India has signed an agreement with Russia to upgrade its RSK MiG-29 fighters, but industry observers say lingering tensions could affect Moscow's chances in future tenders.
Under the $1 billion contract, the Indian air force's 69 MiG-29s will be upgraded over a 36-month period to extend their service lives by another 15 years.
The work will include the installation of the Phazotron NIIR Zhuk-ME radar, Klimov RD-33 engines, new avionics, cockpit displays and weapon control systems, plus an inflight refuelling capability.
MiG's 30% offset obligations will result in the avionics suite including systems produced by Indian companies Bharat Dynamics and Hindustan Aeronautics. It will also build consignment depots, service centres and simulator facilities with training aids in the country.
Only six MiG-29s will be upgraded in Russia, with the remainder to be retrofitted in India. This, according to a source close to the Indian defence ministry, will ensure that there are no delays in the programme.
New Delhi's earlier plans to upgrade its MiG-21s were plagued by delays, and the aircraft now suffers frequent engine failures.
The deal comes after India agreed to pay Russia an extra $900 million to refurbish the Soviet-era aircraft carrier Admiral Gorshkov.
Russian arms export agency Rosoboronexport signed a $970 million deal for the ship in 2004 that also included 12 MiG-29K and four MiG-29KUB fighters, but told New Delhi in 2007 that it needed additional money and time.
After protracted negotiations, the carrier will now be delivered three years late in 2011.
Russia has supplied more than 70% of India's arms needs, but the problems faced during the MiG-21 upgrade and the Gorshkov saga has led to some calling for a review of relations.
"It is an open market and we should not be as dependent on Moscow as we were in the past," says a New Delhi-based observer close to the defence ministry. "We should seriously consider alternative sources in the upcoming tenders."
The MiG-35 is in the fray for a $12 billion contract to supply 126 fighters to the Indian air force, but faces a fierce competition against the Boeing F/A-18E/F Super Hornet, Dassault Rafale, Eurofighter Typhoon, Lockheed Martin F-16 and Saab Gripen. Russia's Kamov is also likely to compete against AgustaWestland, Bell and Eurocopter for a 312-aircraft light utility helicopter contract worth $1 billion.
Thales is, meanwhile, waiting to conclude a major deal to upgrade the Indian air force's Dassault Mirage 2000 fighters in collaboration with local industry, says chief executive Denis Ranque.