Sunday, July 31, 2011

India’s Fighter Upgrades: Mirage 2000s Finally Get a Deal

In an effort to offset the growing number of age-related combat aircraft retirements, India is engaged in a round of fighter fleet upgrades. In December 2006, India Defence reported that the Indian Air Force was “close to finalizing” a EUR 1.5 billion (about $2 billion) deal to upgrade its fleet of 51 Mirage-2000 ‘Vajra’ fighter jets.

The aim was to give the aircraft, inaugurated into IAF service in 1985-1988, another 20-25 years of service life. Of course, “close to finalizing” means something very different in Indian defense circles than it does elsewhere. It took 4 years before there was even a preliminary agreement, and 5 years later, the negotiated agreement appears to be higher than original reports. So, what is India getting for its money?..

Word is that the upgrade will bring India’s Mirages to the full Mirage 2000v5 Mk 2 standard, including a new RDY-3 radar with greater air-air and air-ground capability, a new night vision compatible all-digital cockpit, and improved electronic warfare systems. These will be tied into a joint tactical information data link system (JTIDS, usually Link 16 compatible but not always), plus helmet-mounted sights for wide-angle heat-seeking missiles. As part of the upgrade, the aircraft will also be equipped with MBDA’s Mica family of medium range missiles.

MBDA was probably unamused by India Defence’s December 2006 description of its wares as “an advanced medium-range missile that is the French counterpart to the more capable American AMRAAM missile” [link added]. While the MICA’s radar-guided version does have mediocre range, it also has a heat-seeking IR version that offers a potent medium range ‘no warning’ targeting option. In either version, it’s an improvement. MICA would replace both India’s existing radar-guided Super 350 MRAAM and Magic-II short-range infrared missiles, offering better performance and range.

Work on the upgrades would be performed by a French-Indian consortium including Dassault (aircraft manufacturer), Thales (weapons systems integrator), MBDA (missiles) and India’s Hindustan Aeronautics Limited.

Contracts and Key Events

July 29/11: India signs the Mirage 2000 fleet upgrade contract with Dassault and Thales. Dassault | Thales Group.

July 12/11: A source in the Indian Air force tells Agence France Presse that:

“The defence secretary has agreed to the proposal put forward by French defence majors Dassault and Thales and (European group) MBDA for the Mirage-2000 retrofit…”

The source states that India’s cabinet committee on security cleared the deal on July 13/11, and added that it’s the 9-year, $2.3-2.4 billion deal discussed earlier. Only the 1st 2 jets will be refitted in France, with the next 2 done by HAL in India under French supervision, and the rest done by HAL. India’s standard 30% industrial offset obligation will apply, but HAL’s workshare is a very substantial percentage.

Some media sources cite India’s rapidly declining fighter fleet numbers as the key impetus for the deal. Of course, that fleet is declining in part because India’s fighter programs are behind schedule, and its procurement programs suffer from extreme slowness and delays. While bureaucrats ponder, entropy and use eats at the existing fleet. Calcutta Telegraph | Economic Times of India | Hindustan Times | Machinist India | AFP via France 24 | Flight International.

June 19/11: IANS reports that top decision-makers in India are split over the Mirage 2000 upgrade proposal, citing its overall cost (note that the report’s math doesn’t add, but see below).

There’s also some grumbling about the short service life that would be left in some airframes after the upgrades are done, based on the promises in the 1982 contract and the quoted 9-year time frame for the work. The more relevant figure, however, is expected flight hours after the upgrade, which may include airframe refurbishment. The general expectation in published reports is about 20-25 years, or about 6,000 – 7,500 more flying hours, but this has not been explicitly broken down in reports we’ve seen.

