Lockheed Martin offers two naval aircraft bids for $1 billion

BY A CORRESPONDENT
April 24, 2006

According to media reports, confirmation was received from senior Lockheed Martin officials that the company had made two formal bids totaling $1 billion, to sell naval aircraft to India. The top US defense contractor's offer comes in the wake of strengthening bilateral relations between the two countries.

The first bid of $550-700 million offers 8 upgraded US Navy P-3 aircraft, as a replacement for India's fleet of vintage Russian reconnaissance planes. The second bid, worth $350-400 million, is an offer to sell 16 multi-mission MH60R helicopters. According to Royce Caplinger, head of Lockheed's Indian operations, "It's a case of the perfect storm: the bilateral relationship, the requirement for products like ours, a budgeting process in India that is fixed and real, the money and there seems to be political will."

The bid comes on the heels of the landmark civilian nuclear pact between the two countries, as company officials were quick to point out. Philip Georgariou, a director with Lockheed's aeronautics division in the US said, "We do follow our government. And, where they go, we tend to think that provides us a stable relationship that we can do business with."

New Delhi has been looking to modernize ageing defense equipment, making the world's fourth largest military a valuable global defense market. Defence spending has been raised by 7 per cent to $20 billion for the current fiscal year.

India is in the market for new fighter and trainer jets, submarines, an aircraft carrier, modern guns and radars. With plans to buy at least 126 fighter jets (valued at $10 billion), India may well consider Lockheed's F-16s and Boeing Co's F/A-18E/F Super Hornet, in addition to planes from Russia, France and Sweden. President Bush's visit to India in March had led Pentagon to make clear signals to India on their intentions to make aircraft available to India.

But Indian defence experts are skeptical of the American offer, as they feel that US companies may change attitudes in terms of supply of spares and other support, as their stance may change with a shift in bilateral moods. Ashok Mehta, a retired Indian army major-general and defense analyst said, "We have absolutely no experience of dealing with the Americans, as against the Russians, the French or the British or even the Israelis."

However, Lockheed is keen to invest in India as the Indian defense sector would lead to opening up of the private sector as well as to foreign investment. Georgariou pointed out, "It (India) has got not only a wealth of technology and capability but also the advantage of low cost of labor."