Boeing, EADS, Lockheed Martin eye Indian $12-billion fighter plane deal

29 April, 2008:

With the deadline to bid for a $12-billion deal to sell 126 fighter planes to India getting closer, major aircraft manufacturing companies worldwide are rushing to pitch for the contract.

Six aeronautical companies are expected to submit proposals by April 28, 2008, for the contract.

India’s contract includes outright purchase of 18 fighter jets by 2012. The country also holds the option of buying another 64 fighters from the top bidder.

India has called for the bids as the number of Indian Air Force’s operational fleet of fighter planes plummeted to 576 aircraft in 2007 from about 750 in early 2000.

Boeing Company, based in Seattle, Washington, the United States, is offering F-18 Superhornets. It submitted its proposals on April 24, 2008, according to a Boeing spokesman.

The four-nation European consortium European Aeronautic Defence and Space Company (EADS), reports the news agency AFP, is getting ready to submit the papers detailing its offers, which includes technology transfer and its Typhoon Eurofighter.

The European Aeronautic Defence and Space Company had suffered a setback in December 2007 when India cancelled a $600-million deal for 197 military helicopters from Eurocopter, a unit of EADS.

Lockheed Martin, based in the United States, is striving to sell F-16 fighter planes to the Indian Air Force, which is in need of advanced technology.

India can also choose from MiG-35 and MiG-29 made in Russia, Gripen fighters manufactured by Saab, the aviation and defence company based in Sweden, and Rafale and Mirage jets made by Dassault of France.

Dassault has reportedly promised to supply 40 top-flight Rafale jets on a fast-track basis as part of the deal, while Gripen is offering larger technology transfers.

Douglas Hartwick, CEO of Lockheed Martin’s Indian branch, was quoted as saying,“The F-16 project will be the finest and the Indian Air Force will be extremely pleased with it.”

Lockheed, he insisted, was “unfazed” by India’s arms procurement rules, called the offset policy, saying,“The offset policy is being reviewed and we look forward to the revision as we have made considerable inputs for that.”

India’s ‘offset policy’ stipulates that foreign firms that sell products that are worth more than $600 million will need to re-invest up to 50% of the total amount to build India's manufacturing capacity.

This clause was inserted in India's big defence deals in 2003, to protect itself from non-delivery and to give a fillip to the domestic arms industry.

A top executive of the European Aeronautic Defence and Space Company – the consortium of British, German, Spanish and Italian firms – was quoted as saying that the European consortium wanted to take ties with India beyond a buyer-seller relationship. At the same time, he admitted that India’s purchase policy posed challenges, adding,“We are ready to meet these challenges and we will satisfy the expectations of our customers.”

New Delhi has promised to revise the‘offset policy.’ AFP quoted sources in India’s Defence Ministry as saying that the new policy would give the contenders until August 2008 to “fine-tune their offers on their spend-back
obligations.”