Indian News

[buglerbilly]

Defence min scrambles to ink deal on VVIP helicopter purchase as Budget draws closer

Huma Siddiqui

Posted: Saturday, Jan 23, 2010 at 0136 hrs IST
Updated: Saturday, Jan 23, 2010 at 0136 hrs IST

New Delhi: Defence ministry is scrambling to sign a deal to purchase Italian Augusta Westland VVIP helicopter before the Budget is presented. According to sources, “It is keen to utilise the Budget allocation rather than surrender it.”

The defence ministry short listed Finmeccanica’s helicopter division, Augusta Westland, as it emerged the frontrunner in a multi-million contract to supply 12 AW-101 VVIP helicopter for the Indian Air Force (IAF). Worth Rs 3, 726 crore (Rs 310 crore each), the helicopter would be used by the President and the Prime Minister. Cabinet Committee on Security, too, gave its clearance early December after finance ministry gave the purchase a go ahead.

The Indian contract, which is expected to be signed soon for the flying offices equipped with advanced communication aids and self-protection devices, is likely to be the greatest Italian export to India since 1960s. While the IAF would buy 12 helicopter, the US has placed an order for 20 machines.

Talking to FE on conditions of anonymity sources said, “A high-level team of IAF test pilots and engineers have evaluated the deal.”

According to industry sources, “The IAF deal is very prestigious for the company, especially when one is looking at an aircraft of this nature. Safety is important.”

In 2009, the finance ministry had declined its approval for the deal on the grounds that the machines were too expensive at Rs 310 crore each.

Reportedly, the ministry had objected to the IAF narrowing their selection to a single vendor for seeking price bid. It had pointed out that what AgustaWestland quoted for 12 AW-101 had overrun the estimated outlay of Rs 1,400 crore approved in 2006. AgustaWestland was the sole firm that qualified the technical norms set by the IAF.

The new machines are to replace the Mi-17 machines in the Air

Headquarters Communication Squadron, as the VVIP transport squadron is called, will be equipped with flare dispensers and special self-defence systems. With two deals already signed— one for 5 mid-sized Embraer 135 BJ Legacy jets in 2003 and the other for 3 Boeing Business Jets in 2005—this will be the third deal.

The EH-101 will have self-defense systems like missile warners, flare dispensers and directed infrared electronic counter measures for protection. The existing Russian Mi-8s and Mi-17s would be replaced with these newer versions of advanced jets. These helicopter would have a high tail boom, which would allow

[buglerbilly]

UPDATE 1-Eurofighter leading race for India deal- ambassador

Fri Jan 22, 2010 1:09pm EST

* Source says test flights expected to conclude by April

* India to order new refuelling ship from Finmeccanica

By Valentina Rusconi

ROME, Jan 22 (Reuters) - The Eurofighter Typhoon is "leading the race" to win a contract from the Indian government for 126 fighter jets, valued at around $10.4 billion, India's ambassador to Italy said on Friday.

"We have shortlisted four to five countries, then the trial process and evaluation will follow. Eurofighter is one of them, in which Italy is involved, and it's leading the race," ambassador Arif Shahid Khan told Reuters after a meeting with a senior aid to Italian Prime Minister Silvio Berlusconi.

Boeing's (BA.N) F/A-18 Super Hornet, France's Dassault (AVMD.PA) Rafale, Lockheed Martin Corp's (LMT.N) F-16, Russia's MiG-35, Sweden's Saab (SAABb.ST) JAS-39 Gripen and the Eurofighter Typhoon, produced by a consortium of European companies (EAD.PA)(BAES.L)(SIFI.MI), are competing for the order.

Defence industry experts do not expect an immediate decision.

A Eurofighter source said the test flights were expected to finish by April, and a decision would follow.

He also said German President Horst Koehler would visit India in early February to sign an agreement on defence, security and technology.

India is one of the world's biggest arms importers, and the government plans to spend more than $30 billion on defence upgrades over the next five years to counter potential threats from Pakistan and China. [ID:nDEL380118]

The ambassador said India would order from Italy's Finmeccanica (SIFI.MI) a refuelling ship, following the purchase of a similar vessel worth around $200 million. "We are really satisfied," he said.

