Monday, 3 August 2009

Facing order cuts at home, Eurofighter sweetens India offer


(Photos: courtesy Kuldip Gangwani)

Flight displays by the Eurofighter Typhoon during Aero India 2009)




by Ajai Shukla
Business Standard, 3rd Aug 09



With the four-nation Eurofighter consortium facing the uncomfortable reality of dwindling orders at home, India’s tender for 126 medium fighters, worth some $11 billion, is now crucial. So Eurofighter has reworked some of its most fundamental tenets and structures, to appear more appearling to India.

Next Friday, Eurofighter boss, Bernhard Gerwert, will fly into Delhi to offer a new sweetener to the Ministry of Defence: if India chooses the Eurofighter, it can become a full-fledged manufacturing partner, the first “outsider” to crack a tightly-interwoven four-country manufacturing chain.

The consortium that developed the Eurofighter --- comprising the UK, Germany, Italy and Spain --- had decided upon a unique manufacturing structure. Each part of the Eurofighter is manufactured in a different country; e.g. the right wing is made in Spain, the left wing in Italy. After that, all four partners assemble their own aircraft, bringing the parts together from the plants where they are manufactured.

This EU-style compromise distributed manufacturing jobs (100,000 jobs in 400 companies) amongst the four partners, while creating a mutual dependency.

If India becomes the fifth Eurofighter partner, it will manufacture complete assemblies --- say, as a random example, the front fuselage and tail fins --- for every new Eurofighter across the world. That will include fighters for the air forces of the UK, Germany, Spain, Italy, Austria and Saudi Arabia. In addition, Switzerland, Japan, Romania, Greece and Turkey, which are currently evaluating the Eurofighter, could also be on that list.

Kicking off its India campaign in early 2008, Eurofighter had suggested that India could play a major role in the programme, even using the word, “partnership”. But that was never elaborated; only now will India unambiguously be offered a share of the manufacture. All four European partners have agreed to forego a part of their work share to bring India in.

An order like India’s is badly needed. Earlier this year, a budget-strapped British MoD tried to pull out of buying its contracted share of 88 fighters from the latest batch (called Tranche 3). Eventually the UK honoured its commitments only because default would have cost London billions of Euros in penalties. The other Eurofighter partners are equally cash-strapped; all have jointly agreed to cut back on their orders for now.

In contrast to the gloom in Europe, the future in India looks rosy. EADS --- Eurofighter’s major shareholder --- has enjoyed notable success in penetrating the Indian market. Early this year, EADS signed a US $20 million contract to help resolve persistent niggles in India’s Light Combat Aircraft (LCA) programme. US companies, Boeing and Lockheed Martin were ruled out of that bid by Washington’s unwillingness to grant permissions (called Technical Assistance Agreements). EADS points to the LCA consultancy as a major victory that highlighted the comparative ease of doing high-tech business with Europe.

Buoyed by the LCA consultancy, EADS is now focusing on the US $600 million tender --- floated by the MoD on 17th July --- for supplying 99 fighter engines for India’s single-engine LCA. Eurojet, an EADS subsidiary, has offered EJ200 engines, which power the twin-engine Eurofighter. The rival engine is the General Electric GE-414, which powers Eurofighter’s big rival, the twin-engine Boeing F/A-18. Getting the engine selected, both rivals believe, is a sure path towards getting the fighter selected as well.

22 comments:

Rafale said...

Hi Ajai,

Thanks for the article.I read somewhere that Eurofighter was designed initially as an air superiority fighter & then was modified for the Air to Ground role too.It is also a little too expensive for a 4.5 generation aircraft.Hope the airforce will make a wise choice

Anonymous said...

this deal will not be the same as indigenous manufacture right?
Previous indigenous license productions also have used some if not lot of imported components, but this will be stretching that to a limit. with the actual order being close to 200 (126+options) that would be a bad deal for India, unless we get Ej200 tech.

Anonymous said...

this is nothing beyond an offset. stop being swayed by these things ajai. companies will obviously have to do such things if they want the contract. there is nothing sweet about it. eurofighter has no choice but to do this. and incidentally, the "sweetener" you mention is something that was already conveyed to EADS as an offset option.

