Six aerospace companies, backed by their respective governments, are in intense competition for what could be the last great post-Cold War prize-- selling India US$12 billion worth of combat jets.
Each is seeking to outdo each other using every means possible including allegations of stealing bid data from the government and getting heads of state to plead their case. What happens off the flight line is best left to the imagination.
The purchase, which is to include 126 advanced fighters with an option for 60-odd more, is hugely significant for a variety of reasons, and not just for India, particularly in the light of widespread commentary over recent weeks that China is determined to be the world's sole superpower after America, and doesn't want that status to be upset by a strong and democratic India backed by the US and Europe. China's is increasingly irritated by India's growing links with the US, culminating in the US decision last year to allow India access to nuclear technology after banning it for a decade.
The planes are a crucial element of India's defense modernization efforts to counter threats from not only from China but from its traditional rival Pakistan, which is supported by China. India projects spending more than US$50 billion by 2012 to build an immediate strike force. In a report last year, the Associated Chambers of Commerce and Industry of India said the country had already spent US$10.5 billion on military imports over the last three years, putting it among the largest arms importers in the developing world. Imports alone are expected to reach US$30 billion by 2012.
Whether Russian or US companies, for instance, get the contract would also determine if India's shift in defense posture away from the old Soviet bloc is complete.
Beyond that, however, the purchase is a chance for India to determine whether it can grow out of the spectacular, endemic corruption in military procurement that has dogged its military and its politicians for decades. It was corruption in the purchase of 155 mm howitzers, in which bribes may have run as high as Rs650 million (US$13.4 million at current rates) that led directly to the defeat of then-prime minister Rajiv Gandhi and the ruling Indian National Congress Party in 1989 elections.
Nor has the pace of scandal abated much. In June, the sleaze-ridden system was hit by a major scandal that resulted in the arrest of the chairman of the state-controlled Ordnance Factory Board and the banning of seven major domestic and international companies including ones from Singapore, Poland and Israel. Similarly, Defense Minister George Fernandes was forced to step down in 2001 after an Indian website released a secretly-filmed video implicating senior officials in corrupt arms deals, energizing opposition parties to call for the entire government to quit.
With the winding down of the Cold War, the market for hugely expensive, technologically advanced Mach-2 fighter jets has contracted mightily. That has left Lockheed Martin, Boeing (American), Dassault's Rafale (French), Gripen (Sweden), MiG (Russian) and Eurofighter Typhoon (a consortium of British, German, Italian and Spanish companies) vying for what may be one of the world's last great defense contracts. They each began presenting their fighter jets for flight testing by the Indian Air Force this month. Only a single manufacturer will survive.
India's projected new fighter fleet, universally called the MRCA fleet – multi-role combat aircraft – is designed to replace its long-obsolescent MiG-21 interceptors and fit between the more powerful Russian Sukhoi-30MKIs and its low-end indigenous Tejas LCA lightweight fighters.
Fully aware that it is calling the shots in a fiercely competitive market, India has been insisting that along with the hardware, technology should also be transferred. An offsets clause amounting to 50 percent of the transaction will require the winning foreign firms to invest a portion of the contract value in India's domestic defense industry, either via tieups or independent enterprise.
Competition Heats Up
Upfront, each bidder is looking to sweeten the deal. Lockheed has offered India an upgraded F-16 which is claimed to be a ‘complete new aircraft' catering specifically to India's requirements, possibly including advanced AESA radars allowing simultaneous tracking and destruction of ground and air threats. Washington has allowed them to be installed in F-16s being sold to the UAE. Lockheed has also offered to share the technology of its advanced Patriot interceptor missiles. India has been experimenting with interceptor missiles to thwart perceived threats from Pakistan.
Boeing is also been keen to ramp up its India connection and build defense networks. In the biggest-ever deal for a state run defense unit, Hindustan Aeronautics Limited (HAL) has signed a US$1 billion decade-long manufacturing outsourcing pact with Boeing. Under the agreement, HAL will manufacture subsystems for Boeing's range of fighter planes such as F-15s, F-18 Super Hornets and Apache Helicopters.
Moscow too has been building pressure for its MIG line in a somewhat different style, given its long standing and deep defense relations with India. Russia has opposed India's bid to make operational its first foreign military airbase at Ayni, Tajikistan. India has already been trying to deal with Russia's delays and cost increases over refitting the second-hand Kiev-class aircraft carrier Admiral Gorshkov, purchased in 2004 and renamed the INS Vikramaditya, which won't enter service before 2012. . Trouble has also erupted in the Rs 8.5 billion upgrading of six Kilo-class submarines. The message from the Kremlin is that there will continue to be problems unless there are positive indications about the MRCA contract.
Although defense analysts increasingly see the fighter jet contract as boiling down to Russia versus the US, European firms believe they are still in the contest.
