U.S. firms lose out in India fighter jet deal

India announced Thursday that it rejected bids by U.S. companies seeking a $12 billion fighter jet contract, leaving only European defense contractors in the running.

India shortlisted the French company Dassault, which produces the Rafale jet, and the four-nation European consortium Eurofighter, which makes the Typhoon, according to an official in India’s Defense Ministry.

The deal for 126 fighters had been considered a key component of the growing defense partnership between India and the United States, and President Obama had personally advocated on behalf of U.S. companies while visiting India in November.

But India’s decision not to accept bids from either of the U.S. companies, Boeing or Lockheed Martin, raised questions about the strength of that relationship, analysts said.

“It’s hard not to see it having ramifications for the relationship. You had two administrations lobbying very hard with the Indians for what is the fighter jet sale of the 21st century,” said Bruce Riedel, a former CIA officer and senior fellow at the Brookings Institution.

A major hurdle for the United States, Riedel said, was its perception in India as an unreliable arms supplier because of past embargoes imposed after various wars and nuclear tests.

“There is a belief that in a crisis situation, particularly if it was an India-Pakistan crisis, the U.S. could pull the plug on parts, munitions, aircraft — precisely at the moment you need them most,” he said. “Memories are deep in this part of the world.”

The jets will constitute more than half of India’s fighter fleet over the next decade, and many thought it was too great a risk to put such a large number at the mercy of U.S. foreign policy.

U.S. Ambassador Timothy Roemer said in a statement that “we are reviewing the documents received from the government of India and are respectful of the procurement process.”

In a separate statement, Roemer announced his resignation for personal reasons.

Experts said there was more at stake in the deal than the sale of jets. Had U.S. companies won the deal, it would have led to closer strategic cooperation: training, jet upgrades, joint military exercises.

“Of course, there’s a lot more to the relationship politically and militarily than this, but had this gone through, it would have been the centerpiece of it all, so there’s a real loss of opportunity here,” said Richard Aboulafia, an aviation analyst at the Virginia-based Teal Group who has closely followed the international contest over the contract.

“And you could read into the decision some of the continuing tensions in the relationship,” Aboulafia said. “I think they’ve felt at times like they’re taking a back seat in terms of U.S. military policy to Pakistan.”

According to a recent report by the consulting firm KPMG and the American Chamber of Commerce, about half a dozen American companies are eyeing an estimated $112 billion in opportunities as India goes on a buying spree to modernize its armed forces by 2016.

The United States has already dethroned Russia as the leading exporter of defense wares to India, landing more than 40 percent of recent defense deals. The fighter jet contract involves planes for India’s Medium Multi-Role Combat Aircraft program. The jets would put the Indian air force’s aging fleet on a high-technology route and strengthen its air defense as it warily watches China develop its own stealth fighter and Pakistan buy new U.S. planes.

India also plans to add its first domestically developed light-combat aircraft, called the Tejas, to its air force in 2015. 

In reaching a decision on the fighter jets, analysts said, India conducted its most exhaustive trials ever, with Indian pilots testing aircraft in the Himalayan terrain in the north, the western desert and southern plains.

“In the earlier purchases, our pilots used to visit the seller countries and test the aircraft there. Rarely did the aircraft come to India for tests,” said Jasjit Singh, a retired air commodore in the Indian air force and director of the Center for Air Power Studies in New Delhi. He said India drew up a list of about 500 parameters to evaluate the planes. “This time we have also looked into the life-cycle cost of a plane for the first time. We have asked, ‘Am I going to spend through my nose on spares?’ ”

Defense and nuclear commerce are the big-ticket items in the growing strategic relationship between India and the United States.

But commercial contracts worth billions of dollars that were expected to arise out of the landmark nuclear deal signed in 2008 have yet to materialize because of disagreement over India’s domestic nuclear liability law and bureaucratic delays in securing mandatory assurances that Indian companies will not export American nuclear technology. 

Kanwal Sibal, a former Indian foreign secretary who was once the second-in-command at India’s embassy in Washington, said some U.S. political leaders had viewed the fighter-jet contract as a test case for deepening the strategic relationship and a “return-gesture for the nuclear deal between the two nations.

“India could either have made a political decision to give it to the Americans or go for an open international bid. India chose the latter. India went for the ‘may-the-best-plane win’ route.”

Staff writer William Wan in Washington contributed to this report.

Rama Lakshmi has been with The Post's India bureau since 1990. She is a staff writer and India social media editor for Post World.
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