Budget Cuts, Offsets and Tech Transfer Are Hot Topics at Aero India

 - February 8, 2013, 11:00 AM
Indian Defence Minister A.K. Anthony had bad news for overseas defense contractors who flocked to the Aero India show in Bangalore: defense spending will be cut. (Photo: Neelam Mathews)

Defense contractors flocked to Bangalore for the Aero India show this week, even as the Indian government confirmed that the years of plenty might be over. Defense minister A.K. Anthony confirmed that his spending would be cut in the fiscal year that starts in April, although not on “operational preparedness.” Some $1.8 billion has already been stripped from the current-year budget of $38.6 billion; depreciation of the rupee is having a significant effect on acquisitions from abroad. As a result, major planned purchases are being deferred or even abandoned. Firm contracts for the medium multi-role combat aircraft (MMRCA) program, which India is negotiating with Team Rafale for 126 jets, may not be signed until the new fiscal year begins, although Indian air force chief ACM NAK Browne said this week that it was his “highest priority.” Other big choices that are not yet under contract include the two recent helicopter wins by Boeing, for 15 CH-47I Chinooks and 22 AH-64D Apaches; the six Airbus A330MRTTs; and the second batch of six Lockheed Martin C-130Js. The Reconnaissance and Surveillance Helicopter (RSH) requirement, for which the Eurocopter AS 550 Fennec and the Kamov Ka-226T are contenders for the supply of 197 units, may be scrapped.

Seminars during the show discussed offsets and whether India has sufficient defense industrial backbone for complex defense platforms manufactured under license. The government is producing a new defense procurement policy (DPP), but its publication has been delayed. It is expected to clarify the handling of post-contract implementation, valuation of offset credits and transfer of technology.

MMRCA offset and technology transfer negotiations continue. The new Samtel-Thales Avionics joint venture will be “the first electro-optic house in the country,” said executive director Puneet Kaura. By 2015, the company intends to supply the infrared search-and-track system as standard equipment for the Dassault Rafale fighter for the Indian Air Force. Meanwhile, the Thales-Bharat Electronics surface radar joint venture will be fully operational by March, Eric Lenseigne, Thales’s country head for India, told AIN.

Two joint ventures involving Tata also reported progress: one with Lockheed Martin supplies airframe parts for the C-130J as an offset for the Indian buy; the other with Sikorsky supplies cabins for the S-92 helicopter.

Contrary to recent speculation, Anthony confirmed that the troubled HAL HJT-36 intermediate jet trainer (IJT) would still go into production–by 2015. Russian officials attending the show said the aircraft’s NPO Saturn AL-55I engine is ready for production now.

Neelam Mathews and Vladimir Karnozov contributed to this story.