Aviation giants race to meet Indian fighter deadline

NEW DELHI—Aviation giants are scrambling to meet a deadline to bid for a 12-billion dollar deal to sell 126 fighter planes to India, but tough arms purchase rules are dogging the global contenders.
Six aeronautical firms are expected to submit proposals by Monday for the contract, which includes outright purchase of 18 war jets by 2012. India also holds the option of buying another 64 fighters from the top bidder.
New Delhi called for the bids as the operational fighter fleet of its air force plunged to a low of 576 aircraft in 2007, from nearly 750 in early 2000.
Seattle-based Boeing, which is offering F-18 Superhornets, submitted its proposals on Thursday, a company spokesman said.
The European Aeronautic Defence and Space Company (EADS) said it also was ready to file the papers detailing its offers, which includes technology transfer and its Typhoon Eurofighter.
“In just a few days we will submit our proposals and EADS already has a head start,” Bernd Muetzelburg, Germany’s ambassador to India, said Thursday at an EADS road show. The company, which suffered a setback last December when India scrapped a 600-million dollar deal for 197 military helicopters from Eurocopter — an EADS unit — put on a brave face.
“We want to send a message that we will deliver the bid proposals on time and that shall underline our commitment to India,” Bernhard Gerwert, CEO of EADS’ military wing, told aviation experts and diplomats at the road show. US-based Lockheed Martin is pushing its F-16s to the technology-starved Indian air force. Russian MiG-35, MiG-29, Saab’s Gripen and Dassault’s Rafale and Mirage from France are also in the market. Dassault has promised to supply 40 top-flight Rafale jets on a fast-track basis as part of the deal, while Gripen is offering larger technology transfers. Douglas Hartwick, CEO of Lockheed Martin’s Indian branch, was positive about his company’s proposals, saying the “F-16 project will be the finest” and the Indian air force will be “extremely pleased with it.”
Hartwick also said Lockheed was unfazed by India’s arms procurement rules, called the offset policy. “The offset policy is being reviewed and we look forward to the revision as we have made considerable inputs for that,” he told to newsmen. The policy stipulates that foreign firms selling products worth more than 600 million dollars must re-invest up to 50 percent of the total amount to build manufacturing capacity in India.
New Delhi introduced this clause into all its big defence deals in 2003 as a way of protecting itself from non-delivery and to boost the domestic arms industry. The European consortium’s Gerwert said EADS wanted to take ties with India beyond a buyer-seller relationship, but he conceded the purchase policy posed challenges.
“We are ready to meet these challenges and we will satisfy the expectations of our customers,” he said. New Delhi promised to revise the policy in April, leaving the global firms bidding for the fighter jet deal waiting to see what will change. “We must submit our proposals by Monday, but the new policy is not yet out so we don’t know what obligations we have to meet... Time’s really running out,” a top India-based representative of one of the six contenders told to newsmen.
Indian defence ministry sources said the new policy would give the contenders until August to fine-tune their offers on their spend-back obligations.
But EADS said it was concerned about the extent of the offset provisions. “The main issue is whether this new offset policy would be confined to the defence sector or applicable to the entire aerospace industry,” CEO Gerwert told.—Agencies