The $10 billion dogfight

airbase at Yalahanka is punctured by a deafening roar, as the FA 18 super hornet, performs a stunning rolling loop. The fighter jet is on the Indian air force's shopping list. And it is not just another list going. In these times of recession, $10 billion spells a massive business opportunity. That is the cost of acquiring 126 multi role combat aircraft that India needs for upgrading the air force to the next level. The whole world is lining up to sell, aircraft firms turning up in full strength at the bi- annual air event in Bangalore which kicked of the marketing process. The Indian air force is looking for solutions to a crisis of quality and quantity in its force preparedness. Where as the force needs a minimum contingent of 40 squadrons, currently the force is able to field only 33 squadrons.Says Air vice marshal(rtd) Kapil Kak, additional director of center for air power studies a new Delhi based think tank " This is the biggest ever IAF contract. The winner will need to have three essential attributes. It will have to be a true multi role fighting capability, that includes air to air and air to ground superiority. It will need a powerful AESA radar that can simultaneously track 400 targets and engage at least fifty. Thirdly any air craft will need to have technological modular upgradeability which will allow the IAF to develop it over the years technically. There are many reasons for this depletion in airpower. The first is age of the existing IAF fleet. The IAF has not introduced any new fighter planes over the last decade with the exception of 40 top of the line SU 30 MKI fighter jets from Russia. In the same time, it has had to retire the Mig - 23 fighter bomber as well as the MIg 25 supersonic fighter reconnaissance aircraft. The other major culprit has been air crashes. The IAF has lost more then 200 fighter jets over the last decade. These include all types of aircraft but the largest number has been the ageing fleet of its mainstay – the Mig 21.To get over the resultant shortage of fighter planes India has floated the request for Information, official speak for an tender, to acquire 126 fighter jets that will be the striking arm of the IAF for decades to come.THE F A 18 Super hornet – the front runnerThe super hornet is a formidable aircraft. It is a fifth generation fighter planes and a front runner for the contract. The fighter is designed for air dominance and has Day/night strikes capabilities in all weather. Says Dr Vivek Lall, VP and country head Boeing Integrated Defense Systems, "The Super Hornet will provide the Indian Air Force with a tactically superior and combat proven multi-role combat capability. This is further enhanced by its renowned reliability, ease of maintenance, and exceptional operational availability - all of which contribute to its low Life Cycle Cost." However two factors could hold back this fighter from winning the IAF contract. The first is the issue of defense off sets. The United States has traditionally not shared technology with client states where as India has a stated policy that requires fifty percent of all defense building work to be done within India. Another hurdle is that the US rules will make it difficult for India to have this fighter plane tweaked to make it capable of delivering nuclear weapons. The US has stringent end user agreements for their aircraft and India may not be open to intrusive inspection of their air craft once the fighter joins the force. The proven choice F - 16 super viperAmong those who fly the f 16 is a legend. Across the world in war time sorties it has a 72-0 kill ratio. That is, it has shot down 72 fighters but has never itself been shot down in combat. Its remarkable measurability and proven superiority in wars such as the US attack on Iraq and the Israeli attack on the osirak nuclear reactor have made it the best fighter plane of its generation. Although without question a superb machine there is problem. The Pakistan air force has older version the fighting falcon and that would mean that they would be in a far better position to asses what the technical specifications and operational performance of this fighter plane would be,. This is something that may make it difficult for the super viper. However aviations experts say that the F 16 being offered to India is a block 60 variant and complete in a different advanced category then the one that the Pakistan Air force flies. The Dark Horse - MIg 35The Mig 35 is a dramatic improvement on the Mig 29 which the IAF has flown for many decades. At the Bangalore air show the unofficial consensus among those who watched was that the plane style a long march among rivals when it came to aerial acrobatics. The Mig 35 is a multi role fighter. Although heavier then the competition it has some unique abilities. Says Mikhail T Globenko, regional director for marketing Russian aircraft corporation, " The IAF has a requirement for am modern multi role fighter that can deliver an air superiority platform and the MiG 35 is the ideal choice and it can also be a compatible platform given that the Mig 29 is already ins service with the IAF." The MiG 35 has a powerful Zhuk active electronically scanning array (AESA) radar and can fire a greet range of missiles and bombs. However the Indian relationship with Russian weapons delivery has been rocky with terms of trade changing mid way and thus the trust factor of the delivery schedule and pricing as has happened from with the Indian purchase of the air craft carrier admiral Ghroshkov where the Russians have reportedly hiked prices three fold from the contracted one billion dollars to nearly three billion. The competitor - Euro fighter typhoonThe Euro fighter has an edge in this competition since it is the most modern of the fighter planes on offer and has great strengths in air to air and air to ground roles. The EADS Company has worked with India before as well and is likely to be more flexible with off sets and end user agreements then the Americans. This is likely to be an aircraft that will be the real competitor for this tender. The aircraft has sold over 300 planes to several countries including 72 on order from the Royal Saudi Arabian air force. The challenger RafaleIs a exciting new fighter from Dassault aviation which already supplies the IAF with the Mirage 2000 and the Jaguar fighters. The Rafale stands out in its abilities at air superiority role as well as its advanced avionics and abilities to launch multi role missions. The air force will also be looking keenly at the fact that the firm has a record of working with India on off sets. The air craft is also known to have a very low Radar signature that makes detecting it tough - and can be a critical advantage in combat. The outside chance - SAAB GripenThis Swedish beauty is the last in the race but it too has the modern attributes of a multi role fighter aircraft and is a very new aircraft. The bird is well known for speed and maneuverability and can reach the speed of up to Mach 1.2 without afterburners. It also has a powerful radars and advanced avionics suits. So as the world places its bets and the fighter's role may the best bird win the chance to fly the IAF blues.