May 19/11: We’ve heard this before. This time, it may even be true. The Times of India reports that the deal is negotiated, and remains true to the pattern of the first 4-6 upgrades in France, with the rest performed in India by installing delivered kits:

“Defence ministry sources on Wednesday said the long-awaited deal with France for the upgrade of 52 Mirage-2000 multi-role fighters in IAF’s combat fleet is “finally ready” at a cost of almost Rs 11,000 crore…. “This is also now going to CCS for approval. Another big contract, which was being progressed simultaneously, for around 450 MICA (interception and aerial combat missiles) systems to arm the upgraded Mirages is also in the final stages now,” said a source…. This means the overall Mirage upgrade package, including the fire-and-forget MICA missiles and the infrastructure build-up at HAL, will eventually cross the Rs 15,000-crore mark.”

That’s about $3.32 billion / EUR 2.33 billion. Or, to put it another way, almost $65 million/ EUR 45.6 million to upgrade and arm each of the IAF’s 51 jets. That price rises further if required new facilities at HAL are added as a project cost. For that kind of money, the IAF could replace its Mirage 2000s with 25-35 more M-MRCA planes (Typhoon or Eurofighter), or about 50 similarly capable new SU-30MKIs. Or, it could bulk up its fleet by replacing the Mirages on a better than 1:1 basis with locally-built HAL Tejas LCA fighters, whose capabilities fall somewhere between existing Mirage 2000s and the proposed upgrade.

Feb 10/11: Still no deal. PTI reports that the Indian Air Force hopes to sign the long-stuck deal by March 2011. Air Chief Marshal P V Naik said that differences over price and legal issues had blocked progress, but “negotiations have been concluded and report has been submitted to the Defence Ministry.” Now the question is whether the contract will be authorized. Deccan Herald.

Dec 6/10: Media reports indicate that France and India have agreed on the basic structure of a EUR 2.1 to 2.2 billion upgrade deal, which reportedly includes EUR 700-900 million for MBDA’s Mica air-to-air missiles. That deal still has not been signed, however, and isn’t expected to be signed until March 2011. Time will tell.

The agreement was announced as part of French President Nicholas Sarkozy’s visit, which also included over $9 billion in nuclear power deals for 3rd-generation advanced European Pressurized Reactors (EPRs). India’s DDI government news | Bloomberg | India’s Business Standard | Economic Times of India | Press TV (video) | Sify | Times of India | Usine Nouvelle [in French] || Text of France-India partnership declaration.

March 1/10: Indian chief Air Chief Marshal P V Naik tells the Times of India that a final deal on the Mirage 2000 upgrades:

”....should happen shortly…. A French team will be coming again in early-March to finalise the details. The CNC (contract negotiation committee) should conclude in another two months. The Cabinet Committee on Security’s approval will then be sought.”

French President Nicolas Sarkozy has proposed a visit to India later in 2010, which is usually a convenient time to sign deals like this. DID readers should be cautioned, however, that to India’s defense procurement bureaucracy, “soon” can just as easily mean “several years from now.”

Oct 16/09: India’s Business Standard reports that the Mirage 2000 upgrade deal may have fallen through. The beneficiary would be the MMRCA competition for 126+ medium fighters, but Dassault may have hurt its chances there, too:

“According to senior IAF sources, Dassault has refused to reduce its quota of Rs 10,000 crore ($2.1 billion) for extending the service life of the IAF’s Mirage-2000 fleet by fitting new radars and avionics. The Ministry of Defence (MoD) considers this price – Rs 196 crore ($41 million) per aircraft – unacceptably high…. [and] is veering around to the view that the Mirage-2000 fleet should continue service in its current form. After six squadrons (126 aircraft) of MMRCAs have entered IAF service, an additional two squadrons [DID: about 40-44 planes] of MMRCAs would be built to replace the 51 Mirage-2000 fighters. That amounts to a 40 per cent rise in the MMRCA’s numbers [DID: more like 32-35%; even 48 planes would be only 38%].

Israeli aerospace companies have reportedly entered the fray, offering to upgrade the Mirage-2000 for half the price being quoted by Dassault. The MoD, however, is not inclined to accept that offer [due to bureaucratic rules that require the OEM to perform upgrades].

