India launches race to build fighter jet

India launches race to build fighter jet

India has kick-started a race to supply fighter jets for its air force in what could be among the world’s most lucrative military aerospace contracts, with international defence companies lining up to pitch for as much as $10bn worth of business.

Companies worldwide have received letters in the past few days from the Indian government asking whether they would be willing to partner with an Indian company to produce a fleet of single-engine fighter jets for the Indian air force. A letter was sent via Indian embassies to both Saab of Sweden and Lockheed Martin of the US, while industry executives say letters were also received by Germany, Italy and Russia. It is unclear, however, whether the latter three were handed the same request, given none of those countries makes modern military fighter aircraft of the required single-engine type.

The move indicates that in its haste to replace its ageing fleet of jets, India is willing to upend its normal tendering process and do a deal more quickly. Randall Howard, director of the integrated fighter group at Lockheed Martin, said: “There is a sense of urgency from the Indian air force because its need is so great. This would be one of the largest fighter jet orders ever made.” He added: “We received the letter in the past few days and we have started conversations with the air force to ask what they are looking for and what are their requirements.” The request comes just weeks after India signed a contract with France to buy 36 twin-engined Rafale jets built by French company Dassault.

New Delhi had originally asked for 126 aircraft, but negotiations fell apart over disagreements over how much of the manufacturing would be done in India — something the Indian government has been pushing for more of under the campaign “Make in India”. The reduction in the deal has left the air force well below the capability its chiefs say is needed as its current fleet of MiG 21s reaches the end of its life. The Rafale deal will take the force from 33 squadrons (of between 16 and 18 aircraft) to 35, but senior officers say it needs another 10 squadrons, especially with tensions on the Pakistan border once more on the rise. The letter appears to confirm that government officials have accepted that there is a capability gap that needs filling quickly, and already companies have begun to lobby officials in New Delhi. Sweden’s Saab has said industry estimates at the time of the previous tender had suggested that there could eventually be demand for up to 200 aircraft, while Lockheed Martin said it would like to supply at least 100 to achieve economies of scale. Neither company will say how much they expect for such an order, but experts say it is likely to be well above the €8bn Dassault will receive for its 36 jets. Speaking from New Delhi, Mr Howard said: “There are 3,200 F-16s being flown around the world today and they would all be supplied [with components] from India, as well as new ones being built there.” He added:“This is a once in a lifetime opportunity for the Indian defence industry.” Meanwhile Saab, whose Gripen jet is the main competitor to the F-16, is also promising to transfer the skills and technology that would allow Indian companies to manufacture the bulk of the fighters needed on their own, as it has done in Brazil. An initial batch would produced by Saab with Indian partners, as part of the transfer. Both are so-called “fourth generation” fighter jets.

Robert Hewson, a spokesman for Saab, said: “India would get the ability to design and build a combat aircraft, optimised for Indian requirements, from the ground up. We are fully aware of the need to follow the Make in India rules to the letter and we are ready.” Saab’s case is built partly on cost, with the Gripen having the lowest operating costs of any western combat aircraft, according to IHS Jane’s, the defence consultancy. Saab also believes it would be easier for India to integrate its own weapons systems on to the Gripen as it will not come with as many export restrictions as US aircraft.

The Indian government’s apparent desire to buy single-engine aircraft appears to leave both Dassault and Eurofighter with little hope of securing the contract, despite having been the final two companies in the bidding during the last tender process. Both the Rafale and Eurofighter’s Typhoon jet are twin-engined jets and so do not fit New Delhi’s requirements. Whatever New Delhi does eventually decide, it is likely to transform either the company involved or the Indian defence industry, or both. Walter Ladwig, a lecturer in international relations at King’s College, said: “This is a globally significant deal whichever way India goes. “Building the entire world’s fleet of F-16s would put India in a very important position as a global supplier and could help it leapfrog other countries with new technology. But for Saab, selling that many would be huge, it would make India by far its largest and highest-profile customer.”


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