This Article is From Jan 08, 2013

India selects Airbus to supply six air-refuelling tankers in Rs 9,000 crore deal

India selects Airbus to supply six air-refuelling tankers in Rs 9,000 crore deal

Russia's hope of bagging the Rs. 9,000-crore contract to supply mid-air refueller's to India is over. They were pipped by the European aviation giant, Airbus.

Despite the setbacks, however, Russia remains the biggest supplier of arms to India. Russia and India are soon likely to sign a contract for joint production of the fifth-generation, stealth, fighter aircraft deal at an estimated cost of over 30 Billion USD.

This is the second time that Airbus A-330 Multi Role Tanker Transport (A-330 MRTT) has emerged as the first choice of the Indian Air Force (IAF). The IAF has a fleet of six Russian-made Illyusin-78 (IL-78) refuellers and wants to acquire another six mid-air refuellers.

In 2010, after the entire process of selection was completed by the IAF, the Union Finance Ministry scrapped the purchase. The Finance Ministry had expressed apprehension with the selection process and the pricing of the Airbus A-330 MRTT.

The acquisition of the A-330 mid- air refuellers now underlines the need to streamline the defence procurement process. For, while IAF will be buying the same aircraft which it had shortlisted in 2009, Indian tax-payers will have to pay more because of cost escalations that have occurred in the past four years.

The European Aeronautics Defence and Space Company (EADS) and the Ministry of Defence (MoD) will soon start "the final commercial negotiations," sources in the Defence ministry said. It is understood that the contract will be finalised only in the next financial year (2013-2014). The budgets cuts forced on the Defence Ministry, however, means that the government will have to do a tightrope walk in finding the money for the mid-air refuellers. The MoD has been forced to forgo as much as Rs. 10,000 crore that was allocated for capital expenditure early this year.

IAF has been operating mid-air refuellers for about a decade now. The mid-air refuellers act as "force-multipliers", allowing fighter planes to stay in the sky for longer durations and reach targets much deeper into enemy territory.

The twin-engine A-330 tipped the four-engine IL-78 because of running and maintenance costs. A-330 emerged the cheaper option when the lifecycle costs of both machines were considered, MoD sources said. The A-330 is the modified version of the Airbus A-330 and works as a transport aircraft as well as a mid-air refueller. It can carry about 110 tonnes of fuel. Alternatively, it can also carry as much as 45 tonnes of cargo. A-330 is capable of refuelling several fighter planes at the same time.