Home > Opinion
  print button email button

Monday, March 5, 2012

Ripple effect from India's biggest defense deal


By HARSH V. PANT
Special to The Japan Times

LONDON — First it was the United States that got annoyed, and now it is Britain's turn to ask some tough questions about its India policy. Ever since the French Rafale fighter was declared the lowest bidder in the multibillion dollar contract to provide a new generation fighter for the Indian Air Force, a debate has been raging in the United Kingdom as to what went wrong with Prime Minister David Cameron's charm offensive in wooing India.

His visit to India in 2010 was widely viewed as a highly successful. He made all the right noises in India about Pakistan and terrorism, and there was a sense that U.K.-India ties had finally turned a corner. The Cameron government has also decided to give India £1.4 billion between now and 2015, amounting to almost 1 percent of Britain's own £159 billion debt.

But when it came to the much sought-after Medium Multi-Role Combat Aircraft (MMRCA) contract, France was the winner and the Eurofighter, produced by a consortium of four nations, including Britain's BAE systems, lost. Apparently, saying the right things and giving aid doesn't get you any influence in New Delhi!

From the very beginning, this saga has been rather interesting. Last year in April, India rejected bids by Lockheed Martin and Boeing (along with Russian and Swedish bids) for the $10 billion-plus contract for the 126 combat aircraft, despite extensive lobbying by the U.S. military-industrial complex, supported by President Barack Obama himself.

Nothing works better in New Delhi than a putdown to the U.S. — and that was quite a snub indeed! Instead, New Delhi short-listed Dassault Aviation's Rafale and the Eurofighter Consortium's Typhoon. There were extensive field trials, and technical considerations ostensibly drove the final decision. But the dismay in Washington was widespread and, to some extent, understandable given the investment that the U.S. has made in cultivating India in recent years.

The focus then shifted to the French vs. British, Rafale vs. Eurofighter rivalry in which the French came out on top. Dassault Aviation, Rafale's French manufacturer, will be entering into commercial negotiations with India over the next few months before final deals are signed. As this is a company that has been struggling to get foreign buyers, it would be keen on signing the contract more or less on Indian terms.

Deemed expensive and not cutting edge, the Netherlands, South Korea, Singapore, Morocco, Brazil, the United Arab Emirates and Switzerland have all turned Rafale down in the last few years. India, in more ways than one, will now be subsidizing the French defense sector.

India's decision was clearly influenced by the price factor as the EADS Eurofighter Typhoon is a much more expensive venture. But technology transfer was clearly another guiding factor with the tender stipulating 50 percent direct offset obligation for the winning bidder.

The Indian Air Force's familiarity with French Mirage 2000 aircraft would also have helped as Rafale is operationally and technically similar to the Mirage 2000. India would be buying the aircraft over 10 years with 18 Rafale jets constructed in Dassault plants in France and 108 assembled by Hindustan Aeronautics in India.

Coming just before French elections in which President Nicholas Sarkozy is trailing, this decision will boost his prospects.

It's no wonder that Sarkozy was euphoric, suggesting that "France is delighted at the decision by the Indian government. ... It will include important technology transfers guaranteed by the French government."

At a time when major European countries are drastically cutting their defense budgets, the defense sector needs external help to survive and India's decision will be a big help to France. Dassault was quick to react, saying it is "honored and grateful to the government and people of India." In Britain, on the other hand, there are fears of job losses at BAE Systems, which owns 33 percent of Eurofighter. The deal has been described a "major win for France and a major loss for the U.K." The U.K. government, at least publicly, is still hoping that New Delhi could yet reject the French offer and turn to the Eurofighter.

This is India's largest defense contract at a time when India's defense modernization has been attracting a lot of attention. The fighter levels in the IAF have dropped to an all-time low of 32 squadrons compared with an official level of 39.5 and a desired 42 squadrons. The IAF is desperate to replace its aging fleet of MiG 21 fighters.

At one level, the seeming transparency of the process should indeed be heartening to those who have puzzled over India's inability to get its defense modernization program on track for some time now.

For a usually lackadaisical Indian Ministry of Defense (MoD) this is a welcome change. After years of returning unspent money, the MoD last year not only managed to spend its entire budget but also asked for capital procurement funds.

Now, with movement on the MMRCA bids, it is clear that the ministry wants to move swiftly on new defense procurement, relegating its ultra-cautious approach to the sidelines.

But there is a larger question that still needs to be answered. Major defense purchases are not an end in themselves. Ideally, they should be a means of helping a nation achieve its strategic objectives.

It's not readily evident what strategic objectives of India are being served by choosing Rafale over Typhoon. One can only hope that the Indian defense establishment is not missing the wood for the trees.

Harsh V. Pant is a professor of defense studies at King's College, London.


Back to Top

About us |  Work for us |  Contact us |  Privacy policy |  Link policy |  Registration FAQ
Advertise in japantimes.co.jp.
This site has been optimized for modern browsers. Please make sure that Javascript is enabled in your browser's preferences.
The Japan Times Ltd. All rights reserved.