GE Demands $500M More for F-414 Engine's 80% ToT to HAL, Raising Concerns Over India's Tejas Mk2 Program Timeline

Negotiations between General Electric (GE) and Hindustan Aeronautics Limited (HAL) for the licensed production of F-414 engines in India have hit a snag. GE has reportedly increased its asking price for the deal, which includes an 80% Transfer of Technology (ToT) clause, by $500 million.

This unexpected rise, from the initially agreed $1 billion to $1.5 billion, has introduced delays as both sides renegotiate the final contract value.

The increased cost is attributed to a significant expansion of the ToT offered to HAL. Sources indicate that the new agreement includes a 22% increase in technology transfer compared to a previous 2012 deal. This enhanced ToT aims to provide India with greater capability and self-reliance in jet engine technology, a key objective for the nation's defence industry.

To manage the complexities of the negotiation, HAL has established a dedicated Contract Negotiation Committee (CNC) and is currently reviewing technical documents provided by GE to evaluate the proposed technology transfer.

Despite the price hike and subsequent delays, HAL remains confident in finalizing the agreement with GE by the end of March 2025. However, concerns are growing that protracted negotiations may impact the timeline of India's Tejas Mk2 program, which relies heavily on these engines.

This situation underscores India's ongoing efforts to achieve self-reliance in critical defence technologies. In addition to collaborating with global manufacturers like GE, India is actively pursuing the development of its own indigenous jet engine and may soon announce a partnership with an international partner to accelerate this endeavor.

The advanced ToT offered by GE in the F-414 deal is expected to be instrumental in bolstering India's domestic jet engine manufacturing capabilities.

While the increased cost presents a hurdle, the potential benefits of the expanded technology transfer are substantial for India's long-term defence goals. The coming weeks will be crucial as HAL and GE strive to reach a mutually agreeable outcome that balances cost considerations with the strategic importance of enhanced technological know-how.

 

[Phantom]

$500Mln is fine as long as we get the necessary tech in return, if we are paying $300Mln for one Rafale, why not pay and get the tech, US is not like France to not to honor the promised obligations, whatever they say upfront they will do it, or else what other options we have, it is already too late, we can’t find another reliable adequately powered engine for our future jets.

 

[sanket]

Wow, impose a penalty of $500 million on GE for delaying the supply of the GE-404 engine. That would be the solution. GE is milking the money by delaying engine supply. This is a new business funda from a US company. At the moment, GE thinks they can enjoy an additional $500 million. This is the real face of US companies. First, they lowest bidder, and after winning the deal the are hiking the price.

At first, GE delayed the Tejas MK1A project, and now, in the GE-414 deal, it is delaying Tejas MK2. This is what is going to happen if one trusts an unreliable country. First, they cry for business ties, second, they don't fulfill the contract, next, they demand extra amounts, and last will be imposing sanctions (if Bharat buys any Russian weapon system). Earlier, the US was saying STA-1 status, Major Defence partner, DTTI, bla bla bla...see the result.

 

[Apocalypse gupta]

Take the bitter pill and swear to wean yourself away from foreign engine supplier

 

[मित्र]

$500Mln is fine as long as we get the necessary tech in return, if we are paying $300Mln for one Rafale, why not pay and get the tech, US is not like France to not to honor the promised obligations, whatever they say upfront they will do it, or else what other options we have, it is already too late, we can’t find another reliable adequately powered engine for our future jets.

They will give it with more and more delays to charge you more and more. Next time they will ask for 500 million more.

The US has already not honored the obligations for the supply of F-404 engines. Deliveries are delayed by one year and will start only in March 2025 at a paltry 2 per month. All our Tejas aircraft are on the production lines, unable to fly due to this. Of course, other nations may be no better, but we know that the 36 Rafale were delivered right on schedule.

 

[Anonymus]

This is what happened when rallying on America; many people criticize Russia. I understand they charge a little extra, but they never looted like American companies.

Russian equipment gets delayed as they are under sanctions, but why is America delaying everything, from helicopters to engines, and just blackmailing and charging extra money day by day?

China has developed their entire weapon lineups on Russian platforms, including engines, missiles, and other components, while India is rallying to the West and achieving nothing.

Russian tech is cheap and much more user-friendly than American tech, which is more expensive, less user-friendly with many restrictions, and can't be used against any country that America says not to. It's like even after purchasing, you still don't own it.

 

[Arin Kumar]

This is the price we have to pay for non-innovation and non-infrastructure development in the country.

