Eurocopter braces for Indian
rematch By Sudha Ramachandran
BANGALORE - Eurocopter Group, which last
week had its dreams of landing a multi-million
dollar project to supply helicopters to the Indian
Army abruptly shattered amidst reports of
irregularities in the bidding and evaluation
process, is bracing for a refight that will serve
as a prelude to a US$10 billion dollar battle for
control of the skies over the sub-continent.
The Eurocopter Group, a subsidiary of the
European Aeronautic Defense and Space Co (EADS),
almost had the US$600 million
197-helicopter deal in the
bag. Technical trials had been completed and price
negotiations were in progress with Indian defense
ministry officials. The European company was to
supply 60 helicopters made in France and Germany
over the next three years, with the balance of 137
helicopters to be manufactured by Hindustan
Aeronautics Ltd (HAL) at its Bangalore facility
under a transfer of technology agreement.
Last Thursday, EADS issued a statement
that an agreement with India was likely to be
signed ''in a few weeks''. Then a few hours later
came a statement from the Indian government. The
deal had been shot down.
''The government
has decided to cancel the request for proposals
for 197 helicopters for the Indian Army,'' Defense
Ministry spokesman Sitanshu Kar announced. The
deal had been scrapped for deviation from approved
parameters, he said. While declining to divulge
details, he went on to say that newspaper reports
about the bidding process were ''more or less
correct''.
Reports in the Indian media
over the past month pointed to the possible
scrapping of the chopper deal with EADS due to the
involvement of middlemen - who are banned from
Indian defense deals - and complaints relating to
the bidding process.
It appears that the
machine Eurocopter fielded at the trials was not
the AS 550 C3 Fennec military version of the
chopper it offered in its proposal but an AS350 B3
Ecureil, a civilian variant. Defence ministry
officials said the procedure for securing approval
for such a `"deviation'', involving the defense
minister and the Defense Procurement Board, had
not been followed.
It also appeared that
the chairman and managing director of Eurocopter’s
distributor in India, Global Vectra Helicorp and
Vectra Aviation Pvt Ltd, who acted as the
go-between in the deal, is the brother of a
defense officer who was among those who evaluated
Eurocopter and its rivals in the bid in the
year-long field trials. Eurocopter might have
enjoyed an undue advantage then over its rivals,
media reports pointed out.
The defence
ministry forwarded a report into the allegations
to the corruption watchdog, the Central Vigilance
Commission, which concluded that there were
''sufficient grounds'' for scrapping the deal,
leading to the government announcement last week.
Eurocopter, while confirming that it
fielded for trials the AS350 B3 civilian version
of the helicopter, maintains that it was exactly
the same as the company's AS 550C3 military
version in terms of airframe, systems, main gear
box, rotor head and blades.
''We presented
the civilian version of the Eurocopter in full
knowledge of the army as well as Defense Ministry
officials,'' Eurocopter said in a statement,
drawing attention to the fact that ''in the same
manner, Bell presented its civil version the B407
for trials in India".
When the tender for
the deal was first put out in 2001, Eurocopter
faced other contenders - Bell (a subsidiary of
US-based Textron Inc), Agusta (Italy) and Kamov
and Kazan (Russia). The contest then narrowed down
to the Eurocopter’s AS 550 C3 Fennec versus Bell
Helicopter’s Bell-407. After trials in hot, humid
and high-altitude conditions, Eurocopter was
chosen over Bell earlier this year.
The
scrapping of the chopper deal is a big blow for
EADS beyond the immediate financial value of the
contract. It damages Eurocopter’s dream of also
supplying helicopters to replace the ageing fleets
of the Indian Air Force and Navy. It was hoping to
fulfill an order pipeline estimated at around $2
billion and was eyeing the broader Indian
helicopter market said to be worth around $4
billion in the next few years.
India's
plans to modernize its defense will also suffer
from last week's decision. as it will delay by at
least another three to four years the planned
replacement of the country's 1970s-vintage Chetak
and Cheetah helicopters that the Eurocopter deal
was intended to carry out.
While the
Europeans are crestfallen and the Indian Army is
worried, the Americans are probably celebrating.
The buzz in the aircraft industry and in European
diplomatic circles is that American pressure led
to India axing the Eurocopter deal. Now the US may
be back in the game.
Bell Helicopters had
reportedly put up a high-powered campaign to
clinch the deal. In May, Bell and American
government officials met with Indian Ambassador to
the US Ronan Sen to express their misgivings over
the deal with Eurocopter. According to a report in
Indian Express, the US government ''lodged at
least two complaints with India after Bell was
disqualified on what the US called 'flimsy
grounds'.''
Bell was apparently
disqualified in the field trials when the chopper
it fielded did not meet two requirements specified
in India’s request for proposals. It could not
perform a three axis vector, which enables the
helicopter to perform certain maneuvers to
navigate in adverse weather conditions at high
altitudes, and it did not have the capability to
hoist a specified payload in rescue and evacuation
missions.
When these shortcomings were
pointed out to Bell officials, they offered to
either show a video of the helicopter performing
similar maneuvers in Canada or to fly out Indian
officials to witness it there. This apparently was
not acceptable.
Bell claims the trial
process and evaluation was skewed in Eurocopter’s
favor and it was these issues that it highlighted
to the Indian government.
European
diplomats counter that pressure that the US
government put on India was not so much over the
selection process but was the result of the new
warming in relations between Washington and New
Delhi. With the fate of a nuclear pact between
India and the US still hanging in the balance, the
Americans turned the screws and India succumbed to
the pressure.
Meanwhile, the Europeans are
now turning on the heat on India. France and
Germany are said to have registered their protests
with the Indian government. The French were hoping
that the agreement would be signed during
President Nicolas Sarkozy's visit to India next
month, when he will be chief guest of the Republic
Day parade.
The cancellation of the deal
with Eurocopter does not mean that the contract
will automatically go to Bell. The US company was
officially rejected by the Indian Army and cannot
be handed the deal when it failed to qualify at
the trials, say defense ministry officials. India
will therefore call for fresh bids in a few weeks.
Bell and Eurocopter are expected to re-enter the
fray - with the next round expected to be even
fiercer.
For EADS, the Eurocopter-Bell
battle is only part of its contest to secure
contracts in India. Another arm of the aviation
conglomerate builds the Eurofighter Typhoon, which
is among the contenders to sell India 126
multi-role combat aircraft. The deal has been
pegged at roughly $10 billion. In that race, EADS
will be pitted against the United States' Lockheed
Martin (F-16) and Boeing (F/A-18 Super Hornet),
among others.
If the Eurocopter-Bell
battle for the helicopter deal is any indication
of what lies ahead for EADS, the dogfight for
control of India’s skies is about to get dirtier.
Sudha Ramachandran is an
independent journalist/researcher based in
Bangalore.
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