The ambassador said Berlusconi would visit India this year and the two countries were discussing economic cooperation in other fields, such as agriculture. He said discussions were also underway for Alitalia to start flights between the two countries. (Editing by Rupert Winchester)

[Wolftrap]

The seperate proposal by Eurojet for the EJ200 engine with possible 3D TVC doesn't harm the Eurofighter proposal either. At least the EJ200 could finally propell the Tejas into the air, keep it there and create some better commonality across multiple platforms...

[buglerbilly]

Boeing, Lockheed Wait as India Delays Fighter Deal (Update1)

April 27, 2010, 12:12 AM EDT

By James Rupert

April 27 (Bloomberg) -- India will miss a deadline tomorrow to complete the world’s biggest fighter-jet purchase in 15 years, risking a possible $1 billion price increase as Boeing Co. and five rival manufacturers resubmit bids.

India’s Air Force is still conducting flight trials for competing jets from Boeing, Lockheed Martin Corp. and four European companies, two years after accepting price quotes for 126 warplanes that the government said should cost about $10 billion. The bids expire April 28 and the Defense Ministry has asked manufacturers to submit offers for an additional year, its spokesman, Sitanshu Kar, said in a phone interview in New Delhi.

“The companies have been informed by the government that they can extend their bid for one more year,” Kar said. “They have the option of increasing or decreasing their price.”

The delay in buying what India describes as “multi-role combat aircraft” may raise the government’s eventual cost, said Mrinal Suman, a retired Indian army major general and arms procurement analyst. “By the recent track record, the cost of these aircraft generally goes up by 7 percent to 10 percent each year,” Suman said in a phone interview.

India’s failure to choose a plane within the planned two years “highlights that this is by far the biggest, most complex arms purchase India has ever undertaken,” said Suman, who monitors weapons procurement for the Confederation of Indian Industry.

‘Past Scandals’

Political considerations have slowed decision-making by Defense Minister A.K. Antony, said Rahul Roy-Chaudhury, senior fellow for South Asia at the International Institute for Strategic Studies in London.

“Antony has been trying to assure a squeaky clean deal to avoid any possible allegation of corruption, because of past scandals” that helped drive the ruling Congress Party to defeat in 1989 elections, Roy-Chaudhury said. Those scandals erupted over allegations that Indian officials took bribes in the purchase of Swedish artillery and German submarines.

Since the 1980s, no Indian government has made an open-bid arms purchase valued at as much as $100 million, or 1 percent of the fighter deal’s size, Roy-Chaudhury, Suman and other analysts say.

While the delay amid rising prices is likely to raise India’s cost, competitive pressures or exchange rate fluctuations may also counter such increases, Suman said.

India is buying the fighters as it has been phasing out Russian-built MiG jets, some of which date back to the 1970s. Twenty-one air force MiGs have crashed in the past three years, Antony said yesterday in a statement submitted in Parliament.

Himalaya Tests

The Indian air force has conducted flight trials for the six competing aircraft from a high-altitude airfield near Leh in the Himalayas, a desert base in Rajasthan state and in the tropical climate of Bangalore, Kar said. “The trials will be over shortly, maybe by the end of May,” he added.

The air force “will provide the government with two or three options that meet the technical needs, and then it will be up to the political decision makers,” Roy-Chaudhury said. Chicago-based Boeing, maker of the F/A-18 Super Hornet, and Lockheed-Martin, based in Bethesda, Maryland, which builds the F-16 fighter, may benefit from a desire by India to cement strategic ties to the United States, he said.

Lockheed-Martin “plans to update our commercial bid to ensure the best possible value to India,” company spokesman John Giese said in an e-mail. Boeing is “working to provide a compliant response” to India’s request that it extend its bid, spokesman Brian Nelson wrote in an e-mail.

Sweden’s Saab AB will make no change in its bid to sell the Gripen fighter, said Eddy de la Motte, who heads the company’s campaign in India. The other contenders -- Paris-based Dassault Aviation SA, Moscow-based United Aircraft Corp., and the European Aeronautic, Defense & Space Co., which has headquarters in Paris and Munich -- did not comment on their plans.

