BY : Bloomberg

Lockheed Martin Corp., the world's largest military contractor by sales, is exploring long-term tie- ups with Indian companies for domestic and overseas markets as it prepares a bid to sell 126 fighter jets to the south Asian nation.

Lockheed, based in Bethesda, Maryland, will propose F-16 jets to the Indian Air Force in a contract that may