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Authoritative sources told
India Strategic that the process was
nearing completion but there were volumes of paperwork
and the complicated costs involving Transfer of
Technology (ToT), Offsets, Lifecycle Upgrades
and Maintenance Support. Every detail was being
looked into as this was India’s, and the
world’s, single biggest defence tender yet
in the 21st century.
The Ministry of Defence (MoD) has not set any
deadline to the process, but it could be a New
Year gift to the Indian Air Force as the announcement
could come by mid-January or so.
Notably, the financial bids of the two finalists
in the fray, European consortium’s Eurofighter
and French Rafale, are valid only till 31 Dec
2011, the end of the year. Both of them should
be asked to extend the validity of their offers
for another few months.
However, even if the choice is made within this
month, the winner would be asked for extension
to facilitate negotiations and finalization.
It may be recalled that Chief of the Air Staff,
Air Chief Marshal NAK Browne, had said Dec 18
in Bangalore that “by mid-December we should
have a very good sense of who has been selected,"
Understandably, by now, IAF and the MoD should
know who should be winning – or who is the
lowest – but till all the voluminous paperwork
has been examined to the last comma and full stop,
the files are Top Secret and literally “For
Your Eyes Only” for those dealing with the
subject.
The Air Chief, who was speaking on the margins
of the 51st Indian Society of Aerospace Medicine
conference at the Institute of Aerospace Medicine,
had also said: "I can't tell anything till
the time we finish that work, as there are a lot
of complicated calculations and figures that need
to be checked."
Initially, when the tender was floated in August
2007, the estimated cost for 126 aircraft with
two years’ support and weapons was US$ 10
billion (Rs 42,000 crores then). Both the European
finalists are known to be more expensive than
the four others who lost out in the fray, and
the estimate was revised by MoD some time back
in Dollar/ Euro figures.
It is our guess that the revision should be 30
to 40 per cent of that pre-bid estimate, or say
around to $ 13 to 14 billion. But this is only
a guess as the winner has to help set up the manufacturing
units in India and costing for that is not available
in public domain, particularly as neither of the
two aircraft have been sold along with manufacturing
capability.
There is also an option clause for 63 more aircraft.
Their cost would of course be additional.
Meanwhile, the Indian Rupee has been depreciating.
The expenditure in terms of Rupees would increase
but fluctuations are factored in all defence acquisitions
and do not hinder the process. No fresh Cabinet
approval is required in such cases.
Nonetheless, although procedurally the lowest
bidder, designated L-1 in the MoD jargon, should
be the winner, the choice has to be approved by
the Government, specifically the Cabinet Committee
on Security (CCS) headed by the Prime Minister
(Dr Manmohan Singh). It includes the ministers
for Finance (Mr Pranab Mukherjee), Defence (Mr
A K Antony), Home (Mr P Chidambaram) and External
Affairs (Mr S M Krishna).
Mr Antony has stated that the selection would
be on technical and financial merit, that is,
on the basis of qualification by the Indian Air
Force and the price offered. The bid is submitted
in two parts: Technical and Financial.
IAF disqualified technically four others in the
fray, Swedish Saab Gripen, Russian Mig 35, and
US Boeing F 18 Super Hornet and Lockheed Martin
F 16 Super Viper on the basis of points scored
in its selection process.
As per the established procedure, IAF is not
supposed to give any grading like Number 1 or
Number 2 to the finalists and both are equal as
far as the MoD is concerned.
Nonetheless, the Government is not bound to select
the L-1 as the winner, even if it is much lower,
as there is an over-riding clause in the tender.
If in the national strategic calculus, the L-2
can be of strategic significance for India, then
the CCS can go in for that aircraft.
In the diplomatic circles, the deal is described
as France (Rafale) vs Eurofighter’s Europe
(Germany, UK, Spain and Italy). Eurofighter’s
supporters say that India could gain significant
weight in the global arena through this deal.
The French say that they have supplied the best
of their systems to India without any restrictions
so far, and that it would be much easier to deal
with a single country than the bureaucracies of
four others over the life time of the aircraft
– 6000 flying hours or 40 years as stipulated
in the tender.
So who is the winner?
Procedurally, L-1.
Strategically, only the CCS, the Cabinet Secretary,
National Security Adviser, Foreign Secretary and
Defence Secretary can decide if otherwise
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