--With assistance from Gopal Ratnam in Washington. Editors: Bill Austin, Mark Williams

To contact the reporter on this story: James Rupert in New Delhi at jrupert3@bloomberg.net

To contact the editor responsible for this story: Bill Austin at billaustin@bloomberg.net

[buglerbilly]

European fighters become 25% cheaper

Ajai Shukla / Berlin June 10, 2010, 0:20 IST

Economic woes provide region’s aerospace industry opportunity to undercut American rivals.

Plummeting European currencies, battered by the euro zone financial crisis, are providing European aerospace corporations an opportunity to undercut their American rivals, Boeing and Lockheed Martin, in the contest to sell India 126 medium multi-role combat aircraft (MMRCA) for a price that has been estimated at $11 billion, or about Rs 44,000 crore.

The six contenders for the MMRCA contract — US companies Boeing and Lockheed Martin, Russian company MiG and European companies Dassault, Eurofighter and Gripen — will submit fresh price bids this month to India’s Ministry of Defence (MoD) since their earlier bids, submitted in March 2008, were valid for just two years.

At that time, the euro was worth more than $1.55; today, it has dropped below 1.2 to the dollar, almost 25 per cent cheaper in relative terms. The Swedish krona has fallen as precipitously: worth $0.165 in March 2008, the krona is at $0.126 now.

That means that a bid, calculated in euros as the equivalent of $11 billion in 2008, would be just $8-8.5 billion today, cheaper by as much as $3 billion, or Rs 13,200 crore.

Taking note of this, Enzio Casolini, the CEO of Eurofighter GmbH, the four-nation consortium that manufactures the Eurofighter, told Business Standard, “This (the drop in the euro) is important, especially in relation to the American competitors. In comparison with the dollar, we went down from more or less 1.5 (dollars to the euro) to 1.2. So, this is good…”

Says Bernhard Gerwert, Board Chairman of Eurofighter GmbH, “When we launched Eurofighter’s campaign in India in 2007, I thought we had only a 10 per cent chance of winning the contract. Today, I believe we have a better than 50 per cent chance of winning.”

But it remains unclear whether the euro’s fall has made European fighters cheap enough to win. Aerospace analysts believe that the American fighters in the fray — Boeing’s F/A-18 Super Hornet and Lockheed Martin’s F-16IN Super Viper — remain significantly cheaper than their European rivals. Having churned out thousands of F-16 and F-18 variants over the years, their development costs and production facilities have long been amortised.

The F/A-18 Super Hornet, going by the published US government figures, costs the US Navy between $40-45 million per aircraft. The F-16, being a lighter, single-engine fighter, costs significantly less than that. In contrast, the Eurofighter and the Rafale, more modern fighters that are still under development, are believed to cost upwards of $80 million apiece.

It is not just the cost of the aircraft that makes up the total value of the Indian contract. Also included in the bid price will be the cost of technology transfer, stocks of running spares, training packages, maintenance costs and technical documentation.

Complicating matters even further is the issue of “life-cycle costing”. While the lowest bidder, whose aircraft passes the flight trials, will indeed win the contract, the Indian MoD has publicly declared that the lowest bid will be calculated on more than just the up-front figures on the commercial bids. Instead, the IAF would calculate the cost of each fighter over its entire service life of three decades.

Consequently, European manufacturers, with high ticket prices on their fighters, have argued that low maintenance and high availability of their aircraft mean that they work out far cheaper over their lifetime than, say, Russian fighters that have high operating costs, low reliability, and require expensive maintenance and frequent changes of parts and engines.

Now, however, IAF sources have indicated to Business Standard that calculating costs over three decades is proving more difficult than they had bargained for, and that the up-front value of the bid might end up as a determining factor. For the vendors, this possibility poses a dilemma in their bidding strategy. Bidding high would mean pricing themselves out of the competition, since life cycle costing would no longer be a valid argument. Bidding too low, on the other hand, could result in winning a contract that becomes a financial liability rather than a triumph.

All six competing fighters have completed their testing and evaluation by the IAF. The IAF is aiming at submitting its recommendations to the MoD by September. According to procurement rules, the MoD will then open the commercial bids of the fighters that have been found suitable by the IAF and award the contract to the lowest bidder.