Why Saab Pulled Out of Its Deal With Adani to Make Fighter Jets in India

Saab had entered into a collaboration with Adani Defence in 2017 to locally build, via a transfer of technology, 114 Next Generation Gripen-Es to augment the IAFs depreciating combat fleet.

Chandigarh: Sweden’s aerospace and materiel vendor, Saab, has terminated its nearly six-year long association with Adani Defence to jointly manufacture its Gripen-E fighters indigenously, to meet the Indian Air Force’s (IAF) long-deferred $17-19 billion tender for 114 multi-role fighter aircraft (MRFA).

“We have decided not to pursue the arrangement with the Adani’s,” Saab India head Mats Palmberg told reporters in New Delhi earlier this week, but declined to elaborate on the reason behind the break. But he did not rule out Saab forging a new partnership with an unnamed domestic manufacturer later, provided it was permitted to hold 74% equity in the venture, which Palmberg said was permitted under the foreign direct investment regulations concerning defence and aerospace projects.

Saab had entered into a collaborative memorandum of agreement (MoU) with Adani Defence in August 2017 to locally build, via a transfer of technology, 114 NE (Next Generation) Gripen-Es to augment the IAFs depreciating combat fleet, that had precipitously declined from a sanctioned strength of 42 squadrons to around 29-30 presently.

The Saab-Adani Defence agreement was forged eight months before the IAF had requested for information for the MRFA in April 2018, which elicited responses later that year from seven original equipment manufacturers (OEMs). These included Eurofighter ( Typhoon), France’s Dassault Aviation (Rafale F3R), Saab (Gripen-E), Russia’s United Aircraft Corporation, and Sukhoi Corporation (MiG-35 ‘Fulcrum-F’ and Su35 ‘Flanker-E’) and US’s Boeing and Lockheed Martin (F/A-18E/F ‘Super Hornet’ and upgraded F-21).

All seven aircraft have been under consideration by the IAF for over four years, and there is little or no clarity on when, if at all, the request for proposal (RfP) or tender for these 114 combat aircraft would be issued by the Ministry of Defence (MoD). After all, it is no secret that India’s military faces a serious financial resource crunch and declining annual outlays, in addition to numerous competing platform and equipment requirements by all three services, and not just fighters for the IAF.

Industry sources told The Wire that in all likelihood, Saab had entered into collaboration with Adani Defence, despite its total inexperience in the aerospace sector, believing that its head Gautam Adani’s proximity to the Bharatiya Janata Party government could ‘swing’ the lucrative fighter deal in Gripen-E’s favour. In fact, at the Delhi press conference, held on August 31, 2017, in a five-star hotel, where the Saab-Adani Defence MoU was announced, executives from both companies had incredulously declared that the latter’s expertise in integrating power generation equipment was technologically sufficient to enable it to build fighter aircraft.

This MoU, however, had transpired when the IAF, for a two- to three-year period, had seriously pursued the procurement of indigenously built single-engine combat aircraft to meet its enduring shortfall of 114 additional fighters. And, for this requirement, the two rival platforms under IAF’s consideration for an extended period, considered the Gripen-E and Lockheed’s F-16 Block 70 fighter variant.

The new Gripen E aircraft from Saab. Credit: Reuters

The new Gripen E aircraft from Saab. Credit: Reuters

In pursuit of this goal, the MoD and the IAF had opened negotiations in 2015 with Lockheed and Saab, both of whom subsequently made multiple presentations to them on indigenously building their respective fighters. The projected programme was envisaged as part of newly elected Prime Minister Narendra Modi’s ‘Make in India’ initiative, aimed at reducing India’s unduly voluminous and costly materiel imports, as well as augmenting the country’s fledgling defence industrial base.

Also read: Why It’s Time for a Reality Check on ‘Atmanirbharta’ in India’s Defence Manufacturing

Earlier, Lockheed had fielded its F-16IN Super Viper fighter and Saab JAS-39 Gripen platform – predecessor to the Gripen-E – for the IAF’s 2007 tender for 126 medium multi-role combat aircraft (MMRCA) alongside the Rafale, Typhoon, MiG-35, and the F/A-18E/F. Both the former fighter jets, however, failed to qualify in the field evaluation trials for the MMRCA buy that was scrapped in 2015, following three years of negotiations centred around the shortlisted Rafale.

Instead, the MoD acquired 36 Rafales in flyaway condition in 2016 for Rs 58,891 crore, all of which had since joined service in two squadrons at Ambala and Hashimara in the northeast.

Thereafter, in October 2016, the MoD, then headed by Manohar Parrikar, formally approached Lockheed and Saab via the Indian embassies in Stockholm and Washington D.C., to progress the single-engine fighter programme to meet the IAF’s urgent requirements. This envisaged an Indian private sector company being designated a strategic partner under the Defence Procurement Procedure 2016 licence, building one of the two shortlisted fighters in a joint venture with its OEM.

