India spurns US for fighter jet order-UPDATE 4
India spurns US for fighter jet order-UPDATE 4 18:53 Hours ago
NEW DELHI, April 28 (Reuters) - India rejected U.S. bids for an $11 billion fighter contract and shortlisted two European firms on Thursday in a move that could delay a promised overhaul of relations with Washington while broadening strategic ties.
The rejection came despite lobbying from President Barack Obama and coincided with the unexpected resignation of the U.S. ambassador to India.
Defence sources said the Indian defence ministry had reduced a field of six aircraft to two -- the Eurofighter made by Britain, Germany, Italy and Spain and the French Rafale.
Lockheed Martin's F-16 and Boeing's F/A-18 Super Hornet did not meet the Indian Air Force's technical requirements, a defence ministry source told Reuters.
India also ruled out Sweden's Saab JAS-39 and Russia's MiG-35, departing from long-running reliance on Russian aircraft for its air force.
"The Americans will be very unhappy and people who have been backing the contract will say India has not sufficiently taken into account the political relationship with the U.S.," said Kanwal Sibal, a former Indian foreign secretary.
"That is a political setback for relations."
Timothy Roemer, U.S. ambassador to New Delhi, said the United States was "deeply disappointed."
But the response was blurred by Roemer's surprise decision -- announced shortly beforehand in a separate statement -- to resign after less than two years in the job.
The U.S. embassy declined to say whether the departure of Roemer, a political appointee, was linked to the jet decision.
It said Roemer's departure was for "personal, professional, and family considerations" and he was likely to leave in June.
Relations between the two countries have been on the rise since the end of the Cold war, when India was seen as closer to the Soviet Union.
The United States and India signed a landmark civil nuclear cooperation deal in 2007 and Obama last year promised to back India's bid for a permanent place on the U.N. Security Council.
India has also worked to broaden its diplomatic relationships, working with China, Russia and other emerging powers to avoid being perceived as part of the U.S. camp.
India has also been unwilling to commit to greater defence ties, including joint military exercises and patrols.
The fighter contest now sets up a showdown between two multi-role European fighters actively deployed in policing the no-fly zone over Libya, and both hungry for export sales to compensate for defence spending cuts at home.
Eurofighter is a consortium of EADS, representing Germany and Spain, Britain's BAE Systems and Italy's Finmeccanica. France's Dassault makes the Rafale.
"To the extent that it has come down to the Rafale or Typhoon, the Europeans have, in a sense, won. India is balancing its international relationships," said Howard Wheeldon, senior strategist at BGC Partners in London.
Several analysts said however that Europeans had more to lose than U.S. defence giants in the contest -- something that could give India leverage when it comes to demanding technology and other concessions. The Rafale has yet to be exported.
"It is more of a strategic and political blow to the U.S. than an industrial one," said aerospace analyst Richard Aboulafia at Virginia-based Teal Group.
"The Europeans need this to survive the rest of the decade whereas for U.S. manufacturers it would have been gravy."
Dassault shares rose 4 percent in Paris. U.S. defence stocks were mixed in a narrow range in earoly traeding.
India is the world's largest arms importer, accounting for 9 percent of the global arms trade between 2006 and 2010, according to data from Swedish think-tank Stockholm International Peace Research Institute, and plans to spend $50 billion over the next five years to upgrade its military, largely made-up of Soviet-era equipment, to counter the rising might of China and threats from Pakistan.
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