After submarine deal exit, Sweden's Saab wants 'control' of IAF fighter bid

Saab wanted to export Gripen jets built in India globally if a contract were signed

Saab Gripen Brazil The first Gripen E/F built for Brazil | Saab

Swedish defence manufacturer Saab has indicated it wants to retain control of local manufacturing of aircraft in India if it is selected by the Indian Air Force to supply 114 fighter jets, Bloomberg reported on Thursday.

Saab is one of seven manufacturers offering warplanes for the deal to supply the 114 fighter aircraft, which is estimated to be worth over $15 billion in value. Saab had announced that the Adani Group would be its main partner in India for the project, which revolves around the supply of its Gripen E/F fighter. Saab had earlier said Bengaluru would be the hub of activities to manufacture 96 of the 114 jets, if it were selected.

“If a company needs to take responsibility for quality, time, cost and capability that’s required by the Indian customer, I want to have some sort of control of that,” Saab Chief Executive Officer Micael Johansson told Bloomberg.

Explaining Saab's demand, Johansson told Bloomberg, “We just need to find a mechanism and the sort of balance between investing and having some sort of control, and not to be liable for things that we cannot control in the Indian market." Johansson noted Saab wanted to export Gripen jets built in India for the global market if a contract were signed.

The Gripen E/F has been on offer to the Indian Air Force for over a decade. Saab had offered the fighter to the Indian Air Force for its Medium Multi-role Combat Aircraft (MMRCA) project, which envisaged the supply of 126 fighters, the majority of which would have been manufactured by state-owned HAL.

The problem of control of foreign equipment manufactured in India is not new. The Dassault Rafale was chosen in 2012 as the winner of the MMRCA tender. However, negotiations between the government and Dassault dragged on for three years, with differences over price and the French company's unwillingess to accept responsibility for the performance and quality of the equipment built by HAL. The Narendra Modi government called off the negotiations in April 2015, when it announced plans to buy 36 Rafale jets directly from France.

Johnansson told Bloomberg that in addition to the Adani Group, Saab was looking forward to tie-ups with other prospective Indian companies for the 114-aircraft deal for the Indian Air Force. However, he emphasised "Saab wants to control the entire system".

The demand for control may face complications with current FDI rules in the defence sector, which mandate a limit of 49 per cent on investment by foreign companies without government approval. Economic Times had reported in October the government was mulling hiking the limit on FDI to 74 per cent to allow more foreign companies to set up units in India.

Interestingly, in September, Saab pulled out of a tender to supply six submarines to the Indian Navy under the Project-75I programme, citing 'control' of the manufacturing project as a hindrance. The Project-75I programme, worth about Rs 45,000 crore, envisages construction of a foreign submarine design in India with an Indian company as strategic partner.

At the time, Ola Rignell, CMD of Saab India, told The Hindu the complications in the submarine bid were "time schedule and the requirements related to the Strategic Partnership policy with its unbalance between our possibilities to have control and our obligations and liabilities”.

In 2013, Brazil became the first country to select the Gripen E/F. Saab opened a subsidiary in Brazil to build 36 Gripen E/F fighters for that country. Saab Brazil is executing the Gripen E/F contract for Brazil in collaboration with Brazil's aerospace giant Embraer and other smaller local suppliers.