Aero India 2017: Govt sets terms for fighter jet deals

Defence minister Manohar Parrikar says whoever bags the next big fighter jet deal will have to set up a defence manufacturing facility in India


Manohar Parrikar at the Aero India air show in Bengaluru. Lockheed Martin is said to be reviewing clearances taken to make F-16 fighter jets in India. Photo: Hemant Mishra/Mint
Manohar Parrikar at the Aero India air show in Bengaluru. Lockheed Martin is said to be reviewing clearances taken to make F-16 fighter jets in India. Photo: Hemant Mishra/Mint

Bengaluru: Whoever bags the next big fighter jet deal will have to set up a facility in India and produce those planes under the proposed strategic partnership model—with no exceptions granted, defence minister Manohar Parrikar said on Tuesday.

He was responding to a question on recent reports that US-plane maker Lockheed Martin is reviewing the clearances taken to make F-16 fighter jets under the Obama administration following the inauguration of the Trump presidency.

Trump administration taking a fresh look at F-16 sale to India, says Lockheed

Under its planned strategic partnership model, India will select private Indian firms to exclusively manufacture military equipment for a specified period.

The Indian partner for a multi-billion-dollar single-engine fighter jet deal will be identified through a model prescribed by a government committee, while the foreign partner will be chosen on criteria such as transfer of technology and the financial proposal made by the Original Equipment Manufacturer (OEM).

The two leading OEMs for the 200-plane tender are Saab of Sweden and Lockheed Martin.

Parrikar said it’s for Lockheed to sort the matter with the Union government as India will not provide any exceptions.

“This question you have to put to Boeing, Lockheed,” Parrikar told reporters on the sidelines of the 11th Aero India show in Bengaluru.

“What I am saying is what I want—I want it to be Made in India. Export to third nation is an additional bonus (and) if someone wants to shift the facility from somewhere else or whether he sets up a new one—it is his choice. I am in no way concerned with it.

Aircraft manufacturers eye the next big deal for single-engine fighter jets

“And if there is a restriction on some movement—as far as a I am concerned as of now there is no such issue, no one has written to me, I only read it in the media—it is for that company to take care. Because whenever I am going to go for a strategic partner, the condition of OEM is their government’s approval for whatever they are proposing. If they are proposing, their government will have to give them in-principle approval so that they can quote (their offer). Otherwise they can’t quote.”

With no more orders for the F-16 from the Pentagon, Lockheed had planned to use its Fort Worth, Texas plant to produce the fifth generation F-35 Joint Strike Fighter that the US Air Force is transitioning to. Lockheed would then switch F-16 production to India, as long as the Union government agrees to order hundreds of the planes.

“We’ve briefed the administration on the current proposal, which was supported by the Obama administration as part of a broader cooperative dialogue with the government of India,” a Lockheed spokesman was cited as saying by Reuters earlier this month.

Saab pitches modern combat jet plant to India in race with Lockheed

“We understand that the Trump administration will want to take a fresh look at some of these programmes, and we stand prepared to support that effort to ensure that any deal of this importance is properly aligned with US policy priorities.”

Saab has heavily advertised its jet at the air show, saying it will create a world-class facility in India to make Gripen fighter jets.

Parrikar said aerospace firms are multinationals and they could have other ways of bidding for the contract.

“These companies are multinational in all regards as they may have a plant in Europe, they may have a plant in some other part of the world. They can quote from any of these areas. So it’s not my concern and I don’t worry about it much because I think the interpretation (is taken) wrongly (about President Donald Trump’s remarks on US manufacturing as far as F16s are concerned). Let things be more clear. Basically my requirement is the government has to agree to it, whichever government,” he said.

This first of its kind strategic partnership model will be finalized soon, Parrikar said.

“We are very close to the end. There are finer points that I want to address before I sign it. But very soon it will come out,” Parrikar added. The model was expected to be in-place by January.

Parrikar and his US counterpart defence secretary James Mattis had a telephone call last week and vowed to expand US-India cooperation, according to the defence ministry.

“The defence minister and secretary Mattis expressed satisfaction at the progress in defence cooperation between India and the US, especially in recent years, and noted its significance in the regional and global context. They emphasized the special significance and high priority placed by both countries to the relationship, and resolved to work together to further consolidate and expand this partnership in the future,” the defence ministry said in a statement this month

The US too mentioned the call in its own briefing.

“Secretary Mattis and minister Parrikar affirmed their commitment to sustain the momentum on key bilateral defence efforts to include the Defence Technology and Trade Initiative,” Pentagon press secretary Jeff Davis said.

While US-India defence trade has grown from $300 million to approximately $15 billion in a decade, Parrikar also said a project to develop fifth-generation fighter jets with Russia is on track.

“Some issues need to be addressed in terms of manufacturing after completing the project—how it will be exported? What will be the approvals? What will be the mechanism? We have already put up a small team to go into this issue. Once they come out (with their report) we will finalize it. Everything otherwise is in advance stage.”

Parrikar also said he welcomed the “calm” exercised by the Pakistani Army over the past few months but added India won’t lower its guard.

“Keeping calm does not mean you should not be prepared. But I welcome if Gen Bajwa (Pakistan Army chief) has managed to keep his forces understand neighbour’s concern. It’s good. We wish we have a good relationship with China and Pakistan both. There is no reason why should we (be) quarrelling or fighting with them or consider them with doubt. If he has kept calm I welcome it as genuine concern but at the same time that does not mean I will not be prepared. So don’t worry. My preparedness is an independent exercise which is not an offensive exercise; it is for my defence, so no one needs to worry about what I do,” Parrikar said in response to a question on the relative calm shown by Pakistan in the past few months.

On concerns over the Chines military’s activities coming close to the India border, Parrikar was restrained in his response, saying: “If any security interest of India is put into some sort of a question mark by anyone we will take adequate steps to protect it.”

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