India set to pick $10.4-bn combat plane deal winner

(IANS) India is all set to finalise later this month the winner of a $10.4 billion contract for 126 combat planes for its air force with the defence ministry Friday completing all the spade work for opening commercial bids of the two shortlisted European firms. The opening of the commercial bids will pave the way for identifying the lowest bidder between European consortium EADS Cassidian and French firm Dassault that are the two left in the fray.
India had eliminated American manufacturers Boeing and Lockheed Martin, Russian UAC and Swedish Saab from the contest in April this year.
“The Defence Acquisition Council (DAC), at its meeting here today (Friday), cleared the offset evaluation report relating to the medium multi-role combat aircraft (MMRCA),” a defence ministry official said here.
“With this, all the spade work for opening of the two commercial bids has been completed,” the official said. “The bids will be opened in the next few days in the presence of the two bidders,” he said.
EADS Cassidian has offered its Eurofighter Typhoon and Dassault its Rafale, both twin-engined, as the aircraft for the Indian Air Force (IAF).
Boeing’s F/A-18 Super Hornet, Lockheed Martin’s F-16 Super Viper, Saab’s Gripen and UAC’s MiG-35 were the ones rejected during the selection process that is being keenly watched by the global defence industry, as its considered to be the “mother of all deals” for its size and value.
The tender, issued by the defence ministry in August 2007, had mandated an offset clause, under which the winner would invest 50 percent of the deal amount back in the Indian defence industry.
The offset clause in defence deals, a globally accepted norm, is aimed at energising the Indian defence industry, both public and private sectors.
The tender, called the Request for Proposals in military parlance, also provides for an additional 126 plane order at the contracted price.
Though the offset proposals have been cleared, it is not the end of the selection process. The defence ministry officials, after opening the commercial bids, will also look at the technology transfer proposals of the firms before a final call on the winner is taken.
The commercial bids of the two vendors will expire in December this year, as they had been asked by the defence ministry in April to extend their offers till then.
The 126 jets are required by IAF to replace its aging Soviet-era MiG-21 fleet and to shore up it combat fleet that will stagnate at 34 fighter squadrons for the next five years. IAF plans to have a total of 42 fighter squadron by 2022.