India opens combat plane tender bids; cost to go up

November 4th, 2011 - 10:06 pm ICT by IANS  

F-16 New Delhi, Nov 4 (IANS) India Friday opened the commercial bids of two competing aviation firms for one of its largest defence deals to equip its air force with 126 medium multi-role combat aircraft, originally estimated to cost $10.4 billion. But suspense continues on who will be the winner in the keenly fought contest: Eurofighter Typhoon or Rafale.

But one factor that emerged from the two-hour bid-opening at South Block, the seat of the defence ministry, was that the four-year-long winding tendering had resulted in cost escalation, with officials indicating that the government may “significantly increase” the budgetary provisions for the planes.

In August 2007, when the tender was issued by India, the government had pegged the “acceptance of necessity” figures for the 126 MMRCA (medium multi-role combat aircraft) at Rs.42,000 crore. But since then the cost of the planes have increased while the Indian Rupee has weakened against $.

“The commercial bids were opened today to kickstart the process for selecting the lowest bidder, in the presence of the defence ministry’s cost negotiation committee members and representatives of the vendors,” defence ministry spokesperson Sitanshu Kar said.

The fight is between European consortium EADS Cassidian (Eurofighter Typhoon) and France’s Dassault Aviation (Rafale).

But the outright winner of the contract, said to be one of the largest in the Indian context, was not known immediately as Indian defence ministry and Indian Air Force will burn the midnight oil over the next six to eight weeks to figure out the lowest bidder.

Neither the defence ministry nor the vendors will reveal their own or the competitor’s offer in view of a confidentiality clause not to do so, officials said.

The bids of the European consortium from Germany, Britain, Italy, Spain and EADS Cassidian as also Dassault Aviation will be perused by the Indian officials to figure out the fly-away cost, life cycle cost, technology transfer cost and the offset offers before the winner of the contract will be known.

The offset clause in the tender, included under the Defence Procurement Procedure (DPP) of 2006, requires the winner of the tender to reinvest 50 percent of the deal amount in the Indian defence industry in an effort to energize it.

India had in April down-selected the Eurofighter Typhoon and the Rafale and asked the manufacturers to extend their commercial bids, that were on the point of expiring, till the middle of December.

The down-select had resulted in the rejection of four other contending aircraft — the Lockheed Martin F-16, the Boeing F/A-18, Russian United Aircraft Corp’s MiG-35 and Swedish SAAB’s Gripen.

–Indo-Asian news Service

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