Akshay said...

hi ajai,
I fail to understand why offers such as these should take the focus away from the real deal, which is the performance of the aircraft. The Russian offers are way better than the Eurofighter.
That said, are we capable of producing aircraft parts of the quality required by EADS ? I am a proud Indian but doubt our capabilities in this area.

Broadsword said...

Anonymous 13:32, you clearly don't grasp the writing form called irony. Look it up in some language dictionary, or ask someone who reads something other than blogs.

Do try reading news as simple statements of facts... not as insidious attempts to validate/invalidate your own opinions.

And Akshay, I appreciate your deep love for Russian aircraft, you probably have far more experience in contracting for, flying, and maintaining them than I do... but just how does an offer by Eurofighter, howsoever unattractive, "take the focus away from the real deal"? Do try and consider the possibility that --- unlike the kind of people you are apparently used to --- our MoD procurement officials can focus on more than one thing at the same time.

Adux said...

Col.Shukla,

How is this different from local manufacturing?
Does this mean we have access to Technology at a greater and cheaper level?
Will this bring down the price of EF?


Anyways, Thanks for the article, quite informative. Waiting for your book.

Adu

Daanish said...

I think this is a fine option for the Indian air force this allows us access to technology that would have otherwise been denied to us, this also allows us to explore the middle option between Old allies Russia and upcoming allies america. MInd you the engine of this airctaft just might power the tejas giving us the capability to have parts commonality reducing overall cost and significantly simplifying our spares and repairs situation. I myself am a avid lover of Russian aircraft but this clearly is the best and most advanced option of the entire field offered.

fighterclass said...

ajai, I guess this is parts manufacturing is over and above what we will do for our own aircraft as license manufacturing is already a part of that ?

does this new offer mean anything more than some orders for HAL ?

fighterclass said...

please ignore the first *is* and read as "this parts manufacturing"......

Ajai said...

When you become a full-fledged partner, you will also have design responsibility. Those who have followed the Eurofighter programme would know that it was a three-phased programme: In Tranche 1, the fighter was built incorporating primarily Air Defence capability. In Tranch 2, Ground Attack capability was added on. And that will be further enhanced in Tranche 3 aircraft, for which they are having such a problem getting their partners to shuck up money.

Some lessons here for India on how to progressively enhance capabilities in a development programme. In our case, we want the LCA to do everything before it is inducted into service!

Anonymous said...

Of all MRCA I feel F-18 superhornet will be good choice as it shares engine with LCA. Also after P8-I deal India will be biggest partner for Boeing with two products! Whats your opinion Ajai?

Manjunath

fighterclass said...

ajai, I have followed the EF saga and I agree that we should have done the same with LCA. by this time we should have had a sqdn of AD LCA's flying in the IAF.

but I digress, is there anything left to design in the EF for India to do this late in the project ?

or did you mean future upgrades only ?

anil said...

sir,
please your column to highlight the fact that we still have only low class DMS shoes, no provision in the Individual Combat Kits(ICK) for water bottles, and a million different shades of combat uniforms. MRCAs and ARIHANTS are welcome, but the basics first.............

Anonymous said...

ajai you have lost it. this simply proves how gullible you are. the eurofighter is way past the scope of any design partnership. let's be very clear about that. and by calling their offer a "sweetener" they've obviously been able to convince you that their offer is somehow an act of generosity, when it is anything but. they haven't "sweetened" the deal by any stretch of imagination. this is plan and simply an offset that they are making explicit. we read your blog for your understanding of those finer things that "people like us" usually leave to south block mandarins, so please don't bite the dust and buy the spiel being schlepped out by arms companies. i have nothing against arms companies per se, but to disguise what is a bread and butter offset as somehow an unprecedented, philanthropic incentive is to let a glimmer of light land on your naivete. and that just won't do for a journalist of your stature. letting Eurofighter wine and dine you is one thing. just dont let the wine fuzz your understanding.

Ju² said...

Hi Ajai,
Thanks for the article. If my memory is good, EADS already made this proposition a few months ago in the medias. I do not really understand it... According to the RfP, only 18 aircraft will be done by the winner, the other 108 to be produced in India. So India will become a manufacturing partner 'de facto'. That's a point. And now, EADS CEO come here to say: "Hi guys, I love you so I decided to let you become a true manufacturing partner... even if my consortium will have already produced all the batches of Eurofighters ordered by Europe and Saudi Arabia when you will sign a deal with my company".

