Irshad Salim — India plans to spend $150 billion on the military that requires a foreign partner to invest in Indian manufacturing.
In the backdrop of Prime Minister Narendra Modi’s ‘Make In India’ initiative, Lockheed Martin agreed to send its Texas-based F-16 production line to India in an effort to secure a major fighter deal from New Delhi. It is also probably the last, best hope for keeping F-16 production going, since the fighter is being replaced in U.S. fleets by the next-generation F-35. The Pentagon hasn’t ordered new F-16s since 1999, although it continues to operate and upgrade hundreds of Air Force F-16s still in service, reported Forbes.
The deal signed at the Paris Air Show Monday, is intended to make India the main service and manufacturing hub for the the world’s most combat-proven multi-role fighter aircraft 3200 F-16s in service worldwide. New Delhi says it must have 100-200 single-engine fighters to counter the growing air threat posed by China and Pakistan.
Under an agreement with Tata Advanced Systems, Lockheed F-16 Block 70 fighters will be built in India instead of Fort Worth in Texas. Tata already builds airframe components for Lockheed’s C-130J airlifter and the S-92 helicopter, according to the companies.
While a joint press release said the deal will support “thousands of Lockheed Martin and F-16 supplier jobs in the U.S.,” it comes as the Trump administration has been pressing U.S. companies to expand production and employment domestically.
However, technology transfers and overseas production lines are becoming more common in military deals as defense giants look to keep older production lines in business and increase sales abroad.
The deal would allow India, the world’s largest importer of weapons, to also export the F-16 to other countries interested in the fourth-generation fighter. Over 3,000 F-16s are flown by 26 countries (including Pakistan) with over 4500 built, according to the release.
It would present little threat to American dominance of the global fighter market, since the U.S. and its allies are gradually migrating to the stealthy, software-intensive F-35 that is essentially invisible to adversaries.
The F-16 Block 70, however, is the most modern version of the F-16 Fighting Falcon, variants of which have been in service since 1978. The F-16 is a single-engine multi-role jet capable of air-to-air and air-to-surface missions.
The Block 70 also has an upgraded AESA radar, improved data displays and connectivity, and an Automatic Ground Collision avoidance system to help prevent crashes.
According to reports, India is in dire need of new planes as its 900 fighters, mostly Russian-built aircraft are nearing the end of their service lives, and need to be replaced. A formal contest for 100-250 planes is expected to open soon.
Sweden’s Saab Gripen is also in the running for the deal but hasn’t announced an Indian partner under ‘Make In India’ initiative.
In 2012, India chose Dassault to build 126 fighters but negotiations stalled. So India signed a deal with France worth nearly $9 billion for 36 Rafale fighter jets last year, beating out Boeing’s (BA) F/A-18 E/F Super Hornet, Lockheed’s F-16 and BAE’s Eurofighter.
Under that pact, France agreed to invest 30% percent of the nearly $9 billion order cost in Indian military aviation research programs and another 20% in local production of Rafale parts.
But New Delhi still sees a larger, follow-on order in the future, and Lockheed’s agreement to move F-16 production to India could increase its odds of winning that deal.
Boeing shares rose 1.3% to 199.08, hitting a new all-time high, as the aerospace giant announced a raft of civilian jet orders at the Paris Air Show.