1) Fighter focus–further to this post,
an attempt to look ahead at The Diplomat:
India’s MMRCA Is Officially Dead. Now What?
The Indian government is going the domestic route to fulfill its MMRCA requirement. Will this work?
As my colleague Franz-Stefan Gady reported earlier, India’s request-for-proposal (RFP) for 126 medium multi-role combat aircraft has been, as was expected, formally withdrawn. Following Indian Prime Minister Narendra Modi’s announcement in Paris earlier this year that New Delhi would opt to purchase 36 Dassault Rafale fighters off-the-shelf, it was only a matter of time before we received confirmation from the Indian Defense Ministry of the MMRCA’s demise. The government-to-government deal left little hope that long-standing disastrous negotiation process between France’s Dassault Aviation and the Indian defense ministry would go on. As I commented at the time, the “mother of all defense deals,” as India’s MMRCA tender was known, was effectively dead.
What’s interesting at this juncture is what New Delhi plans to do to meet the Indian Air Force’s outstanding requirement for another 90 medium multi-role fighters. The Times of India reports that, in line with the Modi government’s “Make in India” initiative, the Indian government will revive a new RFP for 90 medium multi-role combat aircraft, effectively reanimating the procurement process but with Indian manufacturers in line.
This development is, again, not unsurprising for anyone that’s kept their eye on the MMRCA process with Dassault. One of the sticking points between the Indian government and the French firm was Dassault’s hesitation to let India’s Hindustan Aeronautics Limited (HAL) manufacture 108 of the 126 aircraft. Successive Indian governments, including the previous Congress-led government, saw an indigenous manufacturing component as crucial to any final MMRCA deal with Dassault. Modernizing and expanding India’s indigenous defense manufacturing base has long been an objective for Indian strategic planners. However, as critics noted after Modi’s announcement in Paris, the decision to go off-the-shelf rewarded Dassault’s intransigence on the indigenous manufacturing issue, awarding the firm a hefty contract with little benefit to India’s domestic manufacturing base.
The decision to opt for a 90-jet domestic MMRCA RFP is, in theory, a wise move by the Indian government. The 36-jet purchase from Dassault will help plug the IAF’s ongoing fighter shortfall, and the 90-jet RFP will lead to the kind of boon for the domestic Indian defense industry that the original MMRCA tender was supposed to produce—it’s a win-win. However, as with most Indian defense procurement projects, the catch is the implementation and the avoidance of delays [NO FLIPPING KIDDING–and the best of Indian luck!]…
Lots more on the MMRCA balls-up at Defense Industry Daily.
2) And defence procurement broadly–further to this post and “Comments”,
excerpts from another piece at DID:
The Evolving Landscape of Indian Defense Procurement
Some years back, global defense companies flocked to the Indian defense market in search of opportunities that could offset declining home budgets [see “Western Countries Lusting for Indian Defence Bucks“]. India’s attractiveness as a market was understandable: the country was embarked on an ambitious military modernization program to mitigate perceived threats from neighboring Pakistan and to compete with China in the maritime, air and land domains.
These initiatives ballooned military procurement accounts, which grew at an annual rate of 14% between 2005 and 2010. Yet contractors soon found themselves frustrated by opaque bureaucratic procurement processes, onerous domestic offset and work share requirements, and seemingly endless delays. With the emergence of a new government, what’s ahead for India?…
Ultimately, the real question in India is the extent of true domestic competition for defense funding. Will the new government open the market sufficiently to allow the private sector to compete and win, resulting in greater non-public sector investment in R&D and production capabilities? The circumstances seem favorable: this government is more committed to competition, has a more instinctive understanding of for-profit industry, and harbors greater awareness of the severe capacity constraints of the traditional public sector undertakings.
It is through this prism that global industry should consider its opportunities. The desire for more indigenous development and production will continue in an avowedly nationalist government. Nevertheless, global defense firms may be able to develop deeper and more fruitful partnerships with emerging private sector defense firms in India, perhaps even leading to greater exports of Indian content – much praised, but rarely experienced to date.
While higher FDI limits, greater flexibility in domestic industrial partnerships, and recent Western successes in exporting to India’s defense market are legitimate causes for optimism for foreign suppliers, aspects of India’s procurement process are likely to shed their bureaucratic and centrally-controlled past very slowly. India’s modernization ambitions are likely to continue drawing attention from Western contractors, but success in India will remain a longer-term proposition than the conventional wisdom of years past [not at this blog] had suggested.
Quite. Slowly, slowly to catch the tiger.