Appu K. Soman
The Failed Negotiations with Snecma for Engine Technology
This article originally appeared in centreright.in. CRI content has now been subsumed in swarajyamag.com. The views expressed here are personal and do not necessarily reflect those of the editors of swarajyamag.com

In the midst of sundry scams relating to defence procurement, the cut in the 2012-13 defence budget, and the usual handwringing over delays in various defence projects, an announcement with huge implications for India’s search for self-reliance in defence production went unnoticed. Early this year, AjaiShukla, the Business Standard’s defence correspondent, reported that the negotiation with the French company Snecma (the maker of the engine for the Dassault Rafale aircraft) for collaboration on India’s Kaveri engine had collapsed. Perhaps because nobody has(so far)leveled allegations of corruption, the media and even defence analysts took no notice. But even a cursory look at this negotiation raises the suspicion that all was not above board.

The Gas Turbine Research Establishment (GTRE), a unit of the Defence Research and Development Organization (DRDO), has been working on the Kaveri turbofan engine for the Light Combat Aircraft (LCA) since the 1980s. The LCA first flew in January 2001, powered by a US engine as an interim measure. DRDO did manage to build the Kaveri engine. Unfortunately, the engine failed its high altitude tests in 2005. Even if the Kaveri had performed well, it still would have been inadequate for its original purpose of powering the LCA. What the GTRE had succeeded was in developing an engine using 1970s technology according to specifications fixed in the early 1980s. In the meanwhile, the LCA had become heavier than anticipated, necessitating a more powerful engine. To enhance its power without increasing its size and weight, GTRE needed new technologies that advanced countries had developed in the intervening years for its “hot section”—mainly single crystal turbine blades, “blisk” (integrated rotor disk and blades) and thermal barrier coating for the blades.

In 2006, MoD decided to seek foreign collaboration from reputed foreign engine manufacturers to produce an improved Kaveri. The problem is that countries do not part with such technologies easily. But India had an ace up its sleeve: its proposed medium multirole combat aircraft (MMRCA) deal.Back in 2008, it was reportedthat DRDO had presented MoD a technology wish list, to be obtained in the form of offsets for defence acquisitions. MoD, however, preferred to buy these technologies as part of the contracts for the import of weapons systems. Accordingly, the RfP for the MMRCA deal reportedly prescribed the technologies the winning vendor must part with. Aero engine technology was surely the military technology India needed the most. As it has been widely reported, losing the MMRCA deal would have made the survival of several of the bidders as combat aircraft manufacturers doubtful. Considering these stakes, the MMRCA bid offered India the best leverage to obtain advanced aero-engine technology from the winner.

But the government of India does not believe in using its leverage in bargaining for what it needs most. It issued a stand-alone RfP for collaboration for developing an improved Kaveri in 2006. A separate RfP for the MMRCA deal followed a year later. The US General Electric (GE) and Britain’s Rolls Royce refused any form of participation. America’s Pratt&Whitney is on record having expressed its willingness to aid the Kaveri project. But later reports said it was willing to participate only as a consultant.  In 2008, MoD selected Snecma over Russia’s NPO Saturn as the collaborator for the Kaveri. It was reported that it would take 4 years to develop and certify a new engine, after which the technology would be transferred to GTRE. MoD entered into separate negotiations with Snecma on this deal even as it was processing the MMRCA proposals. Thesenegotiations dragged onfor more than three years. Meanwhile, the Dassault Rafale, powered by a Snecma engine, emerged as the lowest bidder among those shortlisted for the MMRCA and MoD began contract negotiations with it. Was Snecma playing a game, waiting for the finalization of the Rafale deal? It would seem so. It appeared that in a bizarre twist, at this stage India had allowed France to make the Rafale deal an offset for the engine technology deal.

As what was thought to be price negotiations with Snecma progressed, it also appeared thatSnecma was really offering the “ECO” core it had already developed and that it would pass on the technology to the DRDO only after 15 years. Considering the pace at which engine technology progresses, the know-how, by the time Snecma transferred it to GTRE, would have become obsolete. MoD rejected this proposal. Evaluation of the MMRCA contenders was then going on. Snecma quickly climbed down, agreeing to ToT as soon as GTRE could absorb it.

