U.S. fighter bids for India hit tech-transfer snag

By Jim Wolf

WASHINGTON (Reuters) - A split in the Pentagon over how much cutting-edge technology to share with India is complicating bids by Lockheed Martin Corp (LMT.N: Quote, Profile, Research, Stock Buzz) and Boeing Co (BA.N: Quote, Profile, Research, Stock Buzz) for a potential $10 billion fighter jet contract.

At issue, among other things, is advanced radar know-how India wants as part of any deal for the 126 new fighter jets it plans to buy from one of six global aerospace powerhouses, say current and former Pentagon officials.

Detailed offers from all bidders are due to be submitted to the Indian defense ministry by March 3.

The contenders come from Russia, Europe and the United States. If the deal goes to Americans, it would crown a post-Cold War trend toward tighter U.S.-Indian security ties, a potential counterweight to China's growing might.

Lockheed Martin and Boeing -- the Pentagon's No. 1 and No. 2 suppliers by sales -- were invited by India for the first time to bid to supply fighters.

Lockheed Martin is proposing a version of its widely sold F-16 Fighting Falcon but has not made public any detail of which radar it will offer.

Boeing has said it is pursuing U.S. government approval to sell its F/A-18 Super Hornet "Block 2" strike attack aircraft, used by the U.S. Navy and Australia. It is equipped with what Boeing has called "ground-breaking" Raytheon Co (RTN.N: Quote, Profile, Research, Stock Buzz) APG-79 Active Electronically Scanned Array (AESA) radar.

Also in the race: Russia's MiG 35, France's Dassault Rafale, Sweden's Saab AB (SAABb.ST: Quote, Profile, Research, Stock Buzz) JAS-39 Gripen and the Eurofighter Typhoon, made by a consortium of British, German, Italian and Spanish companies.

"There's advocates and non-advocates" of meeting India's hopes for maximum radar technology-transfer and co-production, said a senior U.S. Air Force official, who declined to be named.

Asked about deliberations on licensing the so-called AESA radars for export to India, U.S. Navy Secretary Donald Winter told the Reuters Aerospace and Defense Summit: "I know that that's under consideration."

"There's a very well detailed process that is followed by the department (of defense) that I'm not expert on, and I would defer to those who are," Winter said on Wednesday.

The trade-offs involved in U.S. reviews are complex. They include business pressure to make Lockheed and Boeing as competitive as possible while protecting a key U.S. war fighting technology.

"The Indians want as much co-production and as much technology transfer as they can get," said retired Air Force Lt. Gen. Jeffrey Kohler, who stepped down in August as the Pentagon's top arms-sale official. "The U.S. government has to decide how far it will go toward meeting India's requests."

"I think this a very critical decision that needs the attention of top government officials," said Kohler, now an unpaid advisor to the private U.S.-India Business Council.

Ron Somers, president of the council that represents 275 of the biggest U.S. companies investing in India, referred to India's fighter market as "a tremendous opportunity for U.S. companies that should not be missed."  Continued...