Tata Advanced Systems (TAS) in June signed an agreement with US aircraft major Lockheed Martin to produce F-16 fighter planes in India. TAS, a subsidiary of Tata Sons, already runs manufacturing partnerships with several global players, including Boeing, Airbus and Sikorsky. Tata has previous expertise in running airlines also.
Recent Rafale controversy seems to hinge around three things: price, propriety and workshare. On price, two questions arise: one, about a significant escalation in the final agreed price; two, about GoI’s claim that this final price saved the taxpayer quite some money. The process violation has been alleged on three issues: one, why the runner-up (L2), Eurofighter, was not played off against Rafale; two, why the entire initial contract was dropped abruptly; three, why Cabinet approval was not sought for the new deal, which involved no competition and reduced numbers.
Why Not Tata ? Why Not HAL? Why Reliance? Because the final negotiated contract is for offsets of industrial defence goods, not an agreement to co-produce planes, which is HAL’s only competence. The Defence Research and Development Organisation (DRDO) reportedly gets Rs 9,000 crore worth of offset work from Dassault, while Reliance is simply the biggest, not only, beneficiary of the remaining Rs 21,000 crore.
Tata and Bharat Forge are the only ones actually producing defence equipment currently, and it was Dassault’s prerogative to pick its industrial partner. But this still doesn’t answer the question of alleged cronyism. Would Dassault tying up with Reliance (Mukesh Ambani) in 2012.
India in 2016 agreed to buy 36 Rafale combat planes for around USD8.9 billion. Some of the major JVs formed for win a slice of the defence pie are:
1.Adani – Saab
Sweden’s Saab tied up with Adani Group to bid for defence deals in India, with a focus on manufacturing Gripen fighter jets in the country. Their plan in India are to building new fighters is very similar to doing high technology projects in energy sector.
Together with the Adani Group, Saab will bid to make about 100 single engine fighters for Indian Air Force (IAF), a contract worth USD 15 billion.
2.Reliance – Dassault
Large scale entry Reliance Group of Anil Ambani into defence sector was in 2015, when he took controlling stake in Pipavav Defence and Offshore Engineering Co, which made warships and energy exploration vessels. It was later renamed as Reliance Defence and Engineering. Since then, Reliance bought large land parcels to build an aerospace facility and signed more than half a dozen joint venture agreements with foreign companies, including the big one with Rafael Advanced Defence Systems of Israel.
Reliance Aerostructure’s incorporated a 51:49 joint venture with Dassault Aviation, with the aim of becoming a key player in executing the offset obligations arising out of the 7.87 billion euro deal for Rafel fighter jets. India and France signed a purchase agreement for supply of 36 Rafale fighter jets for 7.87 billion euros in September last year and the contract includes a 50 per cent offset obligation about Rs 30,000 crore, the largest ever offset contract in India.
Reliance Defence will also work with Russia’s state-run arms manufacturer Almaz-Antey on the entire range of air defence systems required for India.
3.Larsen & Toubro- MBDA
Engineering conglomerate L&T formed a joint venture (JV) with France’s MBDA to develop and supply missiles and missile systems to the Indian armed forces. MBDA is jointly held by Airbus Group, BAE Systems and Leonardo and has expertise in developing all kinds of missile systems.
Indian government deciding not to buy missile systems from overseas but source it domestically. They will develop and supply fifth-generation anti-tank guided missiles for coastal and high-speed target drones.
4.Tata Advanced Systems-Lockheed Martin
US aircraft major Lockheed Martin signed an agreement with Tata Advanced Systems (TAS) in June to produce F-16 fighter planes in India. The American giant has a plan to shift its Fort Worth, Texas plant to India to win billions of dollars worth of order from the Indian military. Tata also plan to export the F-16 from the Indian plant.
The multi-role F-16 has been in production since 1978, with Lockheed so far producing a total of 4,500 units of the aircraft of which 3,200 are currently in service across the world.
5.Mahindra – Airbus
Airbus Helicopters, last year, awarded a contract to Mahindra Aerostructures to make airframe parts for the AS565 MBe Panther helicopter. These parts will be produced at the Mahindra facility in Bengaluru. They will be shipped directly to the Airbus Helicopter production line in Marignane, France where they will be integrated with the rest of the airframe assembly and will form a critical part of the Panthers sold worldwide. The contract positioned Mahindra
Aerostructures as the first Indian company to receive a direct manufacturing contract from Airbus Helicopters as a Tier 1 supplier.