India puts forward new plan to buy helicopters after ending talks with Lockheed

After suspending negotiations with Lockheed Martin in April over the price of 16 naval multirole helicopters, India’s Ministry of Defence has mooted a fresh plan for acquiring 24 helicopters for about $1.87 billion.

A high-priority global tender will now be floated instead to source the 24 helicopters off the shelf to meet a pressing need within the Indian Navy, according to an MoD official.

Negotiations with Lockheed were terminated following expiry of the price bid in March, and subsequently the tender was withdrawn in April, he said.

Lockheed Martin’s Sikorsky S-70B was selected over NHIndustries’ NH90 helicopter in 2011 in a global tender issued by the Indian Navy in 2009 for 16 naval utility helicopters at a cost of $1 billion.

The service asked the MoD in July to consider procuring the helicopters from the U.S. under the Foreign Military Sales program, a senior Indian Navy official said.

However, the request was turn down because Indian procurement procedures do not allow for single-supplier preference but instead prefer global competitions through which weapons or platforms are selected based on lowest price.

Commenting on delays in India’s defense procurements, a CEO of a foreign defense company, who spoke on condition of anonymity, said: “MoD must adhere to a strict timeline in selecting the platform and awarding [defense] contracts, otherwise it will lead to huge cost escalation and even the cancellation of the program itself.”

India’s ruling National Democratic Alliance is now kick-starting all major defense programs under the Strategic Partners policy, which is expected to enhance indigenization by cutting imports and boosting exports, according to a second MoD official.

Under this program, 123 naval multirole helicopters costing about $7 billion in the 9- to 12.5-ton categories will be manufactured by a domestic private company with technology transfer from an overseas helicopter original equipment manufacturer.

The helicopters will be built by a private company at a facility in India. The company will be selected though a separate, robust competition requiring technology collaboration with a foreign OEM.

However, no private Indian company has ever built a helicopter platform, but rather only supplied subsystems.

In the next three to four months, an expression of interest will be issued to several private companies including Bharat Forge Limited, Reliance Defence, Larsen & Toubro, Mahindra Aerospace, and Tata Advanced Systems. The company will be selected on its financial and technical merits, production track record, and infrastructure capabilities.

Likewise, one OEM will be selected based on the technology transfer offer and option for building indigenous technology, building an industrial ecosystem and providing training support.

Both the OEM and the strategic partner will be selected separately by the MoD.

The ministry has already received an initial response to an August request for information from foreign OEMs such as Lockheed Martin, Airbus Helicopters and Russian Helicopters, the second MoD official said. The final selection will take at least three to five years, and the helicopters will be rolled out in about 10 years.

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