Foreign companies making fighter jets see a multi-billion dollar opportunity in India, a country which decided to scale back purchases of high-end aircraft from France. The move may free up cash for India to buy a new fleet of mid-range planes.
Prime Minister Narendra Modi announced last week that India would buy 36 French Rafale jets for an estimated cost of $4.3 billion. This in effect ended talks on a larger deal for 126 planes which was to suck up some $20 billion.
Sweden’s Saab (SAABb.ST) and U.S. Lockheed Martin (LMT.N) are all set to re-pitch their Gripen and F-16 planes as Indian Air Force needs to rebuild its fleet.
“We are here and we are ready,” said a source close to Saab. Earlier, Saab was proposing to establish “fully-fledged production” of the Gripen in India alongside a local partner, some thing India really wishes for.
Lockheed Martin may also re-pitch its F-16 IN, which is one of the most widely used fighter planes in the world, as a replacement for Russian-made MiGs that are a mainstay in India’s fleet.
“The light combat aircraft opportunity is going to be there in the near future because the MiGs have to be replaced really fast,” said Delhi-based defence commentator and analyst Neelam Mathews.
Russia, India’s largest arms supplier, is hopeful it can sell more of its Sukhoi Su-30s, a plane partly assembled by HAL, to tide over the air force while it waits two years to receive the first Rafales.
Foreign manufacturers have also welcomed India’s decision to negotiate directly with the French government for further Rafales.
“What is positive about the announced Rafale deal is that purchase is supposed to be based on a government-to-government agreement. We have been asking the Indian side for a long time to get back to this practice instead of tenders,” said one Russian diplomat.
Moscow also wants to speed up the decision for the joint manufacturing of a new generation stealth fighter jet.
India was running 39 squadrons before, which are down to 34 operational squadrons now. This is time to replenish its air force fleet on priority. The recent government has approved strength of 42 squadrons necessary to face a two-front challenge from Pakistan and China.
Parrikar said on Monday that India needed 100 new light combat aircraft within five years to replace the MiG-21s. He further said that the heavier and pricier Rafale was not the plane to do it.
His preference would be for the indigenously-made Tejas to fill the void. But Parrikar himself has admitted the jet, in development for three decades, has limitations while the latest version still awaits final clearance.
Either way, air force officials and industry sources say India is unlikely to buy anything like the 126 planes agreed in the original deal with France after all-in costs doubled to an estimated $20 billion.
Parrikar said he had not decided how many more Rafales he might buy. Manufacturer Dassault Aviation could also pitch its single-engine Mirage if India opts for something cheaper.
Foreign plane makers may need to join forces with an Indian state-run or private partner to win orders, especially if Modi is to realise his goal of developing a military industrial base.
Under the original deal with Dassault, 108 of the jets were to be produced at a state-run Hindustan Aeronautics Limited (HAL) plant. But the two sides could not agree terms.