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Tuesday, September 1, 2009

Competition to supply planes to India sets up fierce bidding war

The Indian Air Force began flight trials last week of the six combat jets competing for a $12-billion contract to supply New Delhi with up to 186 multi-role advanced fighters.
Competition is fierce to grab what is one of the largest arms deals to surface in the post-Cold War era.
And, as always seems to be the case with arms deals and especially those involving India, the project is already mired in scandal and controversy.
The focus of much speculation is the departure from India in July of Douglas A. Hartwick, a former American diplomat and ambassador, who was the representative in India for the United States' arms manufacturing giant Lockheed Martin.
Lockheed officials insist Hartwick's departure was simply in line with a planned and regular rotation of staff. But officials in India's Ministry of Defence have leaked an altogether more enticing story of Hartwick scuttling to the airport "having barely enough time to pack" after it was discovered that Lockheed had obtained two folders of secret Indian defence documents setting out the country's long-term arms buying plans.
How this allegedly came to light is almost farcical. Apparently in January the two files were accidentally put on the desk of an employee at Lockheed's headquarters in Maryland who was unfamiliar with the Indian advanced fighter competition.
He read the title "Government of India, Ministry of Defence," and as a good, honest soul returned them to the government in New Delhi.
Lockheed officials deny obtaining secret documents or that India demanded Hartwick's removal. And for the moment it appears that attempts by other competitors to have Lockheed barred from the competition have not been successful.
Indeed, the current test timetable calls for Lockheed's upgraded F-16 fighter-bomber equipped with radar that allows for simultaneous attacks on ground and air threats, to go through evaluation after the first on the list, Boeing's F/A-18 Super Hornet.
The other competitors are the JAS-39 built by Sweden's Saab Gripen, Russia's MIG-35, the fourth generation Eurofighter Typhoon, and the Rafale made by the French company Dassault.
The multi-role combat aircraft purchase program is part of a massive modernization of the Indian armed forces that has seen New Delhi spend about $30 billion in the last 10 years.
This is aimed primarily at countering a similarly massive military modernization program in China and the evident determination of the Beijing government to be able to project power around Asia and beyond.
In July, India began trials of its first indigenous nuclear-powered attack submarine which is part of a $3-billion program to build five such vessels.
And work continues, though painfully slowly, on refitting a second-hand Russian Kiev-class aircraft carrier which India bought in 2004, but which won't be operational before 2012 at the earliest.
Lethargy, red tape and corruption are the hallmarks of the Indian government's arms purchasing departments. In May the head of the Ordnance Factory Board, Sudipta Ghosh, was arrested on graft charges. Seven arms companies, including some from Israel, Poland and Singapore, with which he allegedly had unsavoury dealings have been banned from further defence contracts with India.
There are not yet any allegations of bribery in the advanced combat plane program, but these are still early days.
And the pushing, shoving and high-sticking among the six competing companies is already entertaining enough.
The French company Dassault Aviation, for example, tried to get Lockheed Martin disqualified in retaliation for disinformation allegedly put out by the American company.
A few weeks ago there were erroneous reports that Dassault had been eliminated from the competition for not fulfilling some of the technical requirements. Dassault blames Lockheed for spreading this rumour.
And Moscow is reported to be exerting all kinds of pressure on New Delhi. Russia is the traditional supplier of high-tech weaponry to India and is miffed that New Delhi is now establishing actively friendly relations with Washington and Europe.
Moscow is apparently using its influence to stall the completion of India's only foreign military base at Ayni in Tajikistan. This base is intended as a deterrent against Pakistan, India's regional rival, and is a useful spot from which to observe China's activities in Central Asia.
Russia is also said to be going slow and upping the costs of converting the old Kiev-class aircraft carrier in the hope this will persuade New Delhi to buy the MIG-35s.
But with so few big-ticket arms deals on offer these days, India feels firmly in the driver's seat and is demanding large technology transfers from all competitors as well as requiring the winning company to invest in India's domestic arms industry.

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