India: France’s Dassault wins $10.4 billion fighter contract

France's Dassault Aviation on Tuesday pipped the European consortium that makes the Eurofighter to win a $10.4 billion contract to supply the Indian Air Force's medium multi-role combat aircraft. But analysts say the battle isn't over and the makers of the Eurofighter are likely to launch a lower bid for the project, according to the New York Times.

According to India's Daily News & Analysis newspaper, Dassault's Rafale fighter jet emerged as the cheapest option in competitive bidding, and a contract is set to be signed in the fiscal year beginning April 1.

IAF will buy the first 18 aircraft off the shelf while the other 118 will be manufactured in partnership with an Indian company, the paper said.

The Rafale and the Eurofighter Typhoon — backed by Germany, Spain, Italy and the United Kingdom — had already beaten out competition from Russia’s MIG-35, Sweden's Saab Gripen, and America's F-16 Falcon (Lockheed Martin) and F-18 Hornet (Boeing).

Although America's defense ties with India are steadily improving, many believe that U.S. manufacturers were never seriously in the running for the project. India's armed forces have a long memory and continue to view America as a fickle supplier, despite the end of sanctions associated with the 2008 Indo-US nuclear deal. That's a perspective that gains some credence in the midst of sparring over India's refusal to honor U.S. sanctions and end its oil purchases from Iran.

But there's still some room for optimism for America's sole successful manufacturing sector, according to Gunjan Bagla, leader of the defense and aerospace practice at California-based Amritt Inc.

"All North American defense companies should be strongly encouraged that the U.S. MMRCA bidders (Boeing and Lockheed) were fairly treated as serious competitors on a largely level playing field that included Russian and European bidders, many of whom have much longer legacies of success with India," Bagla said in an email Tuesday.

That's big news, if it truly signals a change.  As I wrote this time last year for GlobalPost, India's military establishment is embarking on a $100 billion shopping spree. 

But there's more at stake in the MMRCA deal than simply a big paycheck for a foreign arms supplier.  An essential part of the deal is the joint production of the fighter jets in India, through which India's own defense industry hopes to upgrade its manufacturing capabilities and acquire vital new technologies.  So far, that project hasn't been too successful, though.

In the bid to upgrade its indigenous weapons program, India has spent 30 years and thrown millions of dollars at its own Tejas supersonic light combat aircraft, which was finally cleared for induction into the air force last year.  But even then the project was $500 million over budget, and the most sophisticated part of the plane — its engine — was made by a U.S. manufacturer.

The lesson of the MMRCA deal, says Bagla, is that U.S. firms shouldn't harp on their technological superiority. 

Maybe instead they should start pushing more aggressive plans for technology transfer.