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July 27, 2011

IAF pushes for opening of aircraft bid process

(Deccan Herald) : The big bang in military aviation may come even before Diwali with India wrapping up the $10.4 billion contract to buy 126 medium multi-role combat aircraft (MMRCA) from a European firm in five to six weeks.

 “We have completed the benchmarking and submitted the report to the Ministry of Defence which has to accept it. A technical offset evaluation committee report has also been submitted to the MoD. The lowest bidder will be declared in another five to six weeks,” Indian Air Force chief PV Naik said here Tuesday.

In April, the Defence Ministry shortlisted Eurofighter Typhoon and French Rafale ahead of their four other competitors—MiG-35, Gripen NG, F-16 IN Super Viper and FA-18 Super Hornet—after two years of gruelling trials on 643 test points.  “On the MMRCA deal, we will go as per the procedure,” Naik said, scotching speculation of political interference in selecting the winner.

Defence Minister A K Antony, too, had brushed aside rumours of political influence.
Following the down-select, the Centre extended the terms of commercial bids for Eurofighter and Dassault till December 31, 2011, so that price negotiation could be concluded in time.

Subsequently, the benchmarking exercise was undertaken to fix a price band for individual fighters.

While the Defence Ministry is tight-lipped, the Indian Air Force (IAF) is pushing hard for opening of the commercial bids as early as possible. As IAF's squadron strength is depleting continuously, it wants many more fighters to maintain its air superiority against Pakistan and effectively counter China.

The winning firm has to deliver the first fighter within 36 months of signing the commercial agreement. The first 18 fighters will be delivered off-the-shelf while the remaining 108 planes will be manufactured at Hindustan Aeronautics Ltd in Bangalore under technology transfer.

Transfering of 60 per cent of the aircraft's technology to HAL in four phases  and offsets remain the two key areas of contention. Indian conditions suggest that 50 per cent of the foreign exchange component of the purchase cost have to be defrayed through direct offsets within the Indian aerospace sector.

Despite steep offset what makes the MMRCA contract attractive is a distinct possibility of a follow on order of 60-80 aircraft which escalate the deal value.

The MMRCA along with Su-30 MKI, MiG-29, Mirage-2000, Tejas light combat aircraft and Jaguar will be the IAF mainstay till the introduction of Indo-Russian fifth generation fighters.

Naik said a Rs 10,900 crore contract to upgrade 51 Mirage-2000 would be signed shortly.

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