France’s Dassault wins India’s $10.4bn warplane deal (Intro Roundup)

New Delhi, Jan 31 (IANS) In a defence deal that is India’s — and amongst the world’s — largest, France’s Dassault has won a $10.4 billion (Rs.52,000 crore) order for 126 fighter jets after over four years of a fiercely-fought bidding process.

Finally, it was a direct financial duel between Dassault and European consortium EADS Cassidian Eurofighter, with Rafale pipping Typhoon with the lowest bid to emerge the winner in the MMRCA (Medium Multi-Role Combat Aircraft) deal.

‘Dassault has been informed that it has emerged L1 (Lowest one) in the bid for 126 multi-role fighter aircraft tender,’ a defence ministry official told IANS, referring to the lowest price quoted for the Rafale.

‘But the contract will be signed only in the next financial year.’

Dassault in an emailed statement from Paris said the firm was committed ‘to meet the operational requirements of the Indian Air Force (IAF) and underline their pride in contributing to India’s defence for over half a century’.

French President Nicolas Sarkozy in his reaction said the deal would include significant transfers of technology to India and committed that his government would back Dassault in final talks on the details of the agreement.

‘The negotiation of the contract will begin very soon with the full support of French authorities. It will include major transfers of technology guaranteed by the French state,’ Sarkozy said in an official statement.

The offset clause in the tender, included under the Defence Procurement Procedure (DPP) of 2006, requires the winner of the tender to reinvest 50 percent of the deal amount in the Indian defence industry in an effort to energize it.

Under the terms of purchase, the first 18 aircraft will come in a fly-away condition, with the remaining 108 to be manufactured by Hindustan Aeronautics Limited under a transfer of technology agreement.

The first 18 jets will have to be supplied within 36 months.

The size of the contract could eventually go up to 200 aircraft as there is a provision for increasing the order by 50 percent without any price hike.

The next step in finalising the contract would involve cost negotiations with Dassault which will be held held in the next 10-15 days.

The sources said that the price of the tender — including training and maintenance may reach $15 billion, due to cost escalations in the wake of rising inflation and aircraft prices.

The negotiations will also include the cost of on-board weaponry and royalties for producing the aircraft in India.

The Rafale is a twin-engined, delta-wing jet. It was first introduced in 2000 and since then is produced both for land-based use with the French Air Force and for carrier-based operations with the French Navy.

Though it has been offered for export, it had not bagged any foreign order so far.

The fighter jets will give a major boost to the defence apparatus of India – the world’s biggest arms importer — as the IAF replaces its obsolete Soviet-era combat planes.

The procurement of the advanced fighters forms a key part of India’s military modernisation programme that is aimed at securing eastern and western borders with eyes on China and Pakistan.

The huge defence deal has been fiercely fought over for four years by rival aviation firms.

The other four aircraft in the fray earlier were American firms Lockheed Martin’s F-16 and Boeing’s F/A-18, Russian United Aircraft Corporation’s MiG-35 and Swedish SAAB’s Gripen.

In April 2010, the defence ministry shortlisted Dassault and EADS, rejecting the American, Russian and Swedish bids.

The process was started with the issuing of a global tender in 2007 after which all the six contenders were subjected to extensive field evaluation trials by the IAF in India and in the country of manufacture.

Dassault has also won a $1.4 billion contract to upgrade the IAF’s Mirage-2000 fleet.