Saturday, 5 December 2009

French Defence Minister in Delhi: political push from Paris for upgrade of Mirage-2000


Broadsword learns that the deal is likely to be closed at about US $1.8 billion. Thales is bringing down the price by involving Indian industry


by Ajai Shukla
Business Standard, 05 Nov 09

French President, Nikolas Sarkozy, has thrown his weight behind the the Rs 10,000 crore bid by French company, Thales, to upgrade the Indian Air Force Mirage-2000 fighter fleet. Sarkozy’s defence minister, Hervé Morin, in New Delhi for a day, made his pitch this morning to Defence Minister AK Antony, telling him that President Sarkozy is keen on signing the deal when he visits India early next year.

Addressing a press conference after his meetings in South Block, Mr Morin revealed that he discussed outstanding procurement cases, including the Mirage-2000 upgrade, with his Indian counterpart. Morin said, “We are hoping that some of the procurement cases that are under way between India and France are finalised by the time Sarkozy visits.”

Through two years of negotiations, French aerospace major, Thales, and the IAF have been unable to agree on a price for outfitting India’s 51 Mirage-2000s with new radars, avionics, electronic warfare systems and onboard computers, which will make the aircraft battle worthy for another 15 years. From an initial offer of Rs 13,500 crores (US $2.9 billion), Thales came down to Rs 10,000 crores (US $2.1 billion). But even that is exorbitant; the IAF has let it be known that, instead of spending Rs 196 crores (US $41 million) on each Mirage-2000, it would prefer to buy brand new fighters.

That hard bargaining, it seems, is working. Thales is looking to reduce its price by using Indian suppliers for a significant share of work and components for the upgrade. The IAF now believes that a deal could be close. A top IAF official, who is close to the negotiations, told Business Standard on condition of anonymity, “Thales is climbing down from its high horse and we will meet them halfway. The French president has given his officials a diktat that the Mirage-2000 upgrade deal must be buttoned up this year.”

That urgency is fully endorsed by French officials. One highly placed French industrial source asks rhetorically, “If the upgrade deal is not finalised, what else is there for Sarkozy to sign in Delhi?”

So far, during negotiations, Thales has argued that if India insisted on a cheaper upgrade for the Mirage-2000 fleet, it should be prepared to upgrade fewer systems. If, for example, the IAF was willing to upgrade only the weapons systems, the cost would be considerably cheaper. But the IAF insisted on a full upgrade.

Now, with Thales looking to source from India, there could be rich pickings for Indian avionics manufacturers like Samtel Thales Avionics, the joint venture that NCR-based Samtel Display Systems has set up with Thales. Components developed in France by Thales, will be manufactured cheaply in Samtel Thales Avionics’ high-tech facility near Ghaziabad, allowing Thales to lower its bid significantly.

Puneet Kaura, Executive Director, Samtel Display Systems, confirmed to Business Standard that, “Samtel Thales Avionics is going to be a major partner in the Mirage-2000 upgrade. We have negotiated with Thales for doing a number of work packages in the upgrade. This will also benefit Thales in meeting the offset liabilities that will arise out of this deal.”

For IAF planners the participation of Indian companies, including Samtel Thales Avionics, is a welcome prospect since they would be able to maintain and repair the upgraded avionics in India. The Indian companies would also handle “obsolescence management”, which involves redesigning avionics cards that need upgrading.

Thales was already on track to build avionics systems in Samtel Thales Avionics for a variety of Indian aircraft. These include the technologically advanced TopSight-I, the Helmet Mounted Sight Display (HMD) that Indian Navy MiG-29K pilots will use while operating from aircraft carriers.

23 comments:

Apka bhanja said...

Scoop!

Anonymous said...

For a new single engine MRCA @ 45mn USD a piece, $1.8Bn can fetch 40 brand new a/cs. So what's the point with upgrading 25 yr old machinery?

Instead why not increase the scope of the MMRCA contract. Reduces the types in service too.

Anonymous said...

1.8 billion from an initial offer of 2.9 bil is a good bargain imo. They should seal it. Hopefully, we will also go for UAE Mirages once they buy Rafale. Overall, I think it should be a good deal.

Anonymous said...

To add few lines here for our friends about the rudimentary manufacturing site ,HAL/Nashik for these most sought after aircrafts of the world...
I and my friend ,both are engineer by profession, happened to visit HAL/ Nasik on a rainy day in July 2007 and we were allowed to have a glimse of manufacturing of this beautiful flying machine after lot of persuation. But to our horror and utter disbelief we found our local engineers and technicians were struggling to refit/retrofit parts in eleveted position with very vintage tools, gadgets ,manually with the help of drawings and diagrams at their hand like repairing trucks and buses in an Automobile garage/ factory and many of the buildings had seepage of water from roofs and poor state of affairs from old Russian instruments,panels, obsolete gadgets etc..... we felt the pain and stunned to come to a conclusion why our young and experienced pilots are increasingly losing aircrafts in accidents.... D J Saikia, Delhi.

Karupaswamy said...

No more burning of our tax money to Foreign Defense firms. Instead spend that money to buy a New LCA.

Anonymous said...

How long would it take to upgrade all the mirage 2000's in IAF service?

I am assuming that it would take a lot less time to upgrade the fighters than to get new equivalent number of fighters and that is the major reason for the IAF to go for the upgrade.

Spetsnaz101 said...

Ajai, could you please confirm with your sources if the upgrade deal is with the complete ToT - as it would have been if we were to go in for Mirage as the MMRCA?

