Defence PSU Hindustan Aeronautics Limited (HAL) has formed a committee to negotiate contract with the GE on production of GE-F414-INS6 engines in India that will power Tejas LCA Mk-2 fighter.
The HAL wants to conclude the deal before the financial year 2024-25 comes to an end as GE is seeking higher price for the deal than what was initially negotiated, defence sources said.
The Ministry of Defence has also signed a deal with the GE for GE F404 engines to power LCA Mk-1A fighter jets for the Indian Air Force (IAF). However, there are delays in the supply of the engines which disrupted the schedule for the induction of LCA Mk-1A into the Indian Air Force (IAF).
The contract negotiating committee of the HAL has already initiated its move and carried out engagements with Biden administration and GE around December 3, and more rounds of negotiations are expected later.
In the meantime, the HAL has sought a few technical documents from the GE for evaluation of the depth of Transfer of Technology (ToT).
“It is agreed by both the parties to continue CNC discussions in 4 phases including the Transfer of Technology & manufacturing technology, along with an assessment of the depth of technology being transferred that is up to 80% of the value of the engine,” informed defence sources.
As per an MoU signed between the HAL and GE on June 6, 2023, for production of the GE F4141-INS6 engines in India. The MOU allowed the two sides to get into Purchase and Business Agreements for production of engine.
Now the negotiations are on over GE pitching that engine parts representing 80 percent of the value of engines will be licensed through Transfer of Technology, which is 22 per cent higher than what was agreed in 2012, said defence sources.
In 2023, the price negotiation was valued at around $1 billion at the 2023 Price Level which is subject to negotiation would be the total value of these agreements.
The Manufacturing License Agreement (MLA) and DSP-83 (Non-Transfer and Use Certificate), signed by Ministry of Defence, GE and other stakeholders on September 24, 2024, are mandatory requirement for the ToT, defence sources stated.
Terms and conditions associated with the ToT including Technical Documentation, Technical Assistance, and Training are being discussed along with the terms and conditions associated with supplies including delivery schedule, statement of work, price escalation formula, warranty, option clause etc.
However, defence sources said the negotiations are still going on and are yet to be concluded.