New Delhi, Jul 31 The government has withdrawn the nearly USD 2 billion tender for procuring six mid-air refuellers for the Indian Air Force over high life-cycle cost, for which it was in talks with European defence and aerospace major Airbus.
It may go in for a government-to-government deal to procure the aircraft.
Defence sources said the Ministry, in a letter to Airbus late last month, had informed it of the decision to withdraw the tender.
"The main reason for the cancellation of the tender is very high life-cycle cost which was not calculated properly in the beginning," a top defence source said, adding that the Finance Department also raised some concerns.
This is the second time in a decade that the tender for the much-needed refuellers, primarily to be used for the SU-30 fighter jet to enhance its operational capabilities, has been cancelled.
An earlier tender for procuring these aircraft was scrapped in 2010 after the Finance Ministry expressed reservations on the procedure. Documents related to the proposal to buy mid-air refuellers were found in the custody of defence consultant Sanjay Bhandari during income tax raids on his premises recently.
The deal had been stuck for long because of the cost factor and multiple complaints, besides a CBI probe into a separate deal with the firm inked by the Civil Aviation Ministry during the UPA era. Airbus's A-330 MRTT had emerged as the lowest bidder in the IAF contract for procuring these tanker aircraft.
So far, the Indian Air Force has only been equipped with Russian-origin IL-78 mid-air refuellers.
The selection of Airbus followed a lengthy selection process, including completion of extensive flying demonstration during which the aircraft refuelled multiple types of IAF fighters and operated at high altitudes.
The six aircraft would have added to the existing fleet of equal number of IL-78s operated by the IAF from Agra. The plan was to station the new aircraft in the eastern sector.
Talking about what Airbus had described as "stagnated" deal for buying six refuelers, Venkat Katkuri, President of Airbus Defence and Space Division, India, had said in March that they were awaiting "guidance" from the Defence Ministry about the next step to be taken.