Russia) with the MiG 35, a European consortium with the Eurofighter Typhoon and Dassault Aviation (France) with the Rafale.

The Superhornet will be on display over Indian skies from July 1 to 5. The aircraft is on board the carrier, the USS Nimitz, that will anchor off Chennai.

“In view of the size and operational importance of the likely purchase, the criteria for selecting the final MMRCA contender from among some of the best combat aircraft offered by American, Russian and European companies, has been fine-tuned. The tender will contain a selection model that would involve an exhaustive evaluation process as detailed in the Defence Procurement Procedures 2006,” said defence ministry spokesperson Sitanshu Kar.

(MMRCA, or medium multi-role combat aircraft, refers to a weight category — 20 tonnes.)

The Defence Acquisition Council has stipulated that 50 per cent of the value of the contract will be in “direct offsets”. This does not automatically translate to 50 per cent of Rs 42,000 crore. The final figure will be arrived at only after the shortlist is drawn up and price negotiations are over. The earliest this could happen is in the second half of 2008. The contenders will be asked to respond to the tender by January 2008.

Air headquarters is pushing for the process to be fast-tracked because it has warned of a shortfall in fighter aircraft squadrons. The IAF claims it has 33 fighter aircraft squadrons but the actual figure is around 29, 10 short of the sanctioned 39.

The 126 multi-role combat aircraft will make up seven squadrons. The shortfall is largely because of slippage in the indigenous light combat aircraft programme and the wastage of the MiG 21 aircraft.

Kar said the acquisition council has decided that the “lifecycle cost” of the aircraft will be considered to determine the cost of purchase. This is the first time for such a big project that the norm is to be applied.

It is borne out of India’s experience with Soviet-era equipment that has proved cheap off-the-shelf but expensive to maintain over a period of time. The multi-role aircraft are expected to have a life of 40 years.

In their responses to the tender, the makers will have to give a “verifiable cost model”. The responses will have to be made with sealed covers for technical and commercial offers.

Kar said the tender does not distinguish between single and twin-engine aircraft. Four of the aircraft in the race are twin-engine and two (the F-16 and the Gripen) are single-engine. The determination will be made on the yardsticks of manoeuvrability and operational compatibility for the IAF.

“There are three guiding principles for this procurement,” said Kar, referring to the acquisition council’s guidelines.

“First, the operational requirements of IAF should be fully met. Second, the selection process should be competitive, fair and transparent so that the best value for money is realised. Lastly, Indian defence industries should get an opportunity to grow to a global scale.”

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