Russia again demands more money - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Sunday 22 June 2008

Russia again demands more money

(Photos: The Intermediate Jet Trainer (bottom), which has been fitted with the first AL-55I engine developed by Russia; the engine is currently undergoing static and runway taxi tests. Above it are close-ups of the new engine. Incidentally, the IJT in the picture is the same one that veered off the runway in Aero India 2007, when its canopy opened during take off)

Business Standard: 23rd June 08
Dateline: Bangalore

India’s search for an advanced jet trainer (AJT) took an agonising two decades before the Hawk was finally purchased from UK major, BAE Systems. But the wait for an intermediate jet trainer (IJT) --- which will replace the Indian Air Force’s (IAF’s) venerable Kiran trainer ---- could be half that time. Designed and built in India by Hindustan Aeronautics Limited (HAL), the Bangalore-headquartered Indian defence PSU, the sleek HJT-36 Sitara has used a combination of indigenous design and international purchases to vault from the drawing board to the runway at a speed unmatched in contemporary aircraft development.

On Saturday, the Sitara IJT passed an important milestone. The newly-developed Russian AL-55I engine --- which was specially designed by Russian engine maker, NPO-Saturn, to power the Sitara --- was successfully tested in a ground run at HAL.

But the jubilation has a bitter edge. Even as the Bangalore complex celebrates, it is dealing with a Russian demand for more money. NPO-Saturn claims that it has spent more time and money on developing the AL-55I engine than it had bargained for, and that manufacturing technology will only be transferred to India if HAL pays NPO-Saturn an extra US $64 million, over and above the contracted amount. The Russian company had beaten out French engine-maker Snecma in 2005, in the US $350 million contract to design the AL-55I engine and transfer technology to build it in India.

Top MoD sources are furious; they allege Russia is repeating what it did with the Gorshkov aircraft carrier. HAL’s design chief is in Moscow trying --- so far unsuccessfully to persuade NPO-Saturn to lower its demands.

Russia’s ambassador to New Delhi, Vyacheslav Trubnikov acknowledges that NPO Saturn has asked for more money, but he told Business Standard that he expects an amicable resolution of this issue. Mr Trubnikov said, “Both sides are engaged in the fixing of the price. I don’t think the question is extraordinary. Discussions are in progress on the question of how many engines India will be allowed to manufacture.”

Sources in HAL, however, point out that all these issues had been settled as a part of the original contract between HAL and NPO-Saturn. Adding to Indian frustration is the role of Russia’s state-owned arms agency, Rosoboronexport, which is telling HAL that it should pay up quietly.

As with the Gorshkov aircraft carrier, for which Russia cited cost overruns to double the contracted price to US $1.2 billion, India has little choice but to pay up. MoD sources point out that, even with the extra US $64 million added on, NPO-Saturn’s price will be less than what Snecma quoted. They also grudgingly accept that Russia is the only major arms manufacturer that actually transfers all the technology to India that is demanded in a contract. But the biggest reason for paying up quietly is that the IJT programme --- which has already waited three years for this engine --- will face a delay of several more years if it launches an international search for another engine.

While waiting for the AL-55I engine to be developed, India has flown the IJT with an interim engine, the French Larzac power plant, which was never powerful enough for the Sitara. The AL-55I generates 20% more power than the Larzac and also consumes appreciably less fuel per flying hour.


  1. Instead of paying in money, India should teach them better estimation techniques & project management.

  2. Russia is now turning into a wild 'Snow-wolf'....... It seems like every country is treating India as charity house. Doesn't matter its Snecma or NPO. None of them is going to help us in long run. Heart of almost all military hardware is a suitable engine. It doesn't matter K9 fails or K10 passes. What matters is that we should allow GTRE to keep experimenting with all types of engine at any cost. But GTRE should dump "on its own". Involving companies like Kirloskars is imperative. Kirloskars needs exposure to high technology. GOI should do every thing to convert kirloskars into likes of GE, P&W. At initial stage they should hands with foreign engine house to make sure that every powerplant being used or going to be used by Indian military has % Indian content..........Future of any indigenous military equipment is going to be dark unless GOI take some immediate steps atleast in the case of powerplant.

    Now peoples like 'TANKER' should understand that an a$$ being displayed in showroom wrapped with a 'SALE' tag may look cheap initially. But when the bill is printed out the reality changes to hell.....

