IAF chief’s googly on wrapping the MMRCA deals - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Thursday 10 February 2011

IAF chief’s googly on wrapping the MMRCA deals

A panoramic view of Aero India 2011, where the IAF chief has set the cat amongst the pigeons by announcing that the MMRCA contest would be decided within a couple of weeks

By Ajai Shukla
Yelahanka, Bangalore
Business Standard, 11th Feb 11

Electrifying aerospace vendors at Aero India 2011 in Bangalore, Indian Air Force chief, Air Chief Marshall PV Naik, announced today that New Delhi would decide within two weeks about which medium multi-role combat aircraft (MMRCA) it would buy, and actually sign the US $10 billion contract by September.

“The CNC (Cost Negotiation Committee) is likely to start in a week or two. Taking that as the datum and giving [the CNC] another 6-8 months, the contract is likely to be signed in September”, declared Naik.

The CNC is a group of officials that negotiates, between the Ministry of Defence and the winning vendor, a final price for the sale.

Naik’s boss, defence minister AK Antony, had stated at Aero India 2011 yesterday that the globally-watched contract would be finalised by the end of the next financial year 2011-2012, i.e. by March 2012. By setting the deadline six months earlier, Naik appears to have put the MoD under pressure.

Asked for a clarification by Business Standard, Naik’s officiating deputy, Air Marshall RK Sharma, confirmed his chief’s announcement. Sharma clarified that the winning vendor would be issued an invitation within two weeks to appear for cost negotiations, while the CNC would actually meet within two months. An invitation to a vendor to appear in a CNC is tantamount to announcing the winner of a contract.

“The DAC (the MoD’s apex Defence Acquisition Council) will formalise the winner soon; we will then invite that company for negotiations”, said Sharma.

Six fighters are competing for the IAF contract: Boeing’s F/A-18 Super Hornet; Lockheed Martin’s F-16IN Super Viper; the MiG Corporation’s MiG-35; Saab’s Gripen NG; Dassault’s Rafale; and a four-nation European consortium’s Eurofighter. Executives from these companies say they are baffled by Naik’s announcement. Asked in late-2010 to rework their offset bids, and with no date yet given for resubmission, the MoD does not have a key element needed to decide a winner.

“Is the MoD going to decide the contract winner without examining the offset bids?” asks a bemused executive, from one of the competing aircraft manufacturers.

While no answers are currently forthcoming to these questions, the air chief did explain why little appears to have happened since July 2010, when the IAF submitted its flight trial evaluation report to the MoD. Naik revealed that the last six months had gone by in explaining to the MoD the technical nuances of the flight trials.

“There have been a lot of queries and counter-queries [between the MoD and the IAF]. It is such a complicated deal, and there is so much of technical detail involved… so there was a lot of, shall we say, education to be done so that the report was clearly understood in all its manifestations,” explained Naik.

The air chief also voiced his apprehension that the contract could be delayed by “dissatisfied vendors (who) put a spoke in the wheel”, using allegations of wrongdoing to trigger long-running probes by investigation agencies.

Yesterday, a defensive Antony had announced that political considerations would play no role in deciding the winner. That seemed to suggest that the Cabinet Committee on Security (CCS), which will be required to approval the contract after the CNC negotiates a final price, would merely rubber-stamp the IAF/MoD decision.

Other than the impending contract for 126 medium fighters to boost the IAF’s dwindling numbers, the IAF chief also announced the impending conclusion, “within this financial year”, of the contract to upgrade the air force’s 20-year-old fleet of 52 Mirage-2000 medium fighters. This upgrade, which has been the subject of bitter negotiations between the IAF and French contractor, Thales, will give the Mirage-2000 another 20 years of service life by fitting on a new radar and a modern cockpit with state-of-the-art avionics and electronic warfare equipment.

While Thales had initially demanded US $52 million per aircraft, the deal has been concluded, say IAF sources to Business Standard, at US 39 million per aircraft.


  1. I guess Typhoon would be the winner. French got Scorpene & Mirage deal. So MoD won't be interested in giving anymore cake to French.

  2. “Is the MoD going to decide the contract winner without examining the offset bids?” asks a bemused executive, from one of the competing aircraft manufacturers.

    Ans : Yes the only offset that is applicable would be the 15% kickback that needs to be wired to a Swiss bank a/c, Psst! not that Bofors ac this one is a different A/c number of our madam.

  3. Hey ajai

    Can you ask MOD folks to see if they could include the kickbacks money as part of the Offsets.

  4. In $52 million we can get a new fighter plane. What the point of upgrading the old Mirage?

  5. Ajai, its just a comment to make the MOD nervous and asking it to speed up the process as it is effecting operational plans of the IAF. ACM Naik has a habbit of bringing forward the operationalization date which may not tally with MOD's plans. Like he said the 1st squadropn of Tejas would be formed by middle of 2011 but as Antony said, the same will take atleast end 2012 to form.

  6. It might be interesting to note that the Rafale's RBE2 is now a certified AESA.
    This would give the Rafale an huge advantage over the other Eurocanards, and seeing as how your report suggests it is the European fighters that lead the MRCA... Well, one can only hope the decision is indeed made in 2 weeks.

  7. People do not be so hopeful for MMRCA,

    Once we will come to know the winner, we all will have heart attack. After few years when we will come to know about scam in this deal, we will have some other things. Once we will come to know the dates, we will loose our mind.

    So hurry up !! some insurance policies are very good and will save you from all illness.

  8. If they are not going to take politics into account and they are antisipating angry persons, the most likely answer is the American compeditors. I would say superbug.

  9. Just an AESA wont do, performance matters the Rafale AESA has only 840 modules and its range is less than that of the iother contenders

  10. With the IAF fighter squadron level sliding down below the sanctioned number, why isn't there any urgency at MOD to fast track the MMRCA aircrafts?
    By now the IAF would have clearly indicated the fighter of their choice. Since they are the end users who would be facing formidable foes in the Paki-Chinki, isn't it prudent to acquire as many state of the art aircrafts before hostilities begin?
    The GOI, MOD people are still in their knee-jerk, reactive decision making process.
    Better to be armed to the teeth when facing adventurous predators who would not hesitate to exploit any weakness in their opponents.

  11. @anon 00:05

    range is not proportional to the module count. but to the diameter of the antenna.

  12. With everybody trying to project a squeaky clean image from the minister downwards to uncaring bureaucrats,dear friends this decision will be pending even when the venerable ACM retires and his successor would be making suitable noises.
    The IAF may sound impatient but the moribund MOD will make this farcical selection show go on and on.

  13. The contract will go to the highest bidder - meaning the one who will pay the most to madam. Who will be the next Quattrochi?


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