MoD then began negotiations with Snecma for a joint venture for the development of the Kaveri. Minister of State for DefencePallamRajutold Business Standard: “(Snecma) is willing to co-develop an engine with us; they are willing to go beyond just transfer of technology. It is a value-added offer that gives us better technology than what we would get from ToT from Eurojet(the maker of the Typhoon’s engine) or GE.” This was misleading. GE and Eurojet were not contenders for the collaboration with GTRE. The technology they were offering was part of a deal for the import of 99 engines for the LCA Mark II. The kind of technologies sought for the collaboration on the Kaveri engine were not sought for this deal. Officially, no specifics of what technologies Snecma would offer have been disclosed. A senior DRDO official said two years ago that the work share between GTRE and Snecma would be 50:50; that price negotiations would be completed “within a month”; and that GTRE would gain the intellectual property rights for the new engine. Aviation Week reported in March 2012 that an agreement on the joint venture to develop and build a 20,230-lb-thrust engine would be reached by June that year. Snecma would provide “exhaustive know-how” on the technologies and manufacturing processes GTRE lacked, the sources for the report claimed.

In early January this year came the news that MoD has dropped the proposed deal with Snecma. No reason has been reported for this unexpected development. Quite likely Snecma raised the cost of its technologies or refused to pass on the intellectual property rights for the new engine to GTRE as it seems to have promised earlier. At this point, it looks like a classic case of bait and switch. It is hard not to conclude that Snecma was stringing India along with promises it had no intention of keeping, until almost the end of the Rafale price negotiations, and revealed its hands when it could no longer put MoD off. Snecma, by bidding for the collaboration, prolonging the negotiationsfor several years, and finally hardening its position, has made India’s engine development programme lose precious time.

The decision to build a 20,230-lb-thrust engine is also questionable. Such an engine would be inadequate for India’s future needs. The 22,000lb thrust GE engine is being procured for the initial batch of the LCA Mark II ordered by the IAF. The improved Kaveri, with a 10 per cent less thrust, would not be adequate for later batches of the LCA, should the IAF decide to order more of them. It is also doubtful if it would be suitable for the Advanced Medium Combat Aircraft (AMCA) which India is planning. The AMCA, a stealth aircraft, would need to have an internal weapons bay, fairly high internal fuel capacity, and supercruise capability. If the LCA program imparted any lesson to Indian military planners, it is that the AMCA is going to turn out to be heavier than now planned. Developing a 20,000lb class engine now for it makes no sense. Presumably, it is the maximum level to which Snecma’s ECO core can be developed. As Air Marshall Philip Rajkumar (rtd.) recounts in his book The Tejas Story, the DRDO and the IAF had a falling out in the 1980s over the choice of partners for developing the LCA’s flight control system. The IAF wanted to go with Dassault, while the DRDO preferred Lockheed Martin. This disagreement had caused the IAF to wage a decades-long cold war against the DRDO and the LCA project in particular. Quite possibly,DRDO bought peace with the IAF by accepting the latter’s preference for Snecma.

In the wake of the VVIP chopper scam, Defence Minister A. K. Antony has promised corrective action. He cannot act until he finds out what really happens behind the scenes in the procurement process. The complete lack of transparency in all matters relating to defence makes it easy for unscrupulous elements to manipulate the system. Antony must order a thorough inquiry into the whole Kaveri-Snecma saga. Several questions relating to this affair need answers. Who was pushing for delinking the Kaveri collaboration from the MMRCA tender? What specifically did Snecma offer in its response to the RfP, and at what price? Why did the negotiations drag on for so many years, and on what basis were predictions of imminent agreement fed to the media on a regular basis (see here and here)? What were the reasons for the termination of the negotiations? This charade could not have gone on for so long unless senior levels of the GTRE, MoD, and the IAF were involved. A top-to-bottom shakeup in the MoD, DRDO, and the services would inspire some confidence that it is not going to be, once again, business as usual.


About the author:

Appu Kuttan Soman is a diplomatic historian, and was a Research Fellow at the Belfer Center for Science and International Affairs at the Harvard Kennedy School of Government, Harvard University from 2007-2009. His research interests include arms control, nuclear history, and South Asian security. He is the author of Double-Edged Sword: Nuclear Diplomacy in Unequal Conflicts: The United States and China, 1950-1958 (Praeger, 2000), and Through the Looking Glass: Diplomacy, Indian Style. He holds a PhD in US diplomatic history from Vanderbilt University and master’s in Psychology and bachelor’s in History and Psychology from Andhra University in India. He was an Associate of the Charles Warren Center for Studies in American History at Harvard University from 1995-1997.