India finalises contract with GE for 99 aircraft engines
The only thing left before India signs the estimated $800 million deal with GE Aviation for 99 GE-F414 engines now, is the clearance from the Cabinet Committee on Security (CCS).
The Price Negotiation Committee (PNC), which was set up late 2010 after GE had nipped Eurojet to become the lowest bidder, has recently finalised the deal after having surpassed all the hurdles before it and the file is now expected to go to the CCS anytime.
The PNC, comprising representatives from the Indian Air Force (IAF), the Navy, the Ministry of Defence (MoD), Hindustan Aeronautics Limited (HAL), Aeronautical Development Agency (ADA) and the Defence Research Development Organisation (DRDO) negotiated with GE and the US government for over 15 months before coming to a conclusion.
GE had been, in September 2010, declared the lowest bidder over Eurojet’s EJ200 to power the Mk-II version of India’s Light Combat Aircraft (LCA)—tejas–but there were a lot of issues that had to be resolved before the PNC could finalise the contract details.
Euroject, sources said, had actually quoted a lower price but had not included a lot of things in their quotation—allowing GE’s proposal to be considered the most viable.
The PNC though stuck to its stand that it would not be a viable move for India and has finally convinced the US against such a payment. Two other important issues that were dealt with by the committee were, GE wanted India to sign the deal with one of its subsidiaries and not with it, citing various reasons and GE wanted India to agree to pay liabilities in case the IAF used aircraft powered by these engines to carry nuclear weapons and in case that crashed in Pakistan.
India was not keen on both the propositions. “...We had cleared the engine that was proposed by GE and not any of its subsidiaries for us to consider that.We wanted the company which responded to the RFP to be responsible,” a source from ADA said, adding that GE has been conviced to even drop the clause that requires us to pay liabilities.
The decision to finalise the contract, sources said, was taken in a meeting held on January 22 and that the MoD is waiting for an occassion to announce the same.
When the deal comes through, which sources said is very likely to be cleared by the CCS, GE would ship 18 engines that could be straight away used and the remaining will be manufactured by HAL as it gets versed with the required technology, besides, GE will also help India integrate the engine with the airframe of the LCA.
