The Hindu : National : Fighter aircraft: India seeks indigenous content

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Friday, Jun 29, 2007
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Fighter aircraft: India seeks indigenous content

Sandeep Dikshit

NEW DELHI: India’s mega tender for the purchase of 126 multi-role combat aircraft will stipulate the sourcing of half of the contract from India in order to enlarge the aircraft manufacturing base in the country.

Normally, 30 per cent of the contract must be sourced from India for all imported defence systems worth over Rs.300 crores. However, a two-day meeting of a high-level committee, which ended on Wednesday, decided to hike the percentage to 50 per cent for this contract, whose value is in the region of Rs.40,000 crores.

The proposal of the committee, which finalised the specifications, will be considered by the Defence Acquisition Council (DAC) headed by Defence Minister A. K. Antony and comprising the three Secretaries in the Ministry, the Defence Research & Development Organisation (DRDO) chief, the service chiefs and other senior officials. It will take a month to send a formal request for proposals (RFP) to the companies after the DAC approves the various specifications finalised by the committee, said Ministry officials.

India plans to buy the fighters to arrest the depletion in force levels due to retirement of the older generation of planes, mainly various versions of the MiG series and the delay in the development of the indigenous fighter Tejas. Having been in the pipeline for several years, India has been forced to make emergency purchases of additional Sukhoi planes, compress the production schedule of the ‘in-pipeline’ Sukhoi planes and even scout for second-hand planes with other countries.

Officials scotched speculation that the size of the order would be increased to 190 planes but maintained that the standard clause of opting for more planes, if the need arises, would be retained. India has been incorporating the clause in almost all its major deals and this helped it place an additional order for Russian frigates although it has remained unutilised for the MiG-29 naval version planes for the aircraft carrier Admiral Gorshkov (INS Vikramaditya). The first squadron of the planes would be manufactured at the makers’ home base and the remaining would be produced in the country.

The tender has attracted tremendous interest not only from the six manufacturers in the fray but even the countries where these companies are based.

For Russia, whose defence equipment exports to its main markets of China and India may slow down over the next decade, a win would pave the way for a bigger share in non-traditional markets, where it has started scoring successes, as well as further consolidate its defence ties with India.

For the two American competitors – Lockheed Martin and Boeing – the tender would pave the way for the U.S.’ biggest ever entry into the Indian defence market.

So far U.S. companies have made marginal inroads into the defence market with New Delhi steering clear of high-end and big-ticket American offers. For the Swedish, which has been selling its Grippen fighter in modest quantities, and Eurofighter (consortium of British, German, Spanish and Italian companies) this order would be of the order of a dream come true.

The French, with their Rafael, would be hoping to score a second quick success in the Indian market as they already have a multi-billion order for submarines in the bag.

Although the RFP is nearing completion, the road to selecting the eventual winner remains tortuous because of diplomatic pressures.

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