Analysts: India's Fighter Buy Cancellation Hurts Industry, Air Force

India's cancelation of a $12 billion program to purchase 126 combat aircraft eliminates an opportunity for domestic industry to build sophisticated aircraft based on transfer of Western technology and once again leaves the Air Force without a plan to rebuild its dwindling fleet, analysts said.
Cancelation of the program, in which Rafale had been down-selected in an open competition in response to a 2007 request for proposal, was a foregone conclusion after Indian Prime Minister Narendra Modi announced during his April 11 visit to Paris his intention to buy 36 Rafales in fly-away condition on a government-to-government basis, analysts said.
An Indian Air Force official, however, said an alternative plan to beef up declining fighter aircraft strength should have been announced alongside the cancelation of the 2007 RFP.
Vivek Rae, former MoD director-general for procurement, said, "The reason the [medium multirole combat aircraft] deal has been canceled is because they are going ahead with the government-to-government route.”
Sitanshu Kar, MoD principal spokesman, refused to comment on the MMRCA tender.
A brief statement by Defence Minister Manohar Parrikar in India’s Parliament on July 30 put an end to the program but gave no reasons for the cancellation.
"The RFP issued earlier for procurement of 126 Medium Multi Role Combat Aircraft (MMRCA) has been withdrawn. In this multi-vendor procurement case, the Rafale aircraft met all the performance characteristics stipulated in the Request for Proposal (RFP) during the evaluation conducted by Indian Air Force," the MoD release said.
“The  [government-to-government] program to buy 36 Rafales was a separate program to the 2007 RFP under which negotiations were being held with Dassault Aviation and the two programs could not have existed side by side,” said another Indian Air Force official.
Parrikar fueled speculation about the final size of the Rafale order May 31 when he said the French fighters were "way too expensive" and there was no longer a plan to buy a total of 126 Rafales.
The French Defense Ministry and Dassault Aviation were unavailable for comment“Probably this was right from the beginning when 36 Rafale aircraft were ordered that the 126 MMRCA deal would be canceled, otherwise it cannot happen that way," said Fali Major, retired Indian Air Force air chief marshal and former service chief. "I do not know the reason why the 126-MMRCA deal was canceled.”
The end of the 2007 RFP also ended a proposal to build Rafale fighters at India's Hindustan Aeronautics Ltd. (HAL) on a technology-transfer basis.
Gopal Sutar, HAL spokesman, said the company would not comment on the government decision.
“The decision to cancel the RFP after nearly eight years also puts an end to the proposal to build medium fighter aircraft from the Western world on a transfer of technology basis, which is an opportunity missed,” defense analyst Nitin Mehta said.
An MoD source said that after the Rafale was down-selected in 2012, negotiations ground to a halt as the Indian side demanded French guarantees on delivery of the aircraft to be produced in India by HAL. India and France also could not resolve issues relating to production and cost of the India-made Rafales, which were to have been license-produced by HAL.
An executive from an overseas defense company, who spoke on condition of anonymity, said that canceling the RFP runs contrary to the policy of the Modi government to boost Make in India projects.
Meanwhile, negotiations continue for purchase of the 36 Rafales. The MoD source said India is not insisting on fulfillment of 50 percent offset obligations by France in the deal, which France had opposed.
With the initial plan to buy 126 aircraft now reduced to 36 Rafales, the first Air Force official said it is unclear how the MoD will further meet the service's fighter needs.
“The Air Force has a significant shortage of combat aircraft," Srinivasapuram Krishnaswamy, retired Air Force air chief marshal and former service chief, told Defense News. "Numbers are well below those authorized and continue to dwindle as older machines retire. Considering the low rate of induction, the  [Air Force] may take more than a decade or two to reach its authorized strength,”
According to a report by a parliamentary panel, released in December, India's fighter aircraft strength is down to 25 squadrons  of 18 aircraft each against the required strength of 45 squadrons.
Of those 25 squadrons, 14 are equipped with Russian-made MiG-21 and MiG-27 fighters, which will begin retiring this year through  2024. To fill the gap, the Air Force decided to acquire medium multirole combat aircraft and floated the 2007 RFP.
“As the proposal to acquire 126 Rafales is canceled and replaced with only an intention to buy 36 Rafales, the shortfall in fighters could be met by several options — including producing a single-engine fighter to replace the aging MiG-21, or developing a homemade medium fighter with help from overseas or accelerating the proposed Indo-Russian Fifth Generation Fighter Aircraft,” Mehta said.
Rafale was selected over the Eurofighter Typhoon only on the basis of cost after the F-16, F-18, Gripen and MiG-35 were eliminated from competition following flight trials in August 2011.

defencenews