In U.S. cables, an early battle for Indian skies

Updated - December 04, 2021 11:39 pm IST

Published - April 11, 2013 02:34 am IST - CHENNAI:

Foreshadowing the hard knuckled fight for big ticket civilian and fighter aircraft deals that would occur over India’s immensely lucrative skies some three decades later, the Kissinger cables provide a fascinating glimpse into the bitterness that even the sale of a handful of planes by a rival could cause an American vendor.

After losing a closely fought battle to Airbus Industrie for the supply of three civilian aircraft to Indian Airlines in 1975, a representative of the American aircraft maker Lockheed complained to the U.S. Embassy in New Delhi that one reason the French firm had won was because it had ‘sweetened’ the deal with a $1.5 million contribution to the Congress party.

The representative, Peter Mingrone, claimed that Lockheed too had been solicited for a similar contribution but had refused as prices were already “rock bottom.”

He said Airbus had won because it slashed the final sales price to $23 million for each aircraft and financed the entire sale at an interest rate under 8 per cent.

The embassy communicated all this in a cable to the State Department ( >1975NEWDE05466_b, limited ) , but cautioned that “some of things” Mingrone “reports to us we suspect are merely rumors.”

“[Airbus] also reportedly offered attractive terms on other items the Indians might be interested in acquiring, including oil field technology, and helicopter construction,” the cable quoted Mingrone as saying.

Airbus’s deal was for three high-capacity A-300 passenger aircraft, with options, which were delivered in 1976.

According to Mingrone, said the cable, which is part of the cache of U.S. diplomatic correspondence released by WikiLeaks on Monday, “Airbus people were so desperate for a sale that they threw everything in but the kitchen sink.”

The embassy claimed, somewhat unsurprisingly, that had the decision been made on merits alone, Lockheed should have won ‘hands down”. But “with an order of this magnitude at stake, and with follow on sales sure to result for whoever gets the first order, we don’t doubt that a lot of sharp dealing went on.”

The political climate in India had also turned anti-U.S., the cable noted, “with the reversal of the arms sales,” a reference to America’s decision to lift an embargo on arms supply to Pakistan.

Another cable, titled “Indian Airlines Purchase of A-300 Aircraft; Post-Mortem” ( >1975STATE096112_b, limited ) from the State Department says according to the Lockheed representative in Washington, “the French package” also included “forgiveness on Caravelle [a reference to aircraft leased to Indian Airlines by Airbus earlier] lease payments, 75,000 dollars per month per aircraft for 12 month remainder of lease; (b) aircraft simulator worth approx 40,000 dollars; (c) fixed exchange rate.” The cable requests the Embassy at New Delhi, and other posts, to confirm these details, the interest rate and terms of the loan.

A flurry of cables between 1973 and 1975 shows the U.S. keenly tracking the negotiations for the aircraft deal. Aside from Lockheed, another American firm, Boeing, had also been in the running.

In 1976, the New Delhi Embassy sent another cable ( >1976NEWDE11152_b, confidential ) detailing “Indian Airlines requirement for twinjet aircraft,” and suggesting that “in view of this substantial market potential and the desirability of further American presence in India’s domestic transport system, Emb strongly encourages Eximbank support this sale.”

It further stated: “To a considerable degree, last year’s loss by Lockheed L-1011 Tristar to A-300 Airbus was due to concessional European financing. Political considerations are always of importance in aircraft sales and in India in this regard U.S. may face certain disadvantages. Emb believes, therefore, that in addition to technical superiority competitive financing is vital if U.S. aircraft are to remain in contention.”

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