Adani To Muscle Saab’s Gripen Sale Bid In India – Will It Kill LCA?
NEW DELHI: Sweden’s Saab is in talks with Adani Group to revive the Gripen combat plane campaign by setting up an assembly line for the multi-role fighter aircraft in India. The renewed campaign casts a shadow on the fate of the indigenous, much-delayed Light Combat Aircraft (LCA) program, which hinges precariously on the timely delivery of a successful Mk-2 version fitting the bill as a front line fighter capable of getting into harm’s way.
According to Industry sources, a Saab-Adani joint venture is on the cards. The proposal is being aggressively supported by the Swedish government, which is pushing for a government-to-government deal on the Gripen JAS-39 plane. Saab is reportedly seeking majority stake.
Adani Group chairman Gautam Adani is reported to have set up meetings between the top Saab hierarchy and India’s apex political leadership. Saab’s Marcus Wallenburg, who owns a majority stake in the company, and President and CEO Hakan Bushke are reported to have met Prime Minister Narendra Modi and Defense Minister Manohar Parrikar in May 2015 to lobby for their proposal to set up a Gripen assembly line in India for the Indian Air Force (IAF).
Subsequently, Swedish Defense Minister Peter Hultqvist, during his recent India visit, brought up the matter with his counterpart Parrikar.
It is also learnt that the offer for the Gripen is linked with the development of a fifth generation fighter from scratch.
“At this time we are, as every defense company I guess, waiting for more information on what path India will take,” stated Saab spokesperson Anneli Sundin, in response to questions on a Saab-Adani tie-up.
“We are convinced that Gripen is a perfect fighter for the IAF which fully meets Indian requirements and needs,” she added.
Saab did not disclose whether it has offered the latest Gripen E/F NG or an earlier variant to be produced in India.
The Adani Group has made a recent foray into defense industry by setting up the Adani Defense Systems and Technologies.
Combat Plane Market Reopens
The revival of the Gripen campaign comes close on the heels of the India putting on hold its tender for 125 Medium Multi-Role Combat Aircraft (MMRCA), which has now become infructuous following the announcement of a government-to-government deal between India and France for a direct purchase of 36 Rafale fighters under “better terms” than what was offered by plane maker Dassault Aviation in the tender.
Observers reckon that the inevitable cancellation of the MMRCA process and the 36-plane limit on the awaited Rafale order has reopened the arithmetic of IAF’s fighter aircraft mix, and that’s where Gripen feels it has a chance.
With an approved strength of 42 fighter squadrons, the IAF has a reported current shortfall of about eight squadrons. In addition, replacements are required for about 12 MiG-21 Bison and MiG-27 squadrons over the next decade, as the phase-out of these begin from 2016-17 fiscal.
The accretions on the table are the five residual squadrons of the Su-30MKI, and two each of the Rafale and the LCA Mk-1. There’s a question mark yet over plans for six squadrons of the T-50 Fifth Generation Fighter Aircraft (FGFA) in which Russia has the lead.
Although it reportedly finished at the bottom of the table after flight evaluations during the MMRCA competition, Gripen believes it is best placed to make inroads into the IAF inventory at this juncture.
LCA Delay Causes Anxiety
The proposal has set alarm bells ringing in the LCA constituency. Gripen is perhaps the closest in concept and weight to the LCA from among the world’s leading fighter aircraft. There are fears that the Gripen may not just overlap the LCA space, it may completely eclipse what has been described as a national effort to rid India of foreign dependence.
The IAF’s support for the LCA has always been tepid. It has only committed itself to two squadrons of the LCA Mk-1, the final operational clearance (FOC) for which is due later this year. The Mk-2 is still on the drawing board. The IAF’s lack of confidence is transparent.
Former IAF chief Fali Homi Major made an interesting disclosure: That the IAF favored HAL buying-out Saab’s Gripen business to get over the LCA impasse. “There was a proposal for HAL to acquire Saab. I was very much for it. It would have done HAL a lot of good and brought in technology. But there was hesitation over American components,” recalls Major.
Ironically, the LCA is powered by the same family of American engines as the Gripen. Issues will also inevitably be raised if Saab insists on a majority stake in the Indian JV. The upper limit of foreign investment in defense projects under current FDI rules and Defense Procurement Procedure (DPP) is 49 per cent. Anything above this has to be approved by the Cabinet Committee on Security (CCS) on an exceptional basis. This is where the Swedes expect Adani to weigh in.