126 fighter jets deal back on track, price negotiation resumes

July 10: The multi-billion dollar deal for 126 fighter jets was stalled following complaints of irregularities is back on track with the contract negotiations re-starting following independent monitors giving a thumbs up to the procedure followed in the selection of French Rafale.

 

“The Contract Negotiation Committee (CNC) has resumed its talks with the French firm Dassault for arriving at the final price this month (July),” sources said.

The government had down-selected Dassault to supply Rafale to the Indian Air Force (IAF) under a deal estimated to be valuing $11 billion on January 31. Within a few weeks, the Defence Ministry received a letter from then Telugu Desam Party MP MV Mysura Reddy raising questions over the process followed at arriving at the lowest bidder in one of the biggest defence deals in the world.

The Defence Ministry immediate put the Contract Negotiation with the French aerospace major on hold and set up independent monitors to look into the “loop-holes” suggested in the letter. The three independent monitors were appointed by the Central Vigilance Commission (CVC) and included former bureaucrats from Finance and Defence Ministry.

The acquisition process for the 126 medium multi-role combat aircraft, often dubbed as “Mother of All defence deals” for its size, had commenced in 2007.  European Eurofighter and French Rafale had entered the final round of the dogfight for the multi-billion dollar deal. Rafale finally knocked out Eurofighter for having a cheaper price tag. The lowest bidder has been arrived at by including per unit price and the life cycle cost that would mean the cost of operating the two aircrafts for 40 years or 6,000 hours.

The two were zeroed-in after grueling flight trials that judged six fighter jets in fray – F-16IN and F-18/1A from the US, SAAB Gripen from Sweden, MiG-35 from Russia, Eurofighter and Rafale – on over 660 parameters. The commercial bids of the two aerospace major was opened on November 4.

The deal is expected to be inked this financial year if any of the vendors do not put spoke in the acquisition process.

IAF, which is facing rapidly depleting strength of its fighter squadrons, will get its first 18 aircraft in fly-away condition three years after the signing of the contract and the rest 108 will be manufactured in India under license. The 211-page Request for Proposal (RfP) issued by the IAF in 2007 also stipulates that 60 percent of the aircraft’s technology be transferred to India in four phases to give a boost to the indigenous agencies. The tender also makes it mandatory for the winner to re-invest 50 percent of the total value of the deal in the domestic defence and civil aviation market as offsets.