Indian Government cancels  Airbus mid air refueller  deal

• Yet another L1 programme ends before the beginning

By Sangeeta Saxena

New Delhi. 01 August 2016. After a long wait and what seemed a stagnant deal the  Indian government has cancelled the tender for procuring six mid-air refuellers from Airbus  for the Indian Air Force, quoting high life-cycle cost, despite of being cleared in both commercial and technical evaluations.

Though there is no formal announcement pertaining to this from the Ministry of Defence, Government of India to the media, undisclosed sources have informed PTI that the Ministry, in a letter to Airbus late last month, had informed it of the decision to withdraw the tender . And this is after the lowest financial bidder had been identified and the talks being on since the announcement in January 2013. The officially estimated value of the project is Rs INR 8,500 crore (about US $1.55 billion at 2013 conversion rate).

It is history repeating itself with the Government of India having cancelled MMRCA after L1 selection, announcement and negotiations earlier last year. Also this is the second time the tender for the refuellers for IAF has been cancelled. In the earlier procedure the Airbus 330 MRTT and Il-78 were competing for a global tender floated in 2006 by the Indian defence ministry for six refuellers to extend the operating radius of Indian fighter jets. In May 2009, India finally chose the Airbus A330 MRTT over the Il-78. However, in January 2010, the government cancelled the order citing high cost as the reason, reportedly against the wishes of the Air Force. After rebidding, India selected Airbus as its “preferred vendor” in November 2012. In January 2013, it was reported that India had again selected Airbus’ A330MRTT as “preferred bid”.

In April 2015 deal had  received a jolt, when it was  referred to the defence ministry’s vigilance department for clearance. A Member of Parliament wrote to the Defense Ministry against the deal, as a result of which the case was sent to the Law Ministry for an opinion. The Defense Ministry’s Vigilance Department after ascertaining the status of the old cases against the consortium found that only one such case against the consortium and that too had been closed due to lack of evidence.

The Indian Air Force had last acquired six air refuellers from Russia more than a decade ago. In the present scenario the Government of India  could be  planning to consider the option of Il-78M-90A or Il-78M2 acquisition. The Indian Air Force (IAF) operates Il-78MKI tankers delivered in 2003-2006. The murmurs in South Block are that the  MoD  could be buying through the Foreign Military Sale (FMS) route the tankers. One school of thought is that the MRTT cancellation is a result of a pragmatic and well thought out strategy to conserve scarce resources. The IAF has multiple IL-76s and now that the strategic airlift capability is being served by the C-17s, a number of IL-76 aircrafts can be converted into MRTTs. The money thus saved can be used on more critical acquisitions.

With this development  another rumour is that India could consider acquiring KC130J tankers ( C130 J modified as tanker) through the FMS route and could be stationed at  Panagarh which is going to  house the additional  C 130Js. Both machines are almost same  with  same engines, almost same electronics and same hydraulics, it will  reduce maintenance cost. The total running cost is almost fifty percent of the total life cycle cost. It means total cost of maintenance in the life cycle of the aircraft is almost same as the cost of the aircraft itself. Experts opine that the cost of KC 130J is  USD 71 million which is the fly away, USAF price. And KC 130 J is being used by American and Japanese air-forces.

A military derivative of the best-selling A330 wide-body, twin engine, the A330 MRTT is considered to be a benchmark for new-generation tanker transport aircraft of the current century. The aircraft undertook its maiden flight on June 17, 2007, and formally entered service on June 1, 2011, with the Royal Australian Air Force that was the launch customer. Other customers for the A330 MRTT are the Royal Air Force (RAF), United Arab Emirates Air Force, Royal Saudi Air Force and Republic of Singapore Air Force. South Korea, France and  Netherlands have also placed orders which will see deliveries from 2018 onwards. And does  this cancellation in India mean the end of the road for A330MRTT in India? Airbus was not available for comment.