Panel clears offsets report on $10.4-bn jet plane deal

Written by Huma Siddiqui | New Delhi | Updated: Oct 8 2011, 10:16am hrs
The Defence Acquisition Council (DAC) on Friday cleared the offsets proposals evaluation report related to the $10.4-billion 126 medium multi-role combat aircraft (MMRCA) deal. With this the spadework leading to the opening of the commercial bids for the deal has been completed. The bids will be opened in the next few days in the presence of the two shortlisted contenders.

As reported by FE earlier, at the DAC meeting, issues related to the offsets proposals of the two shortlisted contenders as well as other minor issues were discussed. The opening of the commercial bids for the mother of all deals was dependant on the decisions taken at Fridays meet. Also among the issues to be discussed at the DAC were the effect of falling value of the rupee on the deal, and price optimisation.

Industry sources said, Now, the defence ministry has to send letters to the two contenders informing them of the decisions taken and the dates for the opening of the bids. It is mandatory for the company executives to be present at the opening of the commercial bids.

Indian Air Force has the funds for the MMRCA programme. There will be a realignment in committed liabilities and MMRCA deliveries should begin around 2014, said Air Chief NAK Browne, on the eve of the Air Force Day on Saturday.

On April 27, India shortlisted the two European companies for procuring 126 MMRCA for the IAF EADS Eurofighter and Dassaults Rafale. Once the bids are opened, the lower among the two bids will be engaged in commercial negotiations.

Recently, German Ambassador to India Thomas Matussek described India as an anchor of stability in the region and said that was why Germany was giving it the best technology it possesses. Germany is a part of the four-nation consortium that builds the Eurofighter Typhoon. The other three countries are the UK, Spain and Italy.

The offsets for this programme amount to R20,000 crore plus and these are going to be in service for over a period of 13 years. In the MMRCA competition, companies have to invest 50% of the worth of the deal into the Indian defence sector only. As per the schedule, the first 18 jets will come from the home countries of the winner, while the rest 108 will be manufactured by Hindustan Aeronautics after transfer of technology (ToT) from end-2016 or early-2017 onwards.