New Delhi: The Union government will announce this week that the administration would prefer to deal with France for a contract worth up to €1.5 billion (Rs8,685 crore) to upgrade Mirage fighters, an official from French defence firm Thales Group said on Wednesday.
The announcement of a forthcoming request, for a proposal reserved for the French, is scheduled to coincide with a state visit to New Delhi by President Nicolas Sarkozy, said Francois Dupont, Thales’ director in India.
The initiative is expected to be a major boost for Paris’ efforts to remain a primary player in the burgeoning Indian defence market, following serious problems with other contracts in recent months.
Pricey bid: A Mirage 2000 fighter aircraft of the Indian Air Force. Defence officials say a €1.5 billion French proposal to upgrade the Mirage fleet is too expensive at about $40 million a plane.
“We are expecting an announcement from India on Friday that they will soon launch a tender reserved for French companies,” Dupont said.
The Indian Air Force has about 50 Mirage 2000 war planes, which are made by Dassault Aviation with electronics from Thales, that are in need of an upgrade.
A consortium including Thales and Dassault has been facing stiff competition from Israel for the upgrade contract.
Sarkozy also is scheduled to watch the Republic Day parade in New Delhi on Saturday and hold talks with President Pratibha Patil and Prime Minister Manmohan Singh. Experts in India say Sarkozy will use those meetings to mend diplomatic fences.
France, which had been the second largest major arms supplier to India after Russia, with sales touching nearly €4 billion in 2005, has now been overtaken by Israel.
New Delhi, which is the biggest weapons buyer among emerging nations and is expected to spend $30 billion (Rs1.19 trillion) between 2007 and 2012, has not yet accepted France’s €1.5 billion offer to upgrade the air force’s fleet of Mirage 2000 fighter aircraft.
Indian defence officials say the cost, at about $40 million a plane, is too expensive.
Incidentally, the French lost out to the British on a 2004 contract worth $1.4 billion to supply 66 trainer jets to India.
“But what really has miffed France is the scrapping of the helicopter deal,” said Kapil Kak, director of the Centre for Air Power Studies, a private think tank.
Last month, India cancelled a $600 million deal to buy 197 military helicopters from the Eurocopter Group, a unit of European Aeronautic Defence and Space Co.
The defence ministry has not publicly said why the deal was pulled, but senior defence officials familiar with the matter have alleged that Eurocopter used a local go-between, despite an Indian ban on the use of middlemen in such deals. The signing of the deal was supposed to have been one of the highlights of Sarkozy’s visit. Instead, he is likely to push Eurocopter’s case ahead of a fresh tender process that will give US firm Bell Helicopter Textron Inc., another stab at the contract.
India’s decision in 2006 to buy six Franco-Spanish Scorpene submarines worth $3 billion has also run into choppy waters. Last month, an Indian court ordered police to complete a probe into allegations that $100 million were paid in bribes.
France also is in a race with US and Russian rivals to grab a multi-billion-dollar contract to sell 126 fighter jets to India, but is seen as lagging behind, with its Rafale fighter considered to be too pricey.
With the tender process expected to take years, French defence giant Dassault made an unsolicited offer last year to sell India 40 Rafale aircraft, but did not get a response, according to a company spokesman.
“The Indian market is difficult, not just for France but for everybody,” said a person familiar with the European defence industry, who did not wish to be identified. He said Sarkozy’s visit would determine whether France is “to boost, or not, its business in the next five years”.
Kak said although there were “ominous signs” for the defence contract relationship, he predicted the two sides would “find solutions” during Sarkozy’s visit.
Retired Indian Air Force chief N.K. Sareen said India could not afford to shut France out totally.
“India must keep all its options open...as interdependence is the punchline of the 21st century,” Sareen said. “We must also keep in mind they stood by us in 1998,” Sareen added, referring to France’s refusal to back US-led sanctions after India carried out a series of nuclear weapons tests a decade ago.