NEW DELHI: India is likely to conclude several big contracts in the financial year 2026-27 to sharpen the air force’s combat edge, including contracts for buying 114 Rafale fighter jets, up to 60 medium transport aircraft (MTA) and additional airborne early warning and control (AEW&C) systems, the defence ministry told a parliamentary panel. In February, the Defence Acquisition Council (DAC) — India’s apex military procurement body — cleared the purchase of military hardware worth ₹3.6 lakh crore, including 114 Rafale jets. (via REUTERS)
“There is an increase of 37.03% in the Indian Air Force’s capital budget as compared to budget estimates for 2025-26. The allotted funds are planned to be utilised against some of the major new schemes like MRFA [a reference to the Rafale purchase], combat enablers (AEW&C, LCA Mk-1A), MTA, and medium-altitude long-endurance RPA [remotely piloted aircraft], in addition to the ongoing committed liabilities,” the ministry told the Parliamentary standing committee on defence which submitted its latest report in Lok Sabha last week.
The ministry responded to the panel’s questions about the priority areas identified for capability development, given the increase in the air force's capital share in 2026-27.
In February, the Defence Acquisition Council (DAC) — India’s apex military procurement body — cleared the purchase of military hardware worth ₹3.6 lakh crore, including 114 Rafale jets under the MRFA (multi-role fighter aircraft) programme. The council's acceptance of necessity (AoN) for the new fighters was the first step in the procurement process.
The Rafale capability boost is expected to cost around ₹3.25 lakh crore. The next steps before an actual deal include tendering, technical discussions, cost negotiations, and final approval from the Cabinet Committee on Security.
“Keeping in view the modernisation of the armed forces, especially during the current geo-political scenario, the committee urges the air force to gainfully utilise the allocated funds for modernisation and technological upgradation in armament and in the procurement of other vital platforms,” the panel said in its report.
Under the MRFA model being considered, the Rafales will be made in India by French plane maker Dassault Aviation and a local partner. France is expected to supply 18 Rafale jets in fly-away condition, and the remaining 96 will be made in India. Talks with France are focused on the localisation of the Rafales to be manufactured in India, the integration of local weapons, and other India-specific requirements.
The MTA programme seeks to equip the IAF with 60 new transport aircraft to boost its airlift capabilities. The air force is expected to soon seek the DAC’s approval for the proposed acquisition, after which a tender will be issued.
Those vying for the order include US firm Lockheed Martin with its C-130J Super Hercules aircraft, Brazilian plane maker Embraer, which has offered its KC-390 Millennium aircraft to India, and European Airbus Defence and Space with its A-400M.
The three-cornered contest will be in line with the government’s Make in India initiative to boost self-reliance in the defence manufacturing sector – the winner will set up a production line for the planes in India.
The US firm has tied up with Tata Advanced Systems Limited (TASL), and Embraer has teamed up with Mahindra to bid for the contract. Airbus, however, has not yet announced its partner. The C-130J can carry a load of 20 tonnes, compared to the KC-390’s 26 tonnes and the A-400M’s 37 tonnes.