Barely a few weeks after the defence ministry issued a request for proposal (RFP) for the fifth-generation Advanced Medium Combat Aircraft (AMCA) project to the three shortlisted bidders, including Larsen & Toubro-Bharat Electronics Limited, Tata Advanced Systems Limited and Bharat Forge-BEML, the project appears to have run into a major hurdle, with commercial negotiations over its engines reportedly facing cost escalation trouble.
According to media reports, US engine manufacturer GE Aerospace has sharply increased the quoted price for its F414 engines, complicating the ongoing negotiations for one of the most critical components of the fighter jet programme.
Reports now suggest that while each F414 engine was initially expected to cost around ₹70-80 crore, GE has quoted prices that are almost three times higher.
Although technical negotiations between the two sides have been completed, commercial discussions are understood to have stalled over engine pricing, technology transfer and manufacturing arrangements.
The AMCA prototype programme alone is expected to require 15 F414 engines for its five flying prototypes.
"The company knows the programme is built around the F414 and that changing engines now would be extremely difficult. That gives GE significant leverage during commercial negotiations," The Indian Express quoted a source as saying.
Apart from the procurement of the engines, negotiations also cover transfer of technology, maintenance, repair and overhaul (MRO) facilities, delivery schedules, spares and warranty support.
Sources further told TNIE that GE has sought around ₹6,000 crore to establish a dedicated F414 engine assembly and manufacturing line in India to cater to the future requirements of the LCA Tejas Mk-2, the initial production batches of the AMCA and the Twin Engine Deck-Based Fighter (TEDBF) programme.
According to the reports, India also explored the possibility of reducing the size of the initial engine order to lessen the financial burden. However, the two sides are yet to resolve differences over pricing.
