Price differences delay Indo-UK deal on AJT

KT NEWS SERVICE NEW DELHI, Mar 15: Differences over pricing continued to snag the talks between the officials of the Defence Ministry and the British Aerospace as the negotiations to ink a deal for purchase of 'Hawk' Advance Jet Trainers (AJTs) on Monday here entered into seventh day.

The British team, including top company officials, continued negotiations on the biggest-ever defence contract worth over Rs 80 billion for the purchase of 66 Hawk 115Y trainers and its signing may take some more time, official sources indicated.

They said the deal, which was expected to be finalised last week, is now almost being renegotiated as the public sector Hindustan Aeronautics Limited (HAL), which is to assemble 42 Hawks under transfer of technology, did not include costs for tooling and training at its plant in Bangalore.

The oversight by the HAL could push up cost of the deal by several million pounds per aircraft, with the Indian side trying to tell the British company officials to relent on the oversight.

But so far, the British company has been sticking to the price agreed last year.

The Cabinet Committee on Security (CCS) here has already cleared the deal and the talks are now on to formalise it into a commercial contract.

Prime Minister Atal Bihari Vajpayee's government had late last year cleared the purchase of 66 Hawk 115Y trainer jets from Britisgh Aerospace, a fleet that will, for the first time, help IAF Pilots bridge the gap between subsonic and supersonic aircraft.

The deal involves outright purchase of 24 aircraft, with the remaining 42 to be manufactured by HAL under license at its Bangalore headquarters.

"As of now, it should have been signed.

Today being Sunday, most probably tomorrow it should be cleared," Defence Minister said about the Rs 8,000 crore project, which includes training of pilots, license fee, cost of production at HAL and creating infrastructure for the IAF.

"I am hopeful it will be signed tomorrow because till last night, the British Defence Minister was in touch with me telephonically and our defence secretary was in touch with me.

It seems to me that we are at the fag end of the effort," Fernandes said.

Asked whether there would be a cost escalation for the deal, Fernandes said, "I can't say anything, as there are no details with me".

The delivery of the aircraft will commence after 35 months from signing the contract with BAE.

All the 66 aircraft (each costing about Rs 85 crore), are expected to be available to the IAF before the next six years.

Till the new aircraft are available for the IAF as an interim measure, the contract will also provide for Indian pilots to be sent to the UK for training by British Aerospace.