Lockheed, for its part, had inked an agreement at the Paris Air Show in June 2017 with Tata Advanced Systems Limited to potentially erect a local F-16 assembly line.

“The project had then included a full and complete transfer of technology as well as the local manufacture of tier I, II and III components and sub-assembles,” said a three-star IAF officer, familiar with the negotiations. It was conceived as a comprehensive and all-encompassing manufacturing contract, the likes of which India’s defence-industrial complex had never before undertaken, but eventually it all came to nought, he added, requesting anonymity.

Industry sources said that the abandoned proposal had included the procurement of one squadron of 18 fighters in flyaway condition, followed by the strategic partner constructing the remaining 96, with progressively enhanced levels of indigenisation. The shortlisted platform would have been required to complete 30-35 years of squadron service, or flying time of 6,000 hours, with at least one mid-life upgrade or MLU.

At that time, IAF officers had said in all likelihood, these fighter numbers would be increased to some 200 units, resulting in an overall amortisation of platform costs to render the project viable.

The strategic partner, for its part, would have been required to progressively incorporate 40-60% of indigenous content into the fighter, based on a value-added basis. And other than constructing the fighters, the strategic partner would also be required to sustain their performance-based logistics, in addition to supporting their maintenance, repair, and overhaul (MRO), and in effecting MLUs.

But the byzantine and nebulous strategic partner policy emerged as one of the principal drawbacks in this fighter project, and as the procedure remains, even now, a work in progress with few in the MoD, the services, and even fewer in defence industry circles having a clear perspective of its contours and implementation. “The SP [strategic partner] model remains constrained by obfuscation and continuous contradictory clarifications by the MoD regarding its application,” said a senior IAF officer, declining to be named. This ambiguity, in turn, provoked speculation and conjecture for all the concerned parties, needlessly perpetuating consequential delays and total puzzlement, he added.

As a corollary to this failed endeavour, the Indian Navy (IN), too, is presently wrestling with the strategic partner concept in its 15-year-old P-75 (India) programme, to locally construct six diesel-electric submarines, an unending saga that has previously been reported in The Wire on numerous occasions.

Also read: For the Defence Establishment, Materiel Acquisition Schedules Are Seemingly Timeless

But in early 2018, the MoD ‘directed’ the IAF to abandon its proposal for 114 single-engine combat aircraft by broadening its long-pending fighter requirement to include twin-engine platforms. It instructed the IAF to finalise its request for information for imminent dispatch to OEMs, incorporating both single- and twin-engine platforms in it, as the first step towards boosting the forces fighter shortfall.

Defence officials, however, conceded that the MoD’s directive to the IAF to include single- and twin-engine fighters in its request for information would, once again, emerge largely as a ‘replay’ of the former MMRCA tender. The only addition to the prospective fighter list, it later turned out when responses to the request for information were received, was the inclusion of the Su-35 and Lockheed’s F-21 variant, which some in the IAF referred to as merely a ‘warmed-up and rebranded’ F-16.

Industry officials said that hawking the F-21 – unveiled at Aero India 2019 in Bangalore – made ‘excellent commercial sense’ for Lockheed and the US government, but little operational logic for the IAF. Some even compared it to the glib deal-making salesman’s apocryphal ruse of making money from selling old rope.

With F-16s being phased out of the US Air Force, and their plant at Fort Worth in Texas shutting down after over 40 years, shifting the ageing fighters manufacturing facility to India, would keep the ‘steroids-enabled’ fighter line going for several more years, besides providing much-needed employment in the US.

The IAF, however, has been steadfast in quietly opposing the F-21s acquisition, but seems enthusiastic about the advanced F-15EX ‘Eagle-II’. But, for now, the latter is seemingly not on offer, needing political clearance from Washington D.C. to be included in the putative MRFA listing.

Meanwhile, in late 2021, Saab made an unsolicited presentation to the IAF for its Gripen-E , which it claimed was on offer for half the price that India had paid for the twin-engine, canard delta wing Rafale. It also claimed that the Gripen-E was powered by the more powerful General Electric GE-F414 after-burning turbofan engine with a 98kN thrust and fitted with the cutting edge Gallium Nitride (GaN) Selex-Galileo Raven ES-05 active electronically scanned array (AESA) radar for enhanced situational awareness, among other advanced weaponry and avionics.

Nonetheless, opinion in the IAF on the operational efficiency of single- and dual-engine fighters is divided, but there appear to be more votaries at Vayu Bhawan for the latter.

Perhaps, that is one possible explanation for Saab terminating its ‘arrangement’ with Adani Defence, despite its burgeoning omnipresence in the defence and government circles over the past six years. And, also the realisation that it would simply not be able to wing its single-engine way into the MRFA contest, if and whenever it materialised.