The Indian Airforce is Going Shopping
An international dogfight begins over India's skies for the $10 billion IAF deal
By Cuckoo Paul
Last Updated: Oct 31, 2009, 08:20 IST1 min
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The Indian Air Force (IAF) is going shopping for aircraft. The budget is a cool $10 billion, and manufacturers across the world are racing to bag the contract. The aircraft in question are the Medium Multirole Combat Aircraft (MMRCA). Field trials for the contract, in which all the parameters that the manufactures have claimed are put to test, have begun in Bangalore and the action will soon shift to the deserts of Rajasthan and Leh, where the six contenders will be put through their paces.
The aircraft will beef up future strike capability of the force, whose fighter strength has been dwindling. Estimates are that fighter squadrons have gone down from about 39 (each with 12-18 aircraft) and may reach 27 in a few years, bringing it to the level of the Pakistani Air Force.
No matter which manufacturer bags the contract though, India is likely to benefit in more ways than one. The contract has a huge commercial implication for Indian industry. According to India’s offset policy, the manufacturer that wins the contract will have to either re-invest at least 50 percent of the contract value in India, or source the same amount through Indian industry.
The foreign vendors have already begun forming associations with 25 to 30 local manufacturers, who will get active as soon as the order is placed. Of the 126 aircraft order, only the first 18 or so will be made by the global supplier, the rest will be assembled and later built completely in India. Most like Boeing, Lockheed-Martin and Saab have begun forming joint ventures and incubating smaller ventures in preparation for the deal. The foreign vendors are also required to transfer technological knowledge to the Indian aerospace industry.
At the core, the six aircraft can be divided into two categories by weight. The light weight, flyaway single-engined aircraft and the heavier twin-engined machines. The Americans, Swedes, Russians and the French are all locked in a battle to sell India machines that cost between $55 million to $70 million. The big question really is: Will the Americans be able to storm the Indian defence business through this deal?
First Published: Oct 31, 2009, 08:20
Subscribe Now(This story appears in the Dec 13, 2013 issue of Forbes India. To visit our Archives, Click here.)
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