....The IAF, traditionally a staunch supporter of Dassault and the Mirage-2000 fighter, is apparently changing its views. Dassault, say pilots, has badly damaged its credibility during the recent negotiations by arm-twisting the IAF over the supply of spares for the Mirage-2000 fleet.”

July 14/09: As Indian Prime Minister Manmohan Singh leaves for Paris, The Times of India reports that India resolved their differences over the initial asking price of Rs 14,000 crore (INR 140 billion, about EUR 2.5 billion 2 years ago), and are now all set to ink a Rs 10,000 crore (INR 100 billion, about EUR 1.795 billion/ $2.475 billion) deal to upgrade the IAF’s 55-60 Mirage 2000s. The structure reportedly involves 4-6 aircraft upgraded in France, with the rest upgraded in India by HAL.

“Under the upgrade, the entire airframe will be stripped down to be re-wired and re-equipped with new avionics, mission computers, glass cockpits, helmet-mounted displays, electronic warfare suites and of course weapon systems to extend and enhance the operational life of the multi-role fighters.”

Indian troops led France’s big Bastille Day parade in Paris, and the visit is also reported to include discussions regarding civil nuclear energy cooperation, coastal security monitoring equipment, French proposals for joint development of short-range anti-aircraft missiles, and ongoing competitions involving French A330 aerial tankers and Rafale fighter jets. See also follow-on reports, many of which place the Mirage deal at Rs 9,500 crore: Calcutta Telegraph | Economic Times of India | The Hindu | Sify

Feb 8/09: IANS quotes Thales’ head of solutions for governments sector, Pierre-Yves Chaltiel:

“Pointing out that the technical and programme issues relating to the Mirage-2000 upgrade ‘have been discussed and agreed (to)’, Chaltiel said: ‘We have put everything in place with all our Indian industrial partners, through the transfer of knowledge and technology, for the Indian industry to be in full capacity during the execution phases of the programme.’ “

What’s still missing, are a decision and and contract.

Nov 7/08: IANS reports progress toward a deal. Thales has reportedly offered to deliver the first 2 aircraft from its facilities in France within 40 months of signing, while it helped HAL upgrade 2 more aircraft in India to gain familiarity. Thereafter, HAL would upgrade one aircraft every month, for 47 months. IANS:

”...the IAF is known to have been considering the upgrade for at least two years but floated a request for proposal (RFP) only in April, to which Thales replied in July. Price negotiations are set to begin later this month.”

Pierre-Yves Chaltiel, senior vice president for Thales aerospace government programs, is quoted in another report as saying that “The project is part of a broader strategic partnership between France and India to be implemented under a government-to-government agreement.” Even so, the IANS report adds that another 2-year delay is quite possible:

”...another Thales official pointed out that a decision on the upgrade would have to be taken by the end of this year so that the project could begin early 2009, ahead of the parliamentary polls that are due by May but could be advanced to February.

“Our experience, not only with India but with other countries also, has been that if an election comes in the way, a decision on a project like this can be delayed by at least two years,” the official told IANS on condition of anonymity.”

Aug 5/08: In 1982, Dassault and the IAF signed a maintenance contract for India’s Mirage 2000 aircraft. That agreement was due for renewal 25 years later, in 2007. Now, India Defence reports that a new agreement has been reached, after a 6-month negotiating stalemate that was moving toward court action:

“Ministry sources said a six-month stalemate between the two sides was finally broken when the Indian side acceded to the French company’s demands pertaining to charges on liquidated damages. Half of the Air Force’s 46 Mirage 2000-H aircraft faced grounding had the stalemate persisted, a service official said. Dassault had insisted on renewing the maintenance contract only if liquidated charges are calculated at the rate of 0.5 percent of the total contract on a monthly basis. The Defence Ministry wanted the 0.5 percent to be calculated per week.”

Dassault reportedly got its way on this issue after threatening to take the matter to the courts, which would have created very long delays to repairs and probably would have grounded the fleet.

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