Dassault wins $20bn Indian fighter jet contract - FT.com
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Dassault wins $20bn Indian fighter jet contract - FT.com
India has chosen Frances Dassault Rafale as the preferred bidder in a hotly contested competition worth as much as $20bn to supply the Indian air force with advanced combat aircraft.
The French aircraft has beaten the Eurofighter Typhoon in a bid to equip India with 126 multi-role fighter jets in one of the worlds largest military contracts.
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Dassault wins $20bn Indian fighter jet contract - FT.com
The winning bid is expected to shape Indias air power for the next three decades and serve as the bedrock of a strategic partnership. It also has the potential to reshape the European defence industry at a time when companies are suffering from cutbacks in their traditional developed markets.
The news is a big boost for Dassault and for Nicolas Sarkozy, Frances president, who faces an election this May and is a close ally of the Dassault group of companies, which also owns the pro-government Le Figaro newspaper.
Shares in Dassault Aviation, maker of the Rafale, rose almost 20 per cent in Paris. If finalised, the deal would be the Rafales first export success, which until now has been bought only by the French military.
The Indian government briefed European governments on Tuesday about its decision to advance negotiations exclusively with Paris-based Dassault in preference to the Eurofighter.
The decision came after an evaluation of the lifecycle cost of the aircraft, the acquisition cost and military offset consideration. The offsets include the amount of technology that European companies will disclose to India and the share of investment they will bring to Indias defence industries if they are chosen.
A source at the British High Commission in New Delhi said Indias foreign ministry had told governments that it had reached its decision on the basis of cost and that it was no reflection on bilateral partnerships. The rival aerospace companies were informed earlier in the day of the outcome.
We are disappointed, but its not all over until the contract is signed. We dont yet know the final decision, a UK diplomat said.
Indias Ministry of Defence confirmed that Dassault was the preferred bidder saying that the final contract would be awarded in the financial year beginning April 2012. It said the cost of the contract would be between $15bn to $20bn and that the Rafale was the cheaper of the rival bids.
Rafale is the most competent contender, said a person close to the negotiations at Indias MoD.
After trials last year, India had selected the Rafale and the multinational Eurofighter Typhoon to compete in the final stages of the competition. It had discarded bids from Boeings F/A-18 Super Hornet, Lockheeds F-16 Super Viper, Swedens Saab Gripen and Russias MiG-35.
We have won the contract but there are still a number of things to finalise, said Pierre Lellouche, the French trade minister. We are in a phase of exclusive negotiation.
According to Indian officials, the Rafale was selected because it was preferred by the countrys air force and was cheaper than the Eurofighter Typhoon, which is built by a consortium of the pan-European EADS, BAE Systems of the UK and Finmeccanica of Italy.
The seal of approval for French industry is also welcome for Mr Sarkozy, who is lagging well behind his socialist rival in the polls for the forthcoming presidential election. A large part of the election campaign will be fought around the issue of support for jobs and French industry.
The negotiation of the contract is going to be carried out with the close support of the French authorities. It will include the transfer of important technology guaranteed by the French state, Mr Sarkozy said on Tuesday. The conclusion of the Rafale project will illustrate the depth and scope of the strategic partnership between France and India.
The decision will be a setback to Eurofighter which had strongly lobbied India to buy its aircraft and considered its bid stronger in terms of performance, security of supply and strategic alignment. It is also a blow for David Cameron, the UK prime minister, and Angela Merkel, the German chancellor, who both lobbied on behalf of Eurofighter.
The Eurofighter consortium is building the Typhoon for its four main customers: the UK, Germany, Spain and Italy. While Austria and Saudi Arabia also operate the jet, there are at present no other firm export orders for the Typhoon. While Eurofighter had promoted the jet in Malaysia, South Korea and Japan, the Indian contract was its most promising.
Uday Bhaskar, an Indian defence analyst, said the decision would have a strong bearing on bilateral relations.