French aviation major Dassault has offered to supply 40 new generation Rafale fighters to New Delhi on a fast-track basis and as an interim arrangement. Sweden's Saab Gripen has offered India full transfer of technology along with integration of state of the art weapons systems across the world for its aircraft JAS-39. Eurojet, which powers the Eurofighter Typhoon, a-contender for the MRCA deal, offered its expertise to HAL for the indigenous Light Combat Aircraft, Tejas.
In order not to upset long-standing relationships with European consortiums, India has been handing out key contracts such as US$2.2 billion to the French consortium Thales and Dassault to upgrade its 51 Mirage 2000 fighters to Mirage 2000-9 standards.
Backdoor Action
Each fighter jet is thus being aggressively backed by respective governments, even as the lobbying efforts reach a fever pitch. There is also plenty of indication of the behind-the-scenes action in the MRCA deal as well which does not look very healthy.
For example, Lockheed is facing allegations against its India CEO, a former top State Department official, Douglas A Hartwick, for possession of two folders comprising classified information relating to Indian defense procurement. Reports say that the folders somehow made their way to the Lockheed corporate headquarters in Bethesda, Maryland. Apparently the federal defense ministry has been aware of the pilfered documents since January 2009 and has been trying to ascertain how the folders got to Lockheed and whether ethical norms had been breached. Hartwick, who had served two assignments for seven years in India, made a rather hurried exit from the country.
Lockheed has maintained that all is aboveboard and it does not possess any such documents. Richard Kirkland, President Lockheed Martin South Asia operations in a telephone interview with an Indian news agency, denied the existence of such documents, though he said that in 2009 the company did write to the defense ministry to understand defense procurement policy procedures.
Although Kirkland maintained that Hartwick's removal was routine transfer and not initiated by the Indian government, the reality seems otherwise as Hartwick's exit was quick with ‘barely enough time to pack', according to one observer, with no replacement.
Sensing an opportunity to discredit Lockheed, Dassault has charged the American company with violating procurement guidelines and wants the company disqualified.
Dassault, however, has had its own problems. It was reported that the company had been eliminated from the fighter bid because it hadn't fulfilled technical requirements in the Indian tender. A phone call from French President Nikolas Sarkozy to Indian Prime Minister Manmohan Singh later, however, retrieved the situation for Dassault.
Fact File
Lockheed F-16 (US): Lockheed's “Block 70” would offer an upgraded version of the F-16E Block 60 “Desert Falcon” currently serving with the UAE. It is equipped with the widest multi-role capability among lightweight fighters, proven avionics and weapon systems and compatibility with potential allies in Asia and the Middle East who also fly F-16s.
Lockheed, however, may have difficulty in complying with industrial offset provisions, given their lack of penetration in India. The F-16 E/F Block 60+ enjoys some advantages over Pakistan F-16 A/Bs and even its new Block 50/52 aircraft.
Boeing F/A-18 E/F Super Hornet (US) : Strengths include its powerful AESA radar that India is interested in as it allows Super Hornets to play versatile “quarterbacks”. It also has carrier capability, a very wide range of integrated weapons and proven in combat. No other nation had been offered this aircraft by the US so far. It is expensive and some analysts say its aerodynamic performance doesn't match the Eurofighter or Rafale.
Saab Gripen (Sweden): The JAS-39 Gripen is a complete fourth-generation lightweight fighter. Gripen NG also offers an Active Electronically Scanned Arrays/AESA among enhancements. Along with the integrated weapons and pods, it can be operated from roadways and not just runways. Saab has a great record in countries like South Africa, Hungary and The Czech Republic. The hindrance however is absence of geopolitical spin offs from Sweden, unlike the strategic strength of America.
MIG-35 (Russia): The aircraft offers improved radar and avionics that give it multi-role capability. It has better compatibility with India's existing MiG29 fleet. It can also carry advanced Russian missiles already in service. Given Russia's involvement in India's defense sector, compliance with industrial offset requirements is easier. The weaknesses are that it is short range and lacks true multi-role capability. There are also questions about the future viability of the MiG-29 family platform, outshined by the SU-30.
Eurofighter Typhoon (EADS/BAE, Europe & Britain):This fourth generation aircraft currently has an excellent pilot interface. It has Eurojet EJ200 engines, which are being considered as the base power plant for India's LCA Tejas. Typhoons reportedly have “super cruise” capability beyond Mach 1 without using afterburners. There are yet doubts if this capability can be sustainable once weapons are attached.
Rafale (Dassault, France): Their demonstrated carrier capability could sway the decision. With superior aerodynamic performance over the F/A-18 family, the aircraft offers exceptional capacity for its size. Its range can be extended. It also offers commonalities with existing Mirage 2000. France also has a reputation as a reliable weapons supplier, good history of product support, and long-standing relations with India. However, it has no compatible surveillance and advanced targeting pod. It lacks the AESA radar.
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