The $10 Billion dog fight

A slow down is not a recession

Don't P A N I C

Ninad Dhirubhai Sheth

Confidence is the key. In cricket, when you are low on that critical element, the same shot that got you those spectacular no one moves boundaries result in inglorious caught behinds. The Indian economy is somewhat a similar mood spell. Fundamentals are intact. On almost all parameters including saving rates, investment rates and domestic spending the country is better placed then the US Japan and Germany the three economies which have fallen into a recession. Yet the mood is one of fear. Look around and you see a country low on confidence. The economic crisis globally has induced a scare in India. It is amazing that so many are worried so much by the global crisis even as the economy itself grows apace. It is as if we are determined to talk ourselves into a recession. Go to the ministry of finance and you see nervous bureaucrats scurrying around trying to understand the impact of the global crisis. In Mumbai big firms - the Tata's included - are communicating with staff asking for belt tightening, giants like L&T are cutting back on grand ship building and realty projects. And the airlines, well that's too well documented to be detailed. Thus the fear of recession is writ large in today's corporate India. But is there really a recession? For one thing the classic definition of recession a - shrinking economy for two consequent quarters – simply does not imply to India. The economy grew the last two quarters - albeit at a marginally slower pace. Comments Surjit Bhalla, Chairman, Oxus investments, a noted economist, "We do not have a recession in India. Sure, the global recession will lead to a growth downturn however it cannot be called a classic recession. Look at the realities, inflation is back in single digits and oil prices have halved. Thus we have more elbow room now. " A Standards and Poor's report recently commented that countries like India are less likely to be impacted by the global downturn since their exposure to global trade is marginal when compared to their domestic consumption.Says Pavan Jain CMD, of safexpress, a logistics firm, "There certainly is an economic slowdown, but to call it a recession would be a statement made too soon. As compared to what the other countries are facing we are still in a better position as our banking structure is not as influenced as the western countries. We can call it a spill over effects of the global financial meltdown. More liquidity is coming in to the system and this will help we need to reduce fuel taxes and bring the price of petrol down and lastly the domestic consumption is still a growth story so overall I think we should just concentrate on the basis and results will come." The first bright spot for the Indian economy is the foreign exchange cushion. With nearly $255 billion put the country in a far better position when it comes to measures such as recapitalization of banks and providing support to the rupee. The Software sector that is depended on the external markets is still very much in vogue due to economic arbitrage being in India's favor. With the recent fall in the rupee the InfoTech sector has remained competitive. Firms with size, such as Wipro and Infosys can bet on bigger contracts since the pattern in the rich world is to outsource more - not less - in a down turn. The three large Indian IT firms together hold in access of $500 million in cash reserves. This will allow not only for adjustment s during the downturn - but also overseas acquisitions at the right price since firms in the west are looking good at current valuations. Agrees Raman Roy BPO veteran and chairman of Quattro an IT consultancy based in Gurgaon, "India is a part of the solution of the global crisis not a part of the problem. The US cost structure in a recession predicates further outsourcing. They have to cut costs there not add them. As for India, our dependence on the US market while significant is not absolute. In India there is a growth slowdown that can not be termed as a recession. " A report brought out in October 2008 by Everest, an IT consultancy points out that in fact this quarter and the next will see robust outsourcing orders for larger Indian IT firms from the US should Indian firms manage their cost structures in a correct manner. The state of Indian banks is the third redeeming factor in India's favor Vis a vis the global slowdown. The health of Indian banks is also much better in comparison to their global counterparts. What the US is now doing by taking stakes in big banks, is a matter of course in India. This has helped develop buoyancy. It was reported by the Reserve Bank of India that as much a half a billion dollars came into the NRI bank receipts in September 2008 alone. While some sectors such as banking and export firms have fired a record number of people it is not a sea of pink slips out there. Says Ashutosh Khanna, Partner Korn Ferry, a leading global recruiter "Look, jobs are out there for many sectors. Look at Unilever they grew by 16% last quarter. Sectors such as telecom and consumer durables have picked up and there is robust demand for quality professionals in these. Entertainment too is growing bear in mind that when times are bad sectors such as the liquor industry and entertainment have historically done well. We see a continuing trend of growth in these sectors of the economy." So while there may be a roll back on those fat pay checks the spa as a fringe benefit may not be on offer if you are good enough jobs are still around in many sectors. It's all about Money Globally the crisis is about sourcing money to fund the running of business and supporting business expansion. Here India is on a sounder footing. The RBI is expected to cut lending rates by at least 2 percentage points in the current quarter. This will see an infusion of nearly 80,000 crore of liquidity into the Indian market. What that does is restore confidence among lenders, among entrepreneurs and among corporations - the holy trinity that drives the Indian growth story. With the infusion of cash will also come the peripheral advantages such as new projects and strengthen infrastructure spending on new roads, electricity plants, ports and so forth. This can have the crucial multiplayer effect for the economy. The lending rate is the catalyst to pull a country out of the bad times. Says Ajay Relan of CX partners, an Investment Bank," A dramatic rate cut will certainly help in kick starting the economy, bringing it back on track. However India cannot afford to be complacent. India needs to channels its record level of savings into productive assets. We can no longer afford the ghastly cost overruns in infrastructure projects and so forth." Clearly to ride out the storm India needs to ensure that its tardy abilities at project execution are replaced by a vigorous new approach. We may create new money but it is much harder to create opportunities where that money is spending productively. Taken together, domestic consumption, easier lending rates, entrepreneur culture and robust foreign exchanges can come together to lift us out of what are bad - but not horrid times. As in Cricket so for the Indian economy – stick around this could yet be fun.