The US aerospace industry need not lose sleep over the socalled “missed opportunity” but rather get on with the task of pursuing many more lucrative opportunities that lie ahead

Undoubtedly, the elimination of the Boeing F/A 18 Super Hornet and the Lockheed Martin F16 IN Super Viper from the race for the $11 billion ( Rs. 49,500 crore) medium multirole combat aircraft (MMRCA) tender floated by the Ministry of Defence in 2007 must have come as a bit of a surprise not only to the US aerospace industry but also to the American public at large and to many in India as well.

Indo-US Strategic Partnership

The process of large-scale acquisition of defence equipment even when executed through an “open tender” system, supposedly on account of financial imperatives, is often known to be influenced by political and strategic considerations. With the disintegration of the Soviet Union and the emergence of unipolar world, there have been profound geopolitical and geo-strategic changes. No longer afflicted by the shadow of Cold War politics, it was only to be expected that India and the US, the leading democracies in the world, should come together, not necessarily to form an alliance but as natural and equal partners in the newly emerging world order pursuing common goals and objectives. Thus it was that the era of Indo-US strategic partnership began under the leadership of George W. Bush. Perhaps the greatest manifestation of the changing equations was the Indo-US Nuclear Deal that was pushed through aggressively by the US President against all opposition both at home and abroad. This sensitive agreement of historic prominence was in mutual economic and strategic interest of both the US and India and despite the involvement of international agencies, the speed as well as the ease with which the nuclear deal was finalised, was a clear testimony to the newly emerging relationship between India and the US besides a powerful message to the world.

Thus in an environment of the growing Indo-US strategic partnership, one would have been inclined to expect that if not the single engine Lockheed Martin F-16 IN Super Viper, the twin engine F/A-18 Super Hornet would surely be a front-runner in the race for the MMRCA contract. The fact that after four years of relentless effort, it turned out otherwise, would have been a cause of deep disappointment for the US aerospace industry. What is being viewed as a setback, rejection of the two combat aircraft in question would also have been a cause of considerable dismay for the US Government as the political leadership had provided full and explicit support. President Barack Obama himself had thrown his weight behind the American offer to further consolidate the Indo-US strategic relationship as well as to revive employment opportunities back home with attendant beneficial impact on the flailing US economy.

Missed Opportunity

While the failure to win the MMRCA contract may lead to considerable despondency and a great deal of introspection within the US aerospace industry and the government, an objective analysis would reveal that even though the value of the lost contract has been labelled as $10 billion ( Rs. 45,000 crore), with mandatory offset obligation pegged at a whopping 50 per cent amounting to $5 billion ( Rs. 22,500 crore) applicable specifically to this tender, direct benefit in real terms to the US aerospace industry and to the US economy would be substantially lower. Further, the MMRCA tender is yet a long way from finalisation and given the number of imponderables on the way, the time frame for its finalisation and the ultimate induction as well as operationalisation of the aircraft cannot be predicted with any degree of certainty. Given the complexities of technology transfer and offset obligations, both being unfamiliar territory for the Indian Ministry of Defence, the MMRCA is likely to be plagued by uncertainty for a long time to come. The US aerospace industry therefore need not lose sleep over the so-called “missed opportunity” but rather get on with the task of pursuing many more lucrative opportunities that lie ahead.

Procurements from the US

Although the US aerospace industry has been associated with India for over 70 years, the interaction was focused largely in the civil aerospace regime. The Indian military segment opened up to the US aerospace industry less than a decade ago. A catalogue of procurement of military aircraft from the US in the last few years would reveal that commencing at zero during the Cold War era, procurements have already reached a respectable level and the prospects of growth of business in the immediate and long-term for the US aerospace industry appear to be encouraging. In a deal with Boeing valued at $1 billion ( Rs. 4,500 crore), the Indian Air Force (IAF) purchased three customised Boeing business jets for VVIP travel. These are already operational for some time now with the Delhi (Palam)-based Air Headquarters Communication Squadron. The second major acquisition has been of six C-130J Super Hercules for $1.2 billion ( Rs. 5,400 crore). Delivery of the aircraft that are customised for special operations have already begun with the first aircraft which made its debut during Aero India 2011. Also, negotiations are in progress for the purchase of another six of the same type presumably for a similar price.

Meanwhile, orders have been placed in January 2009 for eight Boeing P-8I Poseidon long-range maritime patrol aircraft along with a host of weapon systems for the Indian Navy. This initial order is to be followed by another four and the total order is worth over $3 billion ( Rs. 13,500 crore). Delivery of the aircraft is scheduled to begin in 2013. A $900 million ( Rs. 4,050 crore) deal has already been concluded for the supply of 99 GE F414F engines for the Indian light combat aircraft (LCA) Tejas Mk II.