Go Bankrupt, Air Force Style (The Diplomat)

By M D Nalapat 

Just weeks from now, Indian Defence Minister A.K. Antony will announce whether the Eurofighter or Dassault will win the $12 billion contract for the supply of 126 front-line fighters for the Indian Air Force. 

Consistent delays by Russia in procurement, slipshod service and repeated cost escalations elbowed out the MiG-35,while US reluctance to give India anything other than the 20th century F-16, as well as crippling conditions on local production sharing of the more futuristic F-18, put paid to the hopes of the Obama administration that the Indian taxpayer would bailout Lockheed or boost Boeing. That left the Saab Gripen, which was eliminated by the Defense Ministry from consideration, reportedly on the grounds that it had a less than optimal radar capability.

This columnist favoured the Gripen, not only because it’s much cheaper than the two other European Medium Multi-Role Combat Aircraft (MMRCA) under consideration, but because Saab would have been agreeable to the location within India of far more significant chunks of aircraft production than the Eurofighter consortium or Dassault, both of whom seem seek to confine production operations of higher technology items to Europe rather than partnering with India to lower overall costs. Unlike Germany and France, the Scandinavian countries are far more willing to enter into equal partnerships with Indian industry, and hence the acquisition of the Swedish aircraft would have boosted local capabilities far more than either of the two options now shortlisted.

Interestingly, while the choice of radar has been given as the reason why the lower cost Gripen was eliminated, the Eurofighter has the exact same radar system as the Swedish aircraft, made by the same manufacturer. Additionally, the lifecycle costs of the Eurofighter are believed to be nearly ten times that of the Saab option, while the costs of the Dassault option are reportedly eight times the cost of the Gripen, for every hour of flight. This will make operation of either of the two shortlisted variants prohibitively expensive for the Indian Air Force.

Purchasing white elephants has become the sport of choice for the Defense Ministry. The Indian Navy has bought the mothballed Admiral Gorshkov from Russia at a price that will cross the $3.2 billion mark, or three times the estimate given at the time the decision to purchase this aircraft carrier was made. Like the Eurofighter or the Dassault options, the Admiral Gorshkov (now re-christened Vikramaditya and awaiting induction sometime in 2012) will be hugely expensive to operate. Of course, as the just-concluded $2 billion deal for the ‘upgrade’ of the Mirage squadrons shows, the higher the cost, the more the hidden ‘sweeteners’ are likely to be.

While there have been news reports of the Italian relatives of a prominent political family in India showing an interest in the MMRCA acquisition, the Indian media has, as is its wont, not dared explore the possibility of any such connection. Instead, they have lapped up the Defense Ministry’s handouts, which tout the deal as giving ‘teeth’ to India’s air attack capability. That such teeth would be false teeth doesn’t seem to bother many. Thus far, the Defense Ministry has refused to budge from its policy of relying on foreign rather than Indian companies for big ticket items.

Antony has presided over the biggest spending binge ever entered into by the Defense Ministry. This legacy is the polar opposite of that of previous Defense Minister V.K. Krishna Menon, who during his tenure sought to deepen ‘self-reliance’ for defence items and technology. Given the financial hole that Europe is in, the murderous expense involved in purchasing, maintaining and operating the Eurofighter or the Dassault Rafaele may be put down to charity.

http://the-diplomat.com/indian-decade/2011/10/12/go-bankrupt-air-force-style/