India's MMRCA decision continues to create ripples

Major defence purchases should be a means of helping a nation achieve its strategic objectives. It's not readily evident what strategic objectives of India are being served by choosing Rafale over Typhoon, says Harsh V Pant.

First it was the United States that got annoyed and now it is Great Britain's turn to ask some tough questions about its India policy.

Ever since the French Rafale fighter was declared the lowest bidder in the multi-billion dollar contract to provide new generation fighter for the Indian Air Force, a debate is raging in the UK as to what has gone wrong with David Cameron's charm offensive in wooing India. His visit to India in 2010 was widely viewed as a highly successful. He made all the right noises in India about Pakistan and terrorism and there was a sense that the UK-India ties finally turned a new corner.

Cameron government has also decided to give India £1.4 billion in aid between now and 2015, amounting to almost 1 per cent of Britain's own £159 billion debts. But when it came to the much sought after the Medium Multi-Role Combat Aircraft contract, France was the winner and the Eurofighter, produced by a consortium of four nations, including Britain's BAE systems, lost. Apparently, saying right things and giving aid doesn't get you any influence in New Delhi!

From the very beginning, this saga has been rather interesting. Last year in April, India rejected bids by Lockheed Martin and Boeing (along with Russian and Swedish bids) for the $10 billion-plus contract for 126 medium multi-role combat aircrafts, despite extensive lobbying by the US military-industrial complex, supported by President Barack Obama himself. Nothing works better in New Delhi than a put-down to the US -- and that was quite a snub indeed! Instead, New Delhi short-listed Dassault Aviation's Rafale and the Eurofighter Consortium's Typhoon. There were extensive field trials, and technical considerations ostensibly drove the final decision. But the dismay in Washington was widespread and to some extent understandable given the investment that the US has made in cultivating India in recent years.

As if to underscore the importance of this development, US Ambassador to India, Timothy Roemer, also decided to announce his resignation at the same time that the decision on MMRCA was being made public, though he has insisted that his resignation is related to "personal, professional and family considerations."

At a time when the political dispensation in New Delhi was embroiled in a whole host of corruption scandals, it used this decision to insulate itself from charges of favouritism towards America.

To its domestic policy critics, the government signalled that despite all the heft of the US military-industrial complex, India refused to budge. To its foreign policy critics, there was a signal that New Delhi remains in thrall to no one, not even the US. The United Progressive Alliance government had been viewed as being too cozy with the US and there were signs of discontent within the ruling Congress party itself on this score.

Some of the revelations by WikiLeaks about the pressure on New Delhi during the negotiations over the US-India civilian nuclear energy pact had put the government in a difficult position. The decision on MMRCA allowed the government to make a case that it was its own master.

The focus then shifted to the French-British rivalry over Rafale versus Eurofighter with the French coming out on top. Dassault Aviation, Rafale's French manufacturer, will be entering into commercial negotiations with India over the next few months before final deals are signed. But this is a company that has been struggling to get foreign buyers, so it would be keen on signing the contract more or less on Indian terms. Deemed as expensive and not cutting edge, the Netherlands, South Korea, Singapore, Morocco, Brazil, the United Arab Emirates and Switzerland have all turned Rafale down in the last few years. India, in more ways than one, will now be subsidising the French defence sector.

India's decision was clearly influenced by the price factor as the EADS Eurofighter Typhoon is a much more expensive venture. But technology transfer was clearly another guiding factor with the tender stipulating 50 percent direct offset obligation for the winning bidder. Indian Air Force's familiarity with French Mirage 2000 aircrafts would also have helped as Rafale is operationally and technically similar to Mirage 2000. India would be buying the aircraft over 10 years with 18 Rafale jets being constructed in Dassault plants in France and 108 will be assembled by Hindustan Aeronautics in India.

Coming just before French elections in which Nicholas Sarkozy is trailing, this decision will boost his campaign. No wonder, Sarkozy was euphoric suggesting that "France is delighted at the decision by the Indian government…It will include important technology transfers guaranteed by the French government." At a time when major European countries are drastically cutting down their defence budgets, the defence sector needs external help to survive and the Indian decision will be a big help to France.

Dassault was quick to react, saying it is "honoured and grateful to the government and people of India." In Britain, on the other hand, there are fears of job losses at the BAE Systems which owns 33 percent of Eurofighter. The deal has been described a "major win for France, and a major loss for the UK." The UK government, at least publicly, is still hoping that New Delhi could yet reject the French offer and turn to Eurofighter.

This is India's largest defence contract at a time when India's defence modernisation has been attracting a lot of attention. The fighter levels in the IAF have dropped to an all time low of 32 squadrons compared to an official level of 39.5 and desired 42 squadrons. The IAF is desperate to replace its ageing fleet of MiG 21 fighters.

At one level, the seeming transparency of the process should indeed be heartening to those who have been puzzled by India's inability to get its defence modernisation program on track for some time now.

For a usually lackadaisical Indian ministry of defence this is a welcome change. After years of returning unspent money, the MoD last year not only managed to spend its entire budget but also asked for money to spend on capital procurement. And now with movement on MMRCA bids, it is clear that the ministry wants to move swiftly on new defence procurement, relegating its ultra-cautious approach to the sidelines.

But there is a larger question that still needs to be answered. Major defence purchases are not an end in themselves. Ideally, they should be a means of helping a nation achieve its strategic objectives. It's not readily evident what strategic objectives of India are being served by choosing Rafale over Typhoon. One can only hope that the Indian defence establishment is not missing the wood for the trees!