  3. Well, Russians are really shoddy when it comes to project management and estimation. 65 million dollars in such deals is no big deal, but the shoddiness ....
    More importantly, I'll really appreciate if Mr. Shukla can tell us what is the difference between Russian TOT vis - a vis European and American TOT.

  4. Russia is trying to send one of these two messages across:

    You are getting too close with US and I have the ability to harass you, any time, any deal.

    Since you have so much dependent on me for you defense goods, a sample of what will happen if you dont select Mig35 for MMRCA!

    Its hight time that realize our true camps.India is currently treading the no-mans-land between US and Russia. Expect more of these "issues".

  5. The point about Russia willing to transfer more technology is bullshit! Sorry Ajai, no offence. If any western company agrees in writing and codifies it in a contract to supply technology, they will do it.

    The Russians, even after signing contracts reneg on their responsibilities.

  6. I strongly believe that its about time the MoD understood that nothing comes for free anymore. The Russian arms industry is becoming more competitive than ever especially with their recent economic growth and large amount of contracts being procured world wide.

  7. Hmm and I thought only DRDO talks big ! They do fail in their promises because that what research is- unpredictable to say the least, but this case of Russia asking for more money for just about anything is nothing short of holding us off for a ransom, not to mention the poor quality/make and build as well as poor product lifecycle support.

    On all these counts DRDO is way better off and the money that you spend doesn't go out of the country. Hope someone in MOD/Air headquarters is listening...

  8. Ha.Ha.Ajai Shukla , the former proponent of T-90 and all things Russian has now been struck by a bolt of enlightenment!. Russians have been screwing us for such a long time and have us over the barrel, and that is largely thanks to former attitudes like Ajai's towards home grown weapon systems.

  9. Left Wing Nut Job, your faith in western honesty misses the point.

    The point is that most western companies... including Snecma, which lost out on this contract... are unwilling to transfer key technologies. For example, in a high-tech radar ToT, a western company will specify that the Transmit-Receive Module (TR-Module, as it's called) will be manufactured in their home facility and handed over in a completed form to the Indian manufacturer.

    Your argument that, "If any western company agrees in writing and codifies it in a contract to supply technology, they will do it", is hypothetical. The simple fact is that they don't agree. Not in writing, not verbally, not any other way.

    So Russia's willingness to supply that technology is a very important plus for them. And that is the only reason why India puts up with their entirely unscrupulous demands for additional payments.

    I'm sure your advocacy of "western companies" is done in good faith, but if you can't understand the reason why India continues to do business with Russia, you have wasted your time reading this article.

  10. Ajai,
    So, you're saying that on the whole, the western countries don't have a better record of adhering to contractual agreements?

    India still does business with Russia because Russia promises to give everything India wants: technology, support, price, timelines, etc but then slowly backs out of their obligations once they see India has no other options but Russia.

    Look at the T-90 project itself! Where is the ToT for barrel and other metallurgy? Plus price increases and time overruns for which India is always left holding the bag. There is no risk sharing with Russia: It's India puts up with more and more Russian demands or India pisses away the money and time already spent on the project. Look at the Phalcon program. How long did Russia hold up the contract because they wanted control over the airframe modifications and then managed to delay the execution of the modifications?

    Yes, I know why India puts up with Russia. It's a deadly cocktail of Russia having the right bait and the right people in the right places. It is high time to reduce Russia's influence in the Indian armed forces and not just by reducing Russian equipment but also reducing the number of Russians in Indian uniforms.

  11. You guys are wasting your bad breath. gen D Kapooooor is off to his father land and his high kommand and witnessing revered t-80 tanks.

  12. When 'blog LCH' will come?????

  13. GTRE has been in existence from 1961 to 2008 WITHOUT ONE SINGLE DELIVERABLE IN THOSE 40 YEARS.

    FOUR DECADES and not one single working engine is out and if this is another country they would have raised bloody hell for such a failure.

    Why should we put up with this non performing asset, I frankly do not know.

    When the Russians can develop a brand new engine in just under 8 months, what does that say about the competency of the GTRE brains. And jet engines are in existence in the world from the 1930s and so its not like we are asking them to produce some star wars technology.

    These people are just a burden on the tax payers blood and money.



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