/IAF moves ahead on private sector deal to manufacture transport aircraft

IAF moves ahead on private sector deal to manufacture transport aircraft

Despite a series of hurdles, including differences on a pricing benchmark, the Indian Air Force (IAF) is moving ahead on a major deal for manufacturing transport aircraft by the private sector.

There has been a flurry of meetings in the past few months and the stage is being set to take a final call on buying the C 295 transport aircraft to be manufactured by a Tata-Airbus combine. The deal has been in discussion since 2012 but gathered pace from March this year when commercial bids for the contract were opened. While the air force was initially taken aback by the offer price that is believed to have been double the projected cost of Rs 11,900 crore for 56 aircraft, sources said a draft contract is now being processed.

Since commercial bids were opened, bidders have been in discussions with the contract negotiating committee to resolve a number of issues from pricing to the indigenous content on the Indian made aircraft, offsets and performance based logistics. Given the of concerns that came up during negotiations and the fact that the contract was expanded from the original requirement of 56 aircraft to include a requirement of the coast guard for six a Multi Mission Maritime Aircraft (MMMA), a final call on signing the deal will need to be taken by the defence minister led Defence Acquisition Council (DAC). When contacted, Airbus refused to comment on the developments.

The contract is being processed under a single vendor scenario as the Tata-Airbus combine was the only bidder for the tender. As reported by ET, the ambitious project was in danger of being shelved in 2015 after concerns were raised on it being a non-competitive process.

An independent committee under the ministry was set up to review the project which greenlighted continuing with negotiations despite it being a single vendor case.