A Boeing KC-46A Tanker in flight

The doors to leasing military hardware were opened for the first time last week with the government unveiling a draft policy on arms acquisition that allows the armed forces to go in for leased capability to cut down on costs associated with purchasing weapons and systems

The Indian Air Force (IAF) is considering, for the first time, leasing aerial refuelling tanker aircraft to extend the reach of its fighter jets instead of a direct purchase against the backdrop of previous failed attempts to buy new tankers, two officers familiar with the move said on Sunday on condition of anonymity.

The doors to leasing military hardware were opened for the first time last week with the government unveiling a draft policy on arms acquisition that allows the armed forces to go in for leased capability to cut down on costs associated with purchasing weapons and systems.

“The IAF has made two attempts to buy tankers during the last decade-and-a-half. On both occasions, we were close to signing the deal but things fell through because of the high acquisition cost. Leasing is a good option to fill the capability gap,” said one of the officers cited above.

The IAF operates a fleet of six Russian-origin Ilyushin-78 tankers that are plagued by maintenance problems and the force urgently needs at least six more.

“We are finalising the requirements for the proposed lease of tankers to boost our in-flight refuelling capabilities. We are looking at aspects such as whether we should opt for a wet [the lessor provides crew and maintenance] or dry lease. Leasing will be a better option as our budget is under pressure,” said a second officer.

Leasing has been introduced in the draft Defence Procurement Procedure (DPP)-2020 as a new category for acquisition in addition to the existing ‘Buy’ and ‘Make’ categories in order to substitute huge initial capital outlays with periodical rental payments.

Leasing is permitted in two categories—where the lessor is an Indian entity and is the owner of the assets and where the lessor is a global entity. The provision of leasing in the draft DPP governs military equipment that is not deployed during the war—transport fleets, trainers and simulators.

“Tankers are a force multiplier and the IAF has been pressing for more inductions for the past 15 years. Finance has been and still is the issue. Leasing is a good option. It will save the flying hours of the IAF-owned aerial refuelling tanker aircraft for wars, with the leased ones doing the very substantial task of training and long ferries for exercises abroad,” said Air Vice Marshal (retired) Manmohan Bahadur, additional director general, Centre for Air Power Studies.

According to an August 2017 Comptroller and Auditor General of India report, the desired serviceability of the Il-78 fleet should have been 70% by the IAF’s own standards but it stood at 49% during 2010-16—barely half of the planes were available for missions at any given time during that period.

American (Boeing KC-46A), Russian (Il-78) and European (A330 MRTT) military contractors were expecting the IAF to float a global tender for more tankers. Israel Aerospace Industries’ Bedek Aviation Group was also looking at participating in the contest with its Boeing 767-200 multi-mission tanker transport—a conversion of the Boeing aircraft by Bedek Aviation.