By Daniel Stacey
NEW DELHI -- India is being offered blueprints to advanced
combat aircraft by the world's aerospace companies, a move
unthinkable even a decade ago, as New Delhi gets ready to place
another multibillion-dollar air force order.
India's aging military jet fleet desperately needs an upgrade,
which analysts say may spur it to place an order worth more than
$10 billion in the next year. Hoping for an edge, and encouraged by
a recent law that allows 100% foreign ownership of local defense
firms, jet-fighter makers such as Lockheed Martin Corp., Boeing Co.
and Saab AB are rushing in with offers to set up production lines
to India.
Efforts to give India unprecedented access to jet fighter
know-how illustrate the country's rising importance to the West as
China's power increases, analysts say.
India, until a decade ago, was trying stubbornly to build its
own jets, after the U.S. and Japan imposed sanctions following its
nuclear tests in 1998, which broke U.S. nonproliferation laws and
sparked tensions with Pakistan. U.S. companies were blocked from
giving India the technology it needed.
Relations between India and the U.S. have improved since, as
both share a goal to contain China's military. India has struck
deals with the U.S. to buy everything from Apache helicopters to
transport planes and artillery, lifting the country to India's
second-biggest defense trading partner behind Russia.
"China's rise has changed the equation," said Pushan Das, a
fellow with the Observer Research Foundation, a policy think tank
based in New Delhi. Industry experts estimate India needs over 300
new combat jets in the next 15 years.
It could be a while before a deal is struck. Successful bidders
also face the challenge of setting up a jet-manufacturing system
from scratch. Previous such attempts have failed.
A deal struck in 2012 with France's Dassault Aviation SA to
build Rafale fighters in India fell through last year following
disagreements, and was replaced with a smaller plan to import 36
jets. That plan finally was approved by India's government, and an
agreement was signed on Friday.
Similarly, efforts to co-develop a next generation fighter with
Russia's Sukhoi stalled over cost disputes, while a third
indigenous jet program aiming to deliver 120 light combat aircraft
is behind schedule.
Those programs relied on state-run Hindustan Aeronautics to
build and design jets. Defense experts say the company faces a
skills shortage as its best engineers are spread thinly across
projects that include retrofitting old Russian and French jet
fighters and building helicopters and drones. The company didn't
respond to requests for comment.
Impatient with the delays, India relaxed foreign investment laws
and defense procurement rules to kick-start a privately managed
jet-fighter industry as its air force struggles to keep its aging
fighter fleet in the sky, including MiG-21 jets bought in the
1960s. Since then, U.S. manufacturers Lockheed and Boeing, and
Sweden's Saab, have proposed building jets with Indian
partners.
The U.S. hasn't sold jet fighters to India before, with India's
air force preferring European and Russian manufacturers.
Lockheed also has proposed moving its F-16 production line in
Fort Worth, Texas, to India, and training more than 5,000 locals.
Its bid also is critical to strengthening military cooperation
between the U.S. and India, said Abhay Paranjape, Lockheed's
director of business development in India.
"If you ever want to fight together, you need to train together,
and to do that you need to fly the same kind of aircraft," Mr.
Paranjape said. U.S. industry officials said per-unit costs could
drop by as much as 20% in India compared with the U.S., potentially
driving fresh sales outside India.
Still, it could take Lockheed roughly four years to transfer the
Fort Worth F-16 line, which is slated for closure soon when
remaining orders for the aging jet type tail off, industry
officials said.
A logistics-sharing treaty, signed last month, is the first of
three agreements the U.S. wants India to sign to allow for a
greater transfer of U.S. military technology, potentially
strengthening Lockheed and Boeing's bids to sell jets in India.
Boeing's India President Pratyush Kumar said it was aiming to
help India build F/A-18 fighters and develop jets in the long
term.
Saab's plan would have it build a second manufacturing plant in
Sweden for its Gripen E jet type, train Indian technicians there,
and then dismantle and ship the plant to India, said its Indian
country head Jan Widerström. Saab hopes to gain an advantage by
offering the blueprints for the Gripen's advanced radar system, Mr.
Widerström said.
Saab and its suppliers could help train 20,000 local technicians
in coming years if their bid is successful, and build anywhere from
100 to 200 jets for the Indian air force and export customers in
places such as Thailand and Malaysia, said Mr. Widerström.
"We're offering to set up aerospace capability in India for the
next 100 years," he said.
--Doug Cameron contributed to this article.
(END) Dow Jones Newswires
September 24, 2016 05:44 ET (09:44 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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