Race on to sell fighters to India

Remember when we wrote about India’s undeclared fighter contest last October? Game on.

Even though the government hasn’t announced any tender or solicited any bids, three companies have come forward to offer fighter aircraft with Make in India-compliant manufacturing proposals. Defense Minister Manohar Parrikar said in February, “It is private sector which will be required to supply to the air force. We need fighters. We may encourage…there are proposals.”

The Indo-U.S. joint statement issued after the visit of U.S. Secretary of Defense Ashton Carter to India last week said, “With the aim of encouraging greater participation of U.S. Defense Industries in the Make In India program of the Government of India, Raksha Mantri Parrikar informed Secretary Carter about the recently announced Defence Procurement Policy and other reforms in the Indian defense sector. Both sides agreed to encourage their respective defense industries to develop new partnerships in the pursuit of a range of cutting-edge projects. In support of Make in India, the United States shared two proposals to bolster India’s suite of fighter aircraft for consideration of the Government of India.”

Both Boeing and Lockheed Martin held meetings with the defense ministry to make their offers, two weeks back.

StratPost understands that ‘everything except price’ was discussed at these meetings.

Three of the MMRCA-6

Boeing has offered to produce its F/A-18 Super Hornet in India. Lockheed Martin announced its intention, at DefExpo 2016 last month, to make a formal offer for the transfer of the Final Assembly and Check Out (FACO) line for the F-16 to India. And Sweden’s Saab is offering to produce its Gripen in India.

All three of these fighter aircraft were fielded in the Indian Air Force (IAF) tender for 126 Medium Multi Role Combat Aircraft (MMRCA), besides the Russian MiG-35 and the Eurofighter Typhoon, the last of which made the technical shortlist along with the Rafale.

Since negotiations with Dassault failed, the MMRCA tender was withdrawn and a separate request for 36 Rafale aircraft was announced by Prime Minister Narendra Modi a year back. This second round of negotiations with the French are still underway and media reports have shown sharp spikes and drops in the level of optimism about the conclusion of an order.

But it is increasingly becoming evident that irrespective of whether the French come to terms or not, India will be looking elsewhere for fighter aircraft, as well.

The Russians haven’t said anything in terms of an offer and it is unlikely to make a difference, anyway. Officials from Airbus, which was leading the Eurofighter Typhoon campaign for the MMRCA tender, have said since the cancelation of the tender that the prospect of selling fighters to India is ‘a closed chapter for us’.

This could change, but it hasn’t yet.

Privately, most observers feel that this new competition – without a formal tender or official solicitation of offers – would depend more on cost and industrial offer and not on ‘rigorous’ technical specifications like those outlined in the MMRCA tender. Which is, perhaps, not so good for the Eurofighter Typhoon.

Advantage Lockheed Martin

But it is on cost and industrial offer, where Lockheed Martin might have an edge over Boeing and Saab.

The F-16 is easily one of the most widely produced modern fighter aircraft. There is no cost of development to be recovered. The F-16 assembly line is nearing the end of production with current orders expected to be competed by the end of 2017.

Randy Howard of Lockheed Martin told media at DefExpo 2016, “Whatever decision India makes here is going to be an incredibly important one because you desperately need fighters. You need them as soon as possible. Your air force is grossly short of what they’ve identified as their requirements. You need a couple of things. One is I think you need a fighter aircraft that can be delivered quickly. So what we’re talking about is a 2019 first delivery and 2020-timeframe delivering from India. Remarkably quick turn time for those in the next three to four years.”

“We had a launch customer for the F-16V program that’s just about three years ago and so we’re three years ahead of anybody else that wants to try to do this on these aircraft – ‘cos we’ve been doing this for three years now. Flight testing at this point. Six months into the flight test program on F-16V,” he added.

Boeing: India Presence & Two Engines

Boeing is also keenly interested in the Indian contest. It’s F/A-18 is a larger, twin-engine aircraft and obviously more expensive. The company is anticipating a Kuwaiti order for 28 aircraft and an additional U.S. Navy order for 12 aircraft, all of which are expected to keep their assembly line running until 2018, at the earliest.

Here’s what Vice President of Global Sales at Boeing Defense, Space & Security Jeff Kohler said at the Singapore Airshow 2016 in February.

Our CEO was just in India. First part of the month – and he was quite enthusiastic and said that we are fully ready to work with the Indian government on the Make India fighter program that Prime Minister Modi has talked about. We’re working very closely with the US government on that as well. A lot of it – they have the lead for.

There’s an ongoing dialogue between the two governments and we’ve let the United States government know that we’re willing and able to jump in once the two governments have come to some sort of agreement on what they want to do.

In our view, it’s not a competition yet and the Indian government’s evaluating virtually all the same players that were in the MMRCA competition but it’s a little different because there’s not a set of requirements and so on and so forth for the airplane. We think it’s much more about the Make In India prospect on the industrial side than it is the airplane, which is okay. We were ready in MMRCA and we’ll be ready this time. We think it’s a great opportunity to be involved in. 

