The Ministry of Defence seems to be in a fix over plans to procure six new generation Airbus refuelling tankers or A330 MRTT worth nearly $1 billion for the Indian Air Force (IAF).

While the Ministry is keen on buying these twin-engine air-tankers, government support has not been forthcoming. The government thinking apparently is that the Rafale deal should be concluded first before the air-tankers are taken up as costs involved are huge.

Top echelons of the government find the deal with Airbus “too expensive with not enough output” and prefer the cheaper Russian Ilyushin-78, sources told BusinessLine .

The IAF is believed to be pushing the government to take a final call on the deal as it is in dire need of such tankers over and above the six Russian aircraft it has in its fleet, sources said.

A long haul

Senior defence officials feel that it will be a long haul before the deal gets done with the proposal now before the vigilance department. Airbus’ civil division has been facing a CBI case from the 1970s.

According to an official, the CBI case is government’s way of “finding a way out of the deal” as the Defence Ministry is engaged with Airbus on many other programmes.

The A330 MRTT was selected as the preferred tanker in January 2013. It had made the cut twice. However, the process of acquisition has been stuck with the Defence Ministry’s contract negotiations committee.

Airbus, on its part, has extended the validity of the bid without raising the price. Venkat Katkuri, President, Airbus Defence & Space Division, India, said: “There has been no update from the Ministry since 2014 on the MRTT. I do not think pricing is an issue stopping them from processing the case, because then they would have sought clarifications. We have diligently followed all processes, guidelines and the DPP rules as per the request for proposals. We are awaiting the MoD’s guidance on next steps.”

According to one Airbus spokesperson, it was evaluated twice as the lowest bidder inclusive of life-cycle costs by an expert committee following due process. He said that Airbus has corroborated its position on the cost by submitting the operational cost data of A330MRTTs deployed in other air forces around the world. The A330 MRTT has been ordered by France, Korea, Singapore and Australia, and has been selected by five more countries — the Netherlands, Norway, Poland, Qatar and Spain.