US Firms Lobby India re: Offsets on Fighter Deal
Flight International reports that US manufacturers are trying to persuade the Indian government to ease proposed new offset requirements that would make it difficult for them to compete in India’s lightweight fighter selection. These rules would have a substantial effect on the competition if applied.
India is planning to hand shortlisted manufacturers a highly anticipated tender for at least 126 new fighters next month. Despite the restrictions created by its foreign procurement rules, the competitive field may even be about to expand again…
The new guidelines will require direct offsets worth 30% for any defense contract over $70 million, in addition to co-production. Flight International also reports via industry sources that technology transfers worth 90% of imports may also become a requirement.
The US government is preparing to respond with pricing for the Boeing F/A-18E/F Super Hornet and Lockheed Martin F-16 Falcon Block 70, adding those bids addition to previous shortlist contenders which include the Dassault Mirage 2000-5, Russia’s MiG-29 OVT/ MiG-35, and Saab JAS-39 Gripen. Flight International’s sources are also telling it that efforts by the French and UK governments to persuade India to add the 4th generation Dassault Rafale and Eurofighter Typhoon to the shortlist appear to have been successful.
Aug 28/07: The MMRCA RFP is released – with 50% industrial offsets required, instead of the normal 30% rate. The only concession was a promise of flexibility re: partnering opportunities for Indian firms. See DID’s Spotlight article covering the $10+ billion fighter competition for further updates.
May 5/07: India’s MoD:
“In this connection it is clarified that the offset policy has been designed by Ministry of Defence carefully after studying all aspects between direct and indirect offset. In order to encourage Indian Defence Industry, a well considered decision was taken not to allow indirect offset. There is no rethinking on this subject as reported in a section of the media.”
DID: December 2005 Analysis & Op/Ed
Barring an official announcement or accepted bid, the participation of the Eurofighter and Rafale in the lightweight fighter competition is far from certain. Nevertheless, DID has reported on the Super Hornet’s inclusion before, and the Rafale in particular would constitute a similar addition as a more advanced medium-range fighter that has the ability to operate from a full-sized, catapult-equipped aircraft carrier.
The original intent of India’s fighter purchase was to replace hundreds of non-upgraded MiG-21s that India will be forced to retire, and provide a more numerous complementary force to its mid-high end SU-30Ks and Su-30MKIs. India is a large country, with coverage needs over a wide area (see map of airbases) and on several fronts. Lightweight multi-role fighters that could make up for declining aircraft numbers with broader and better capabilities would appear to fit that need.
The initial shortlist followed that template. The Mirage 2000 and MiG-29 were already in service with India in this role, and the JAS-39 offers a fourth generation aircraft whose costs and profile place it firmly in the lightweight fighter category. The proposed American F-16 fits this template, too, as would the F/A-18 Hornet A-D models.
With the possible addition of the larger and more expensive F/A-18 E/F Super Hornet, however, and of the Rafale and Eurofighter Typhoon, the competition would appear to be bifurcating into a process involving two different classes of fighter aircraft. The Super Hornet, Rafale, and Eurofighter are all medium to high-end fighter platforms in the $50-70 million range, more similar in cost, capabilities and role to India’s SU-30s than its MiG-21 ‘Bisons’ or its long-delayed Tejas Light Combat Aircraft project.
Given that the lightweight fighter order is intended to replace some of India’s 300-350 aging and dangerous non-upgraded MiG-21s, cutting the 126 plane order to 50-75 medium aircraft for the same amount of money seems like a bit of a leap given India’s needs on multiple fronts. The F/A-18 and Rafale also require full catapult launch facilities if used in a naval role, which would preclude its naval use on either India’s present Viraat or its next carrier, the ski-jump equipped INS Vikramaditya (Admiral Gorshkov).
Furthermore, India already flies the excellent Sukhoi SU-30MKI, a fighter with a similar price tag to the F/A-18 E/F Super Hornet or Dassault Rafale and comparable or superior range and performance. It is not clear why India would abandon the benefits of standardization to spend similar amounts of money on different aircraft, rather than just adding to its SU-30 MKI force.
DID’s analysis of India’s Super Hornet enquiries explains this logic, and India’s options (incl. a look at the F-35 Joint Strike Fighter), in more detail. As we noted therein, logic doesn’t always play a decisive role in weapons purchases – but it often does, and observers need to think that logic through when evaluating rumors of this type.