Govt plans to award huge fighter deal by March 2012

The government plans to award an USD 11 billion fighter jet contract by the end of March 2012, the defence minister said, as manufacturers at India's air show vied to boost their share of a fast-growing market for military hardware, reports Reuters.

The six global firms competing for the contract to provide India with 126 fighter jets were among those showing off their wares at the biennial event, which has become increasingly important as Asia's third-largest economy steps up spending to modernise its military.

US defence firms are also looking to take advantage of the Obama administration's recent removal of nine Indian aerospace and defense firms from a list of restricted entities that cannot be sold certain technologies with military uses.

Defence Minister AK Antony said on Wednesday that the government is making procurement process easier, and several global firms on Tuesday announced plans to set up operations in India, which is looking to spend $50 billion on its armed forces over the next five years.

India wants to upgrade its military technology in line with its growing global economic stature and in the face of increasing assertiveness by China, as well as its rivalry with Pakistan.

"We have been fine-tuning our defence procurement procedure through periodic reviews to make it as transparent and efficient as possible," Antony said on Wednesday.

"We have expanded the scope of existing offset policy guidelines to include civil aerospace, internal security and training ... we hope this will provide even better opportunities to foreign manufacturers," he said.

Under its offset policy, India requires foreign defence companies to invest part of their contract award in the country.

Fighter order

Saab's JAS-39 Gripen is competing with Boeing's F/A-18 Super Hornet, Dassault's Rafale, Lockheed's F-16 and Russia's MiG-35 to win the fighter contract, which would be one of the largest export orders in the history of defence.

Cassidian, the defence arm of EADS and a partner in the Eurofighter Typhoon, is also vying for the fighter award. Eurofighter is a four-nation consortium of EADS, representing Germany and Spain, Britain's BAE Systems and Italy's Finmeccanica.

Antony said the fighter jet contract process is "going smoothly".

Boeing has begun talks with the Indian Space Research Organisation, one of the firms removed from the prohibited list, to collaborate on space technology, the US-based aerospace giant told Reuters at the air show.

Rival Lockheed Martin said it would also look at the opportunity created by the removal of companies from the list.

Lockheed, which sold six C-130 J transport aircraft in a USD 1 billion deal to India, told Reuters the country has expressed interest in buying another six. The planes are considered the world's most advanced transport aircraft.

Boeing is also competing with Dassault and Saab for a Brazilian contract worth at least USD 4 billion.

Brazilian President Dilma Rousseff has told visitors she believes Boeing's F-18 is the best jet among the finalists, but she is pressing for better terms on technology transfers that are critical to any deal, sources told Reuters late Tuesday.

Saab Chief Executive Hakan Buskhe on Tuesday said he expected Brazil to announce a bidder by the end of this year.