New Delhi : The Indian Air Force (IAF) was Friday given the go-ahead by the government to float a global tender for 126 combat aircraft worth $10 billion, but it could be five to six years before the first planes start arriving.
Eighteen of the medium multi-role combat aircraft (MMRCA) will be purchased in flyaway condition and the remaining 108 manufactured in the country under a transfer of technology (TOT) agreement with the chosen supplier. The aircraft are envisaged to have a lifecycle of 40 years from the time of delivery.
"Transparency at all steps must be ensured during the tendering process," Defence Minister A.K. Antony said while chairing the meeting of the Defence Acquisition Council (DAC) that cleared the tender.
The IAF desperately needs new aircraft to replace its ageing fleet of Soviet-era MiG-21 fighters that make up 21 squadrons of its 30-squadron fleet of combat aircraft.
"During the meeting, the DAC debated various issues related to the initial purchase, transfer of technology, licensed production and life-time maintenance support for the aircraft and gave the final go-ahead for the project," defence ministry spokesman Sitanshu Kar told reporters.
A request for proposal (RFP) would now be sent out within a month to the manufacturers of six aircraft: the US F-16 and F-18 Super Hornet, the Swedish Gripen, the French Rafale, the Russian MiG-35 and an European consortium's Eurofighter.
These companies would also have to sign a confidentiality clause against revealing the contents of the RFP to a third party.
The RFP will also contain an offsets clause under which 50 percent of the money paid to the chosen vendor will have to be reinvested in India's defence manufacturing sector.
The offsets clause that was introduced in the Defence Procurement Procedure-2006 (DPP-2006) mandates that 30 percent of the cost of military purchases exceeding Rs.3 billion has to be reinvested in the country.
"The DAC decided that the offsets in this case would be 50 percent," Kar said.
"In view of the size and operational importance of the likely purchase, the criterion for selecting the final contender has been fine tuned," he added.
Toward this, the RFP would contain a selection model that would involve an exhaustive evaluation process as detailed in the DPP-2006.
Explaining the process, Kar said a professional team would conduct a technical evaluation of the proposals received to check for compliance with the IAF's operational requirements and other RFP conditions.
Following this, extensive field trials would be carried out to evaluate the performance of the different aircraft. Finally, the commercial proposal of the vendors short-listed after technical and field evaluations, would be examined and compared.
The defence ministry's Contract Negotiation Committee (CNC) would then hold discussions with the vendors before identifying the manufacturer who would be awarded the IAF order.
The CNC would submit its report to the defence minister, who would forward it to the finance minister. After the file returns to the defence ministry, it would go for final approval to the cabinet committee on security (CCS). This process would take some two-and-a-half years.
After the contract is signed with the chosen manufacturer, it would take another two-and-a-half years before the first aircraft start arriving.
"Since the aircraft are likely to be in service for over 40 years, the vendors have to provide lifetime support and performance based warranty for them," Kar pointed out.
According to him, defence ministry officials "have confirmed that great care has been taken to ensure that only determinable factors that do not lend themselves to any subjectivity, are included in the commercial selection model.
"It is expected that the technology transfer and offset clauses would provide a great technological and economic boost to the indigenous defence industries in the public sectors," Kar stated.
Among those who attended the DAC meeting were Minister of State for Defence Rao Inderjit Singh, Defence Secretary Shekhar Dutt, Secretary (Defence Production) K.P. Singh, and Secretary (Defence Finance) V.K. Misra.
Friday was Misra's last day in office as he retires Saturday and Antony "specifically thanked him for playing a leading role in finalising the RFP", Kar pointed out.
The Indian Navy chief, Admiral Sureesh Mehta, the IAF chief, Air Chief Marshal Fali Homi Major, the Indian Army vice chief, Lt. Gen. Deepak Kapoor, and the Director General (Acquisitions), Sheelbhadra Banerjee, also attended the meeting.
The DAC decision is the culmination of a process that began in 2001 when the IAF sent out its request for information (IAF) for 126 jets.
During this period, the IAF has witnessed an alarming dip in its fighter squadron levels from a sanctioned strength of 391/2 to 30. This will further reduce by the time the first of the new jets start arriving, which means that the IAF would actually require some 200 aircraft – some 70 more than it currently hopes to purchase.