India inches closer to major aircraft deal

NEW DELHI, April 7 (UPI) -- India's air force won't accept any last-minute offers from bidders in a 126 medium-multi-role combat aircraft deal expected to be worth around $11 billion.

"No offers for upgrades or changes in the original bid submitted by the six aircraft companies would be allowed as their aircraft have been judged on the basis of capabilities offered in the original bid and their performance in the field trials," an unnamed air force source told Indian media.

The comment came after one bidder -- not named - suggested it could supply a more powerful engine.

Planes in the running are the F/A-18E/F Super Hornet from Boeing, the Rafale by French firm Dassault, the Eurofighter Typhoon from Europe's EADS, Lockheed Martin's F-16, the Russian-made MiG-35 and the Gripen from Swedish firm Saab.

But the final report on the planes and each bidder's value-for-money tender has been submitted to the Indian Defense Ministry for evaluation, with a final contract likely signed by July.

Many of India's nearly 800 fighters are aging Soviet-era and Russian aircraft, including the Mikoyan-Gurevich MiG-21, MiG-27 and MiG-29 and some Sukhoi Su-30MKI planes. The air force also has Anglo-French SEPECAT Jaguar and French Mirage 2000 aircraft produced under license.

The MRCA deal is imperative for the air force because of the age of its largest aircraft by numbers, the MIG-21, a 1970s fighter.

The long-awaited aircraft deal -- the tender was issued in August 2007 -- will be one of India's largest capital military expenditures likely in next several years.

The purchase is reflected in the country's boosted defense budget, announced last month. India raised its defense budget by more than 11 percent in the face of China's growing military might.

The increase to $36.5 billion for 2011-12, from $32.74 billion this year, includes a 12 percent boost in capital spending for equipment and services.

From next month, capital spending will rise from $13.33 billion this year to nearly $15.4 billion, Indian Finance Minister Pranab Mukherjee said in his presentation of the budget to the country's Parliament.

"More than 40 percent of the Indian defense budget for 2011 will be spent on capital expenditure, while the rest will go toward maintaining its armed forces," he said.

India also will buy nearly 200 light helicopters and 145 ultra-light howitzers for the army.

The "substantial" increase in the budget will go a long way to paying for these, Defense Minister M.M. Pallam Raju said after the budget was presented.

Also last month, Israel's Rafael Advanced Defense Systems said it expected to secure an anti-tank missile order worth $1 billion from the Indian army.

Rafael, which posted a record net profit of $178.6 million in 2010, is also in line to secure arms sales to South Korea worth $500 million a year, The Jerusalem Post reported.