Bottomline | Difficult Choices

The RFP is only the beginning of the tough road ahead

Pravin SawhneyPravin Sawhney

The government has finally cleared the release of the Request for Proposal (RFP) for the 126 multi-role combat aircraft (MRCA) for the Indian Air Force, a business that is poised to eventually cross USD 10 billion. This is not all. This major contract will impact upon India’s relations with the selling nation. For this reason, this deal will require acceptance from five quarters: the IAF as the user, the industry that has the onerous task of absorbing an unprecedented 50 per cent direct offset specific to this deal, the finance department within the defence ministry to ensure cost effective utilisation of money, the defence ministry as the arbiter to both balance the views of the user, industry and finance, and also to set a realistic timeline for signing the contract so that it does not compromise IAF’s operational preparedness. And finally, it will be left to the Prime Minister’s Office to oversee that India’s strategic interests are not adversely affected by this business. The user’s role will be the simplest and that of the PMO most daunting. The IAF is certain to finish its task within 18 months of the release of the RFP: the competitors will need up to six months to respond to the RFP and the IAF another one year for technical evaluations. The user’s task is easier than the other four players as technical parameters mentioned in the RFP are non-negotiable. Once technical acceptance is given to the competitors, all that Air Headquarters can do it keep pressing the defence ministry on the urgency of this deal.

While Dassault’s Rafale aircraft is amongst the six contenders that had responded to the Air Headquarters’ Request for Information, it is uncertain if it would respond to the RFP. The Rafale did not participate in Aero-India 2007 in Bangalore and Dassault aviation is upset with New Delhi for its sudden change of mind in 1995 about buying Mirage-2005. However, Rafale F2, which unlike Rafale F1 that specialises in air defence role has air-to-ground capabilities as well, gave a good account of itself recently in Afghanistan. Moreover, Rafale F3 that is slated to enter service with the French Air Force and Navy in 2008 is being touted as an omni-role aircraft capable of performing a wide range of roles, from reconnaissance to nuclear strike. It will be a pity if Dassault does not respond to the RFP. The Eurofighter aircraft is another undecided competitor. It too was absent at Aero India 2007, and its vice president communications, Wolfdietrich Hoeveoler, recently told me that they would decide on their campaign only after studying the RFP.

The Eurofighter is fast attaining Full Operational Capability (settling down) after a protracted development programme with the air forces of consortium nations comprising the UK, Germany, Italy and Spain. It certainly is the aircraft of the future. One thing that militates against it in the Indian deal is its reported prohibitive cost of British Pound 70 million a piece. The third competitor, SAAB Gripen will prove to be a determined competitor. SAAB has already launched a new Gripen demonstration programme that intends to keep the aircraft at the leading edge beyond 2040. A spin-off of this programme will be that the present Gripen aircraft could be made readily available to the IAF should SAAB win the Indian contract. The only problem, however, is that with all other things being equal, SAAB cannot exert the pressure on the PMO like the US and Russia can. And this is unlikely to be a small factor in the selection of the aircraft.

The US and Russia are dead serious about this deal, the US probably a bit more, and it shows. Both Boeing and Lockheed Martin are determined to take advantage of the growing improved relations between New Delhi and Washington. The two ostensible landmarks of this relationship are the civilian nuclear deal and the strengthened defence ties. The US has publicly said that it will support India become a major power. Translated, it implies that it will help India with its burgeoning energy requirements, and equally important, it desires a defence partnership in the Indian Ocean Region that India considers its area of responsibility, stretching from the Horn of Africa to Malacca Strait. If interoperability is what the two armed forces are seeking, commonality of equipment should be a natural mutual desire. Considering that the nuclear deal is improbable, New Delhi will find it extremely difficult to reject the US aircraft, of which Super Hornet stands a better chance than F-16 that Pakistan has. The only area where the US may have doubts about the deal is the new qualification of 50 per cent direct offset. With the nuclear deal in the deep freeze, the US Congress will be selective about giving high technology to India. Then there is the question of how much technology the Indian defence industry, especially HAL can absorb quickly. Russia, meanwhile, is doing its best to sell MiG-35. Its two handicaps are that India may not desire to put all its aircraft eggs in Moscow’s basket, and Russia has a long way to go in delivering on life cycle costs. India indeed has hard choices to make ahead.


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