Bell Helicopter has virtually pulled out of the Indian military market, after choosing not to take part in the country's revived light utility helicopter competition.
The company, which had planned to offer a development of its Bell 407 (below) for the requirement, says New Delhi's stringent 50% offset rules meant it was not possible to submit a bid for the $750 million contract.
"We have a very good product in the 407, but it was simply not feasible to take part given the high offset requirements," says a Bell source. "We will continue to look for opportunities in the Indian military market. The focus for now, however, is on the civil helicopter sector."
© Bell Helicopter
The decision comes a month after Bell also decided against participating in India's attack helicopter competition. New Delhi insisted on a direct purchase from bidding manufacturers, while Bell's AH-1Z Cobra is available only via the US government's Foreign Military Sales mechanism.
India in July sent a request for proposals for 197 light utility helicopters - 133 for its army and 64 for its air force - to AgustaWestland, Bell, Eurocopter, Sikorsky and Russian arms export agency Rosoboronexport. The remaining contenders have until 19 December to respond.
Eurocopter came close to winning an earlier LUH tender, but New Delhi cancelled the programme last December after Bell and several others complained that the EADS subsidiary had been unfairly favoured in the selection process. India's defence minister subsequently exonerated the company of any wrong doing.
The value of the new tender has risen by more than 25%, as India now wants to acquire all of its helicopters directly from the selected manufacturer. Separately, the defence ministry has also asked state-owned Hindustan Aeronautics to develop an additional 187 light utility helicopters by itself or in partnership with a Western contractor. HAL had previously been expected to licence produce 137 of New Delhi's LUH fleet.
The new programme's increased value led the defence ministry to raise its offset requirements from 30% to 50%. Foreign contractors have long complained about India's stringent offset requirements, but the country is keen to use the ongoing modernisation of its armed forces to acquire the latest technology and build up a domestic production base.
The delays that resulted from the cancellation of the original tender led to the defence ministry promising to put the procurement on a fast track. Field trials could begin in the second quarter of 2009, with the first aircraft due to be delivered within 24 months of a contract signature.