April 22, 2021
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MRTT deal may face rough weather

After Indian Ministry of Defence selected EADS-made Airbus-330 multi-role tanker transport (MRTT) for multi-billion Dollar mid-air refueller deal few weeks ago, it appears the deal is going to face yet another complication over the L-1 status offered to Airbus Military.

The A-330 emerged as L-1 after lot of evaluations and extensive consultations with the IAF which preferred Airbus system over Ilyushin made IL-78, but the whole deal is all set to get into a fresh trouble after the Russians complained to the Indian government about faulty cost calculation.

The MRTT deal had two competitors Russian IL-78MK and EADS made A330. In fact, four-engine IL-78MK and the two-engine Airbus-330 had participated in the extensive evaluation trial process conducted by IAF but A-330 got extra marks due to over all operational flexibility such as cheap to operate and easy to maintain.

According to Defence Ministry sources, the Russians are unhappy over the Indian decision to make Airbus A-330 as L-1 as Moscow is getting ready to contest this decision.

Of course, the reasons are many and the Russians are always confident that no one can beat them over the price issue.

But MoD sources said it is not always price as a key factor to award a contract of this nature to a vendor. The tanker is a strategic asset which should be based on over all operational flexibility it can offer, not just price.  

India is likely to go for a total of 18 mid air refuellers over a period of time perhaps by end of 2025 but to start with Indian MoD has gone for negotiation of 6 new refuellers for which it has selected Airbus Military A-330 due to better performance.

Since India has got a dual front threat from China and Pakistan, the IAF will require long range capabilities to strike at enemy fortifications across the hinterlands and mid air refueling will make it easier for Indian fighters to carry out deep penetration attacks.   

Currently, the cost negotiation is going on with the Airbus but the Russians who still control a sizable share in Indian arms market have made complaint to Indian MoD that India followed a faulty method to award the L-1 status to A-330.

“There is no doubt that the multi-billion dollar mid-air refueller deal is going to see complications after Russia challenges the L-1 status offered to EADS by the Indian MoD as both are in commercial negotiation to clinch the deal after Russian IL-78 lost out,” said a senior Indian Government official.

EADS touts its tanker as the fastest one in the business because it can transfer 4,600 litres per minute, greatly reducing the refueling operation time.

Indeed, Russian President Vladimir Putin during his India visit in December last year had raised the topic with Indian Prime Minister that the cost calculation process of Indian MoD is full of faults.

Russia says that its basic price offer is still cheaper than EADS, although EADS life cycle cost calculation may have created a situation in which it was perhaps found that EADS is cheaper.

Life cycle cost is based on assumptions as it hypothetically draws cost calculation which may not exist or may not occur.

This time the life cycle cost played a key role as deciding factor. Russia is taking the plea that why basic price parameter was lowered down.

Russia is arguing that since IL-78 has been with IAF and it will not cost further to IAF on training and maintenance, in that way the IL-78 should be considered cheaper in the long run.

Now, this has created a rethinking in the MoD and when they carry out commercial discussion with EADS, the subject may come for negotiation.

India had carefully worked out this tender, floated three years ago in which specifically life cycle cost was made a top priority and was supposed to play a crucial role in deciding the selection process of the refueller.

But Russia is asking why basic price was not considered as the factor for selection and a change was made to accommodate Airbus Military.