The Eurofighter is surely a good plane, but very expensive. More than the others. I wonder how 126 aircraft could be bought with "only" $10 billion.
Personally, for the first shortlist that will be done on technical criterias, I bet on F-18 and Rafale. I there is a third place, I hesitate between EF and F-16IN.
But wait & see!! One of the most exciting test campaign in the world is to begin!

Anonymous said...

IMHO, we should be punishing the EU for selling all those subs to Pak... I hear France and Germany are lining up to sell Pak more Scorpenes, U-214, whatever. Furthermore, EU governments are sheltering all the criminals that got cutbacks from all the arms deals. Punish them, I say.

AK said...

LoL!

This is a good read. Right wing in UK left wing in Germany, nuts in Spain finally India gets Screwed.

Anonymous said...

Ajai, some good news. The second destroyer of the Kolkata class is getting launched next month.

http://mazagondock.gov.in/ots_july09/8000000016/rfq.&Part.A.pdf

the terminator said...

Indians have an uncanny knack of splitting hairs in even the most obvious statements. Their delusionary mindset is even more apparent when a plane of their liking might, in their reckoning, be shelved in place of one that they do not root for.

India is quite advanced in the design, fabrication of aircraft frames, avionics and other related areas except for AESA radar and a viable aeroengine.

Since we lack the advanced state-of-the-art knowhow in radar and combat aircraft engines, wouldn't it be prudent to take on the offer of any proven company that has both.

My 1st choice would be the F-18 Super Hornet if not for the fact that the US still regards the Pakis as better friends than India even after their nuclear proliferation and being the epi-centre for terrorism. The US has not taken any concrete action against Pakistan for nuclear proliferation and the numerous vile attacks of terrorism in India.On the other hand the US has ostrcised India many a time, even to the extent of denying technical assistance as that could be used for dual use.

There is no guarantee that the US would not stop India using the hardware bought from it against Pakistan. They might even sell us items with embedded bugs that might be useless in a fight.

What is more worrying is the fact that the US gladly gives freebies to Pakistan in the form of military assistance worth US15 billions. Most of the military assistance so far has not been used against the Talibans but in preparation for future wars with India. Under this scenario, it may not be prudent to invest billions of our money in US fighter planes.

I would like the French Rafale in IAF colours but the French do not seem to be interested to do real business with India even though the plane is not cheap. The French too are holding back on TOT for the Scorpeone submarines. We have to be very vary of offers from the French.

No point in talking about the Migs. We have enough of Russian made military hardware. In fact we are being arm-twisted because we had been too crass in judgement and too naive in believing they are our all weather friends. We are paying for such bad judgements for the Gorshkov, T-90s and some battleships.

If what the EADS has to offer is good and practical in terms of a joint venture, then by all means it should be looked into.

Whether such JVs would get us screwed is left to the MOD technocrats to exercise due diligence when such agreements are drawn up.

When we get taken for a ride because of sloppiness on our part, let us not chastise them as cheats. We stand to be blamed for being gullible fools.

Nitin said...

I would still contend that the Typhoon would be the best choice. They would form the backbone of our air assault combined with Sukhois (and later PAKFA) forming tip of our air power spear and with Tejas (Is it our lack of imagination to come up with such a name!!!) acting like a point interceptor and ground support roles.

This will fulfill all three roles for InAF.

This will allow us to eventually phase out the Mig 27s, Mig 23s and Mig 29s.

Jaguars can still be kept as a maritime strike aircraft.

Plus, the Typhoon will not come with a gazillion strings attached to it in terms of its end use.

I just hope the MOD makes a wise choice and see these beauties draped with the Indian Flag!!!!

WillWorkForFood said...

Ajai,
How much pressure does the PAKFA put on the IAF? Would the IAF be tempted to go for the Mig just because they might fear that the Russians would stop any collaboration on the PAKFA?

Rituraj Gupta said...

Wow,thats a sweet offer,like very tempting!this will also in a defaul way add india to the list of develepors of the next eurofighter!