India must go ahead and pay the price and get the engines as fast as possible.

And 99 GE-F414 engines is too small a number - we must be getting at least 400 of these engines. We must not forget Pakistan already has more than 200 JF-17s. Bangladesh is also in the process of acquiring 40+ JF-17s. To counter these threats and to prevent China from launching an air raid, we need at least 300 Tejas Mk 2s. We must also do a comprehensive spare parts agreement with GE.

400 engines might cost 6 billion dollars. But remember we paid 7.87 billion Euros for just 36 Rafales - and that has zero Indian components. All spare parts and weapons for the Rafale have to be purchased from France by India - hence the operational cost of Rafale will be eye-wateringly high.

This is so much necessary because, unlike other aircraft, the Tejas Mk 2 will have all its other components manufactured in India, including the weapons. Plus, a large number of the same aircraft brings in economies of scale, which will help further reduce the operational cost of the aircraft.

 

[vasu gali]

Russian AL-31/41/51 may be chosen as per suitability instead of the blackmailing GE 404/414 engines. Sanctions or no sanctions, the safety and security of India cannot be pledged or overlooked. China developed the J-20 by copying Russian engines. Why not India?

 

[Anant]

This is what happened when rallying on America; many people criticize Russia. I understand they charge a little extra, but they never looted like American companies.

Russian equipment gets delayed as they are under sanctions, but why is America delaying everything, from helicopters to engines, and just blackmailing and charging extra money day by day?

China has developed their entire weapon lineups on Russian platforms, including engines, missiles, and other components, while India is rallying to the West and achieving nothing.

Russian tech is cheap and much more user-friendly than American tech, which is more expensive, less user-friendly with many restrictions, and can't be used against any country that America says not to. It's like even after purchasing, you still don't own it.

You do realise that India's reliance on the West was exceptionally limited between the early 1960s and the early 2000s in most areas, right? We over-relied on Russia in that period, and have little to show for it.

Need I remind you of just how many times we have been duped by Russia in these defence contracts?

1. Look up the fact that the Russians promised to transfer the expertise to India to refit submarines in return of the Kilo-class purchase, and did nothing of the sort, to the point that we spent over a decade each refitting two of our boats and learning how that was done.

2. The Ka-226 ToT disagreement is another story.

3. The Russians tried swindling us over the FGFA, and we were lucky to get out when we did.

4. The Russians were in favour of having India build the last two Rajput-class (Kashin mod) destroyers, only to backtrack at the last moment and dramatically jack up the prices.

There are a number of other examples too. See, Russia has helped us a lot, but they too have cheated us, and have always extracted their pound of flesh for that help.

 

[Kira]

Take the bitter pill and swear to wean yourself away from foreign engine supplier

If the agreed price was decided roughly a decade or so back, then there naturally will be substantial price escalation, I don't think there is necessarily a rat here.

 

[Kailash]

Quadruple the number of 414s to 400 engines, but drive the price much lower to 3.2 billion to 3.5 billion. We will definitely need those numbers considering all the Mk2, AMCA, and TEDBF: 200 Mk2 (200 engines), plus 40 AMCA Mk1 (80 engines), and the rest for TEDBF (60 engines). If you add reserves (assuming our 110kN engine with Snecma never comes), it will cross 750-800 engines.

In the meantime, invest another 500-1000 million dollars into GTRE/Midhani/DMRL and discovering, mining, refining, and machine tech for rare-earth metals needed for strategic engine use within the country. With this kind of money, GTRE can, in parallel, start with turboprops (HALE/small transports), a series of turbofans from cruise missile/CATS size platforms all the way up to MTA-type transport aircraft. It can ALSO start work on the 90kN Kaveri 2, AND set up all the test facilities, AND more...

 

[Sanatani Yodha]

Just pay the extra amount and get the deal signed. Because that's the price you have to pay as punishment for not spending similar amounts on your desi R&D. They are the technology masters, and you are the slaves. Be it Russia, France, or the US, they will jack up prices whenever they wish; they can starve you with delayed deliveries at their wishes. You can't do much, so be a good slave and keep dancing to the tunes of these masters.

Mind you, they will never let you become a major military power by giving you cutting-edge tech. That's the thing you have to make yourself - buy, copy, steal - whatever.

As per the deal, they will give you 80% ToT, but what about the remaining 20% tech? That's the exact missing building block to make the Kaveri engine on par with the F404/414!