I think if you listen to the key leaders in the government, that’s what they’re talking about. How can a company – and let’s take the Boeing company, the world’s largest aerospace company – how can we go into India and help them jumpstart their aviation ecosystem – primarily around defense?

But you can’t sustain an aerospace industry around defense alone. Who else can bring the commercial piece and everything else with it. So we think we can go in and help India create that larger, more robust aerospace ecosystem – and we can do it a lot faster than other companies can.

We envision that there may be two lines, for one thing. The U.S. Navy – if they continue, they’re going to want to keep something in St. Louis. But you could replicate a lot of it there – and again – if you’re talking 150 to 200 airplanes total that builds a good business case for somebody to go stand up a second line. 

Let’s wait and see what the Indian government – who they select, first. I have to remind people, you have to be selected before you worry about some of those things. But there’s a lot of dialogue that’s going on with different suppliers. 

And officials from the U.S. Government and Boeing confirmed to Indian defense ministry officials that their technology offer to India was the same as was offered by the company for the MMRCA tender.

Saab’s Gripen E

But it’s Saab that was the first of the three companies to make an offer to build the Gripen in India, even before the MMRCA tender was canceled.

Saab is fielding an aircraft that is only now coming into its prime, with the latest variant, the Gripen E, scheduled to be rolled out next month and ordered by Sweden and Brazil. And it’s offer of complete technology transfer seems to have made an impression in India.

Last December, Saab’s head of aeronautics Ulf Nilsson told media in New Delhi, “When we started to talk about Gripen NG in India it was more at the early stage of development. Now it’s actually a true aircraft and soon will be flying as well. It’s been proven that we can deliver the time schedules that we’ve been talking about.”

Saab’s India head, Jan Widerström laid out the offer, saying:

We’re not offering a product. We’re offering a long-term aerospace capability for the next hundred years to India. And that aerospace capability I hope will play a major role in supporting India in developing the next generation fighters for the future.

Sweden and India are to hold a meeting on defense cooperation in June when prospects for Gripen production in India are expected to be discussed.

Saab is already setting up a line in Brazil for production of the aircraft in addition to the Swedish line.

This is, perhaps, what Lockheed Martin’s Randy Howard talked about at DefExpo 2016, when he said, “We have a very active production assembly on the F-35. So that’s the real difference. Our workforce is actively building F-35s. And that’s a fundamentally different scenario than our competitors have. Because the aircraft they’re offering, they are actively building and depend upon building that.”

The reference here is to the fact that the F-16 line is expected to close, soon. This is also something the French tried to do when they tried to sell India the assembly line for the Mirage 2000 aircraft, already in service in the IAF, after they ceased production of the aircraft. It didn’t work at the time and eventually made way for the MMRCA tender.

Strategic Considerations

If cost and industrial offer is going to be the most important determinant for an Indian decision, Lockheed Martin might have the best game in town.

On the other hand, the company also has several things going against it.

The first issue is the fact that the F-16 is also operated by the Pakistan Air Force and the U.S. government has recently approved the sale of another eight aircraft to India’s western neighbor. How would sustainment for the Pakistan Air Force work? Where would the spares and services for Pakistani F-16s come from? Lockheed Martin representatives didn’t have an answer for these questions at their media briefing at DefExpo 2016 in Goa last month.

And strategic considerations will also have a role to play and could be viewed from the both sides. If any of these companies were to indeed set up an assembly line in India, there is little question given the shortfall of fighters and anticipated retirements that the selected aircraft would soon dominate the IAF fleet in terms of numbers.

So far, the IAF had a preponderance of Russian fighters. Politically, could India live with a fighter fleet made up largely of U.S. fighter aircraft? Not to mention, the inevitable F-35 Lightening II Joint Strike Fighter (JSF) hardsell that would follow?

Could this be less a question of setting up a fighter aircraft assembly line in India and more about whether India is comfortable enough with the U.S.?

What about the navy?

And then a third consideration could be India’s future naval fighter requirement. With the naval Light Combat Aircraft (LCA) under question until someone manages to fit a GE F414 into a Tejas, the Indian Navy could be looking at other options for what will eventually be three aircraft carriers. If it chooses against the in-service MiG-29K aircraft, an existing in-country assembly line could prove useful. The Boeing F/A-18 Super Hornet is an obvious alternative. Saab has also been working on a naval concept called the Sea Gripen. There is no naval variant of the F-16.

But at any rate, what Lockheed Martin could end up doing is sticking on a price-tag that will be held as a reference point for comparison for Saab and Boeing.

Two Lines

At the end, to clarify or confuse things further, what is also important to remember are two statements made by Parrikar.

In April 2015, he said, “A replacement (for the MiG-21) could be the LCA Tejas or another – I’ll not call it low end – but a single engine lighter aircraft. Tejas is a good aircraft but it has its limitations.”

And last February, he said, “We might select few aircraft to Make in India. Which one? I don’t commit. But there will be at least one, may be two also.”

There could well be two new assembly lines set up in India. For both single-engine and twin-engine aircraft.