IAF’s mega buy delay to cost $1 bn

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SummaryFor the second time in row, the commercial bid validity of the six contenders for the medium multi-role combat aircraft will be extended which may cost the government $1 billion more over and above the $10.4 billion for 126 planes.

For the second time in row, the commercial bid validity of the six contenders for the medium multi-role combat aircraft (MMRCA) will be extended which may cost the government $1 billion more over and above the $10.4 billion for 126 planes.

Industry sources told FE that “the government is planning to seek extension of the validity of the commercial bid expiring on April 30 as none of the vendors have received any indication from the ministry of defence (MoD) about being down listed nor has the price negotiation committee been set up.”

Last year, the ministry had extended the commercial validity of bids on India’s 126-aircraft MMRCAbid by a year to April 28, 2011.

The Air Chief Marshal PV Naik had recently announced that by March end the price negotiation for the mother of all deals will take off.

However, sources revealed that “those who have been shortlisted have to be given enough time to get ready for the talks, with this extension, the negotiations for the Offsets too will get delayed.”

The ministry’s Technical Oversight Committee (ToC) is currently looking at the ‘offset’proposals — a requirement that the winning contractor source a certain amount of the value of each aircraft that India buys from Indian industry — submitted by the contenders for the deal.

Simultaneously, their proposals for transfer of technology, critical for the rapid development of an Indian capability to build advanced fighters, are also being examined. The chosen combat jet will be the mainstay of IAF's fighter aircraft fleet for the next 40 years. The new MMRCA will replace the IAF's existing fleet of MiG variants.

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