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!

 

[Shrujanam Syama]

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.

The F414 was negotiated only 2 years ago. There has been no delays from Indian side. So, why should India pay penalty? Also, what if GE keeps delaying & charging more repeatedly?

 

[Bhishma]

@Arin Kumar I would agree with other players, but GE is trouble. Use this opportunity to move away from them

 

[Anant]

I am fairly certain that part of this price escalation is due to the technology being shared rather than the engine itself. If that is the case, then further engine orders would not have this extra component baked in, which means your per engine cost on an order of, say, 400 engines would be somewhat lesser than 15 million USD in today's money.

 

[Anant]

The rationale behind this extra 500 million USD warrants looking at. Given the scale of the indigenous aircraft programs, we will be needing considerably more than 99 engines.

If this is just a case of GE trying to charge extra for the technology, then this would be a fixed cost and would therefore not factor into later orders.

Alternatively, if this is a case of GE trying to be greedy, well, we can always impress on them just how much we would like to partner with them with the 110 kN engine (we wouldn't, but anyways), and how disappointed we would be to rule them out due to these cost overruns.

 

[padmanabhan ramasubban]

Better to develop our own engine to suit the airframes, EWS, weaponry, and radar India is going to install in the fighter jet.

The USA or any other supplier would give us older tech only.

Our own supply chain would be better any day, with future upgrades integrated into our own airframe.

The USA is a dirty competitor who would never allow Indian development.

Trust yourself and develop our tech, as imported tech is way too expensive.

 

[Arin Kumar]

@Arin Kumar I would agree with other players, but GE is trouble. Use this opportunity to move away from them

Then We have to go back to the drawing board again for designing the Tejas Mk 2. Tejas Mk 2 was designed assuming the GE F414 as the engine.

However we need to check how many factory workers or people in management in GE are there who are of Chinese origin or Pakistani origin. Because they might deliberately sabotage this manufacturing process.

 

[Arin Kumar]

I am fairly certain that part of this price escalation is due to the technology being shared rather than the engine itself. If that is the case, then further engine orders would not have this extra component baked in, which means your per engine cost on an order of, say, 400 engines would be somewhat lesser than 15 million USD in today's money.

We must go for it even if it is for 15 million USD a piece. And we must buy at least 400 pieces.
And rather than creating a gigantic drama about ToT - we should focus of getting the engines in our hand as early as possible.

No nation in the world has got aero engine technology by "Transfer of Technology". Every body says China reverse engineered aero engines from Russia. But the even reverse engineering requires brains -which China has. Besides China has been operating 4 Universities and research centres DEDICATED towards aero engine manufacturing since 1970s - that is for last 55 years.
So they have huge depth of manpower in both research in manufacturing which India does not have.

Even the engineers at HAL and Dynamatic Technologies Ltd. are not from Aeronautical Engg background. They are mostly from Mechanical Engg.

 

[Akshat]

The F414 was negotiated only 2 years ago. There has been no delays from Indian side. So, why should India pay penalty? Also, what if GE keeps delaying & charging more repeatedly?

F414 was selected in 2010. 2 years back we actually renegotiated the deal to increase ToT to 80%. The original price was just for local manufacturing, no ToT.

 

[Rajesh]

Better to develop our own engine to suit the airframes, EWS, weaponry, and radar India is going to install in the fighter jet.

The USA or any other supplier would give us older tech only.

Our own supply chain would be better any day, with future upgrades integrated into our own airframe.

The USA is a dirty competitor who would never allow Indian development.

Trust yourself and develop our tech, as imported tech is way too expensive.

Yes, the USA will never want to give its older technology to any country with brains that can enhance the technology with its own technically brilliant minds. The government should focus on infrastructure to develop advanced technologies in premium institutions to overcome these kinds of hurdles. It's this lack of facilities that's making our brains migrate to the USA to develop advanced technology. Also, remove all controls from the ever-egotistic Babus' hands if India needs to develop at a fast pace. See, China has adopted stealthily acquiring technologies to overcome these kinds of roadblocks, but they had invested heavily in infrastructure and research labs where they reverse-engineered to understand and then make immense progress in every technological field. Today they're not only self-sufficient but competing with the West in every field and have a huge manufacturing capacity. India needs to learn from China in having a vision and focused working on the same.

We can do it as we have the brains but lack facilities and manufacturing infrastructure.

Hope the Indian think tanks do ponder over it.