That would probably justify the heavy pricing.

Anonymous said...

wtf ......why upgrade cost 45mil/plane, are the providing spectra with tot.it seems french president would go empty handed?

Anonymous said...

french are leach they are trying to cut the hen which lays golden egg. They sould remember that the cow shold be milked slowly

Anonymous said...

Is the Scorpion still a mirage?

http://news.rediff.com/report/2009/jul/26/cag-slams-scorpene-delay.htm

CAG - Defence Ministry gave "undue financial advantage" to French company.

>>
Renegotiate Scorpeone Deal before signing new deals.

AK said...

Now what's the point of this stupid deal when we are going for the MMRCA.

Anonymous said...

On a tangential note, it looks like the Chinese news agency Xinhua has upped the ante on questioning the legitimacy of the state of Kashmir within the India Republic. Here's a headline from Google today:

"India-controlled Kashmir gov't to review security of separatist leaders"

India controlled Kashmir Government?

It's about time the Indian media go on the offensive on Tibet; publicize the Indian view of the issue instead of accepting the status quo established by China.

Anonymous said...

Hi Ajai,
Mirage has been a great powerhouse for our IAF so far.. but spending $40 million in to this old ware house is it worthy??... Ajai ji please post your valuable comment for this?

Sajay said...

I completely agree with the anonymous post of 06 December 2009 00:41. Now with the Sukhois too starting to crash like the Mig-21s and our squadron levels reducing, we need to ensure quality rather than quantity.

Yes! it makes sense to spend the cost of a new fighter on upgrading the Mirage because it is still THE best multirole fighter we've got and we need to ensure that at least IT remains fighting fit till the MRCA winner starts filling the ranks.

To the fellow countrymen who are in awe of the 'MRCA' contract -- when do you think the winner of this contract will start entering the IAF? And what if we need to fight a war in the interrim? What are we going to fight our enemies with? the MRCA contract?!!

ArjunTankFan said...

शुक्लाजी, आख़िर कब बताएँगे हमें अर्जुन टैंक के विषय में ?

क्षमा करें परन्तु हमारे मन में अत्यन्त कौतूहल हो रहा है , इसीलिए बार बार आपको परेशान कर रहा हूँ |

Anonymous said...

We should go ahead with addition of brand new fighter rather then upgrading old mirages.Mirages should be phased out on time and new multi role fighters in large no. should come in to replace them.
We should go ahead with the upgradation with the cheapest option.Mirages were the best in the past,they are good now,but in future they will turn up to be mig-21's.If they were so good french would have retained them in their air force.The best thing is to upgrade them with the chepaest opetion and add additional 100 - 200 fighters in addition to MMRCA.

Anonymous said...

Trusting the French is not a good idea. For each a/c or naval boat they've sold us, they have sold an equivalent and more contemporary version to the mongrels across our border. The performance of the M2k is beyond reproach though, and considering that these are potent nuclear-delivery systems, the IAF would be rightly remiss in not upgrading. Talk about being stuck between a rock and a hard place!

I believe the linkages to the MMRCA will play a large role, 414s for the LCA, Rafaels for MMRCA, and of course the UAE Mirages recycled for our use. Do you think this combination will affect our capabilities as much as people have been claiming? I pray we do not select the SH because the supplier is hardly reliable, given their role in 71 and later.

Anonymous said...

Given the complexity of MMRCA contest, who knows when the first MMRCA aircraft will be inducted, and at which price ?

To Anon 9 Dec : any specific example ? Since the Agosta, which is a generation lower than Scorpene, I don't really see what they sold so high-tech ?

To Anon 8 Dec : I understood from previous readings that French AF will keep a mix of Mirage and Rafale for long and plans to upgrade its Mirage up to -5 ou -Mk2 standard or so.

NJS said...

i think 1.8 billion will be better than original asked one, but israel has offered very lesser than this amount i wonder why india is so eager only on french proposal or india can select Gripen which is almost in between 45 - 60 mn usd

India hardly needs land attack / navel ver of Longer range bombers like Tu22m3 backfire which china has already got TOT from russia to manufacture land and navel version , all the equipments will be made in china itself . Long range bombers are most important in case of war , but indian MoD is not realizing it .Tu22m3 can easily carry some brahmos , which can easily strike land and sea based targets .

Anonymous said...

@Anon 10 Dec.: How about the Marlin upgrade they offered Pak before asking India if they wanted access to the same?

Broadsword said...

The mathematics around here is not great, is it? The cost of upgradation comes to $35 million per aircraft.

NJS, Who the hell told you that Gripen is 45-60 million per piece? I must meet you! The bid is lying in a sealed envelope in the MoD, Antony himself doesn't know what Gripen has quoted, but you do. Fantastic.

"Now with the Sukhois too starting to crash like the Mig-21s and our squadron levels reducing..."

Wow! Two Su-30MKI crashes, and they're being equated with the MiG-21. Maybe we should be a little less hysterical??

Vijay said...

Ajai sir,

There is news of Israel upgrading the Mirages for 40% less than the French price:

Is it even possible to get this big a discount while getting the same quality of upgrade?

Anonymous said...

Hi Ajai,

There s news that the Israelis are willing to upgrade our fleet of Mirage fighters at 40% lower costs than what the French have offered. In fact today's report that appeared in the Telegraph also claims that the Israelis gave a presentation to IAF in that regard just recently.

What do you think? Should India go for the Israeli offer. Will there be some opposition from the French? Which package do you think will be technologically superior?