One of the biggest-ever defence contract for 126 fighter jets worth a huge $11 billion will be closely watched for any signs of corruption in the deal. Mr Antony and Dr Manmohan Singh and Sonia Gandhi better watch out as at the first sign of corruption, the whistles will be out and blowing loudly across the land

India is finalising one of the country’s biggest-ever defence contracts. The order is for 126 fighter jets worth an immense $11 billion. These jets are meant to replace the country’s ageing fleet of MiG 21s, which make up one-third of the Indian Air Force’s jet fighters which have been crashing regularly for no other reason but that they are aged.

Originally six companies and consortia put in bids for the tenders which were announced in early 2011. The six were: Dassault of France which is offering its Rafale jet fighter; a consortium of the pan-European EADS, BAE Systems of the UK and Finmeccania of Italy. This grouping is offering the plane called the Eurofighter Typhoon; Lockheed Martin of the US bid with its F-16 fighter aircraft; Boeing of the US which placed on the table its bid to supply the F-18 Super Hornet; Saab of Sweden offered its Gripen fighter and Russia which wanted to sell its MiG 35.

India made a shortlist of two in April this year: Dassault’s Rafale and the Eurofighter Typhoon of the pan-European consortium. The bids for the shortlisted two fighters were opened last Friday. No details have been released as to what the bids offer.

The defence ministry, it is understood, will evaluate the bids on the basis of three criteria: The cost of acquisition and what is known as the “life-cycle cost of the aircraft” and “military offset considerations.” The last criterion covers the extent of technology transfer and the investment the bidders will put into the country’s defence industries if they are chosen.

According to informed sources, the two US companies lost out because they did not offer their latest and technologically most advanced jet fighters. The controls imposed by the US government on transfer of technology to India also came in the way of these two companies.

India’s jet fighter order is stated to be of vital importance to the shortlisted bidders. Both are looking for export markets since defence budgets are shrinking in the developed world.

The Eurofighter Typhoon has four main customers: the UK, Germany, Spain and Italy. Austria and Saudi Arabia also operate the jet. But military sources say there are no other firm export orders for the Typhoon at present.

The stakes are said to be higher for the Dassault. The Rafale came out as France’s decision to pull out of the pan-European project with Germany, the UK, Spain and Italy to share the development costs of a new fighter that ultimately became the Typhoon. The Rafale has no customers outside France. Dassault is hoping to sell the Rafale to Brazil and the United Arab Emirates.

All this is fine and till now everything is going by the book. But the future could be worrying. The financial well-being of both the shortlisted bidders depends heavily on securing our order. Therefore, the cynic would be justified in warning that there could be ‘pressures’ a la Bofors on the politicians, bureaucrats and Air Force bigwigs deciding the deal.

And then, $11 billion is a huge, humongous amount of money. When such money changes hands, it is but human nature that some of it will adhere to sticky fingers and become unstuck in a ‘safe’ banking haven in Switzerland or the Cayman Islands or Bermuda.

Luckily, perhaps, we have a supposed incorruptible in AK Antony, the defence minister. And we hope that he will continue to maintain his reputation while dealing with this order.

Still, we at Moneylife and in the huge Indian press as well feel constrained to issue a warning.

We will be watching this deal very closely. We assure Mr Antony and Dr Manmohan Singh and Sonia Gandhi that we will be able to sniff out the first odour of corruption in this deal. The press has its sources of information.

So the trio had better take care. At the first sign of corruption, the whistles will be out and blowing loudly across the land.

(R Vijayaraghavan has been a professional journalist for more than four decades, specialising in finance, business and politics. He conceived and helped to launch Business Line, the financial daily of The Hindu group. He can be contacted at [email protected]).