The Indian Air Force (IAF) on Tuesday floated a global tender for 126 combat jets worth $10 billion in the country's biggest ever defence deal, but it could be six years before the first planes start arriving.
Eighteen of the medium multi-role combat aircraft (MMRCA) will be purchased in flyaway condition and the remaining 108 manufactured in the country under a transfer of technology (TOT) agreement with the chosen supplier. The aircraft are envisaged to have a lifecycle of 40 years from the time of delivery.
The 211-page request for proposal (RFP) has been sent to the manufacturers of six aircraft: the US F-16 and F-18 Super Hornet, the Swedish Gripen, the French Rafale, the Russian MiG-35 and a European consortium's Eurofighter.
India's Defence Acquisition Council (DAC) had cleared the RFP at a meeting here June 29 chaired by Defence Minister A.K. Antony.
The six companies, which have been given six months to respond, will also be asked to sign a confidentiality clause against revealing the contents of the RFP to a third party.
The RFP will also contain an offsets clause under which 50 percent of the money paid to the chosen vendor will have to be reinvested in India's defence manufacturing sector.
The offsets clause that was introduced in the Defence Procurement Procedure-2006 (DPP-2006) mandates that 30 percent of the cost of military purchases exceeding Rs.3 billion has to be reinvested in the country.
"The DAC had decided that the offsets in this case would be 50 percent," Defence Ministry spokesman Sitanshu Kar told reporters.
The IAF desperately needs new aircraft to replace its ageing fleet of Soviet-era MiG-21 fighters that make up 21 squadrons of its 30-squadron fleet of combat aircraft.
While the RFP relates to 126 aircraft, the number could go up by 70-80 to make up for the aircraft that will be phased out in the period before the new jets start arriving.
The RFP also contains a selection model that would involve an exhaustive evaluation process as detailed in the DPP-2006.
Explaining the process, Kar said a professional team would conduct a technical evaluation of the proposals received to check for compliance with the IAF's operational requirements and other RFP conditions.
Following this, extensive field trials would be carried out to evaluate the performance of the different aircraft. Finally, the commercial proposal of the vendors short-listed after technical and field evaluations would be examined and compared.
The defence ministry's Contract Negotiation Committee (CNC) would then hold discussions with the vendors before identifying the manufacturer who would be awarded the IAF order.
The CNC would submit its report to the defence minister, who would forward it to the finance minister. After the file returns to the defence ministry, it would go for final approval to the cabinet committee on security (CCS). This process would take some two-and-a-half years.
After the contract is signed with the chosen manufacturer, it would take another two-and-a-half years before the first aircraft start arriving.
"Since the aircraft are likely to be in service for over 40 years, the vendors have to provide lifetime support and performance based warranty for them," Kar pointed out.
According to him, defence ministry officials "have confirmed that great care has been taken to ensure that only determinable factors that do not lend themselves to any subjectivity are included in the commercial selection model.
"It is expected that the technology transfer and offset clauses would provide a great technological and economic boost to the indigenous defence industries in the public sector," Kar stated.
The floating of the tender is the culmination of a process that began in 2001 when the IAF sent out its request for information (RFI) for 126 jets.
During this period, the IAF has witnessed an alarming dip in its fighter squadron levels from a sanctioned strength of 391/2 to 30.