Sunday, June 18 2006 12:10 Hrs (IST) - World Time -

New Delhi: A new policy governing defence purchases has delayed plans by the Indian Air Force (IAF) to acquire 126 combat jets to maintain its force levels, the IAF chief says.

"Why it has taken long is because our procurement policy has changed," Air Chief Marshal S.P. Tyagi told sources

"We are (now) looking at offsets. Earlier the IAF used to buy on the lowest tender system. Now we're saying not the lowest tender, but we want to see what the life-cycle cost is," he said.

"How do you calculate life-cycle cost? This is a new area, so we have to devise a formula. So, to get a consensus and to make sure it's fair and everybody believes it is fair, it will take some time," Tyagi added.

The IAF had in 2001 projected a requirement of 126 multi-role combat aircraft (MRCA) to equip six squadrons. At that time, the IAF was operating its sanctioned strength of 39-1/2 squadrons and the new planes were expected to arrive by 2010.

In 2004, a Request for Information (RFI) was sent out for four jets - the US F-16, the Russian MiG-29M/M2, the French Mirage 2000-5 and the Swedish JAS-39 Gripen.

In addition, the manufacturers of the US F/18 Super Hornet, the French Rafale, and the four-nation European Typhoon also sent in their offers.

Based on this, a Request for Proposal (RFP) was to have been sent to the short-listed manufacturers in 2005 but it is nowhere in sight, even as the IAF strength had dwindled to 30 squadrons. "I have said (the RFP would be sent) shortly for the last one-and-a-half years so I'll stick to that," Tyagi said.

The new 'offsets' policy could prove to be a major sticking point. For the record, the new defence procurement policy lays down that 30 percent of all contracts above Rs.3 billion ($65 million) has to be reinvested in India either by way of purchases or by creating infrastructure.

The policy, however, does not detail the modalities for this, leading to considerable confusion.

For one, the Indian defence and finance establishments do not have experts on offsets, unlike the case with all foreign manufacturers.

Thus, there is the danger of Indian negotiators being led up the garden path, a defence analyst pointed out. Then, there is the question of where and how the 30 percent is to be invested.

Complained the Indian representative of a major foreign defence contractor: "We were in negotiations with HAL (Hindustan Aeronautics Ltd). They told us the 30 percent would go towards purchases from HAL. But there is nothing from their inventory that I need."

To add to this, the commerce ministry is reported to have stated that since trading is involved, it should be the nodal agency for deciding where the 30 percent offsets money would go.

However, even after the RFP goes out, it would be quite a while before the first of the new jets start arriving.

"It's a long drawn process," Tyagi pointed out.

"We will say we want this and they'll say they've got this and can do this but not that. It will be a fairly long-drawn complex exercise," he said.