Fighter jet deal: 15,000 crore to be re-invested in defence, aviation industry

New Delhi: After years of speculation and dilly-dallying, the defence ministry on Friday finally cleared the global tender on India’s biggest defence deal — purchasing 126 medium multi-role combat aircraft at a whopping Rs 42,000 crore (approximately $ 10 billion).
The companies in competition are USA’s Lockheed Martin (F-16 Falcons) and Boeing (F/A-18 Super Hornet); Sweden’s Gripen (JAS-39); France’s Dassault Aviation (Rafale), Russia’s Mikoyan Design Bureau (MiG-35) and a European consortium comprising of companies from Germany, Spain, UK and Italy which manufacture Eurofighter Typhoon. While 18 fighters will be purchased in flyaway conditions, the remaining 108 will be manufactured at the Hindustan Aeronautics Ltd under licence.
Interestingly opening up a new course in the complex price negotiation process, DAC has approved 50 per cent offset for this mega deal. While the new defence procurement policy stipulates 30 per cent offset for all purchases worth more than Rs 300 crore, the 50 per cent offset clause has been put exclusively for this deal because of its massive size.
If the total deal is worth Rs 42,000 crore, approximately Rs 30,000 crore will be the cost of acquisition. In such a scenario, at least Rs 15,000 is likely to be re-invested in the country’s defence and aviation industry as offset.
30/06/07 Deccan Herald

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Categories: General Aviation Jun 2007, New Jun 2007