Jul. 29 – Britain’s BAE Systems, the world’s largest defense contractor, recently confirmed a US$780 million deal with India’s Hindustan Aeronautics Ltd. which will supply the former British colony with 57 more Hawk advanced trailing aircraft.
The agreement, which also includes a further US$312 in work for Rolls-Royce to build the engines, was signed in Bangalore yesterday with Prime Minister David Cameron in attendance as he makes his way around the country. He commented that the deal was “an outstanding example of India-U.K. defense and industrial partnership” and that it would bring “significant economic benefits” to both nations.
“It is evidence of our new, commercial foreign policy in action,” Prime Minister Cameron said in a statement. Under the agreement, Hindustan Aeronautics will manufacture the aircraft domestically under the BAE Systems’ license. Of the 57 new aircraft, 40 will go to the Indian air force and 17 will go to the country’s navy.
“BAE Systems is committed to developing a domestic business in India and will continue working with industry in India to develop further capabilities in the defense and security sectors,” BAE’s Chairman Dick Olver told the Telegraph.
The new aircraft will be added to the 66 other Hawk training aircraft purchased by India from the company in 2004 for US$1.45 billion.
India paid US$780 million for 57 Hawks to the UK ie US$13.68 per aircraft.
India paid US$ 1450 million for 66 Hawks to the USA ie US$ 21.97 per aircraft.
Were the Hawks identical ?? If so, why the difference especially considering that the US deal was done earlier and hence should have been cheaper ???
Can anyone throw any light ???
Shambo,
Carlos.
“…If so, why the difference especially considering that the US deal was done earlier and hence should have been cheaper ???…”
Actually it’s the opposite. When a product initially comes out it will be more expensive until the manufacturer makes back their development and setup costs. Throw in maintenance and spare parts as part of the contract which are added on top of the price of purchasing the planes. The Americans also has different price points for different countries governments. The Israelis get US military grants and a discount on the American fighters they buy whereas the Saudis pay top dollar for their US fighters which are nobbled. You have to figure where Indian fits in with US plans.
As time goes on other manufacturers provide price competition reducing purchase costs. In addition for the second contract, the Indians will be manufacturing the planes themselves saving on the cost and perhaps maintenance costs later as well.
I might add that India could save even more money if she could get her indigenous HAL Tejas to work, and kit out some as trainers
Thanks for the reply, The_Observer.
What you say makes complete sense. Much obliged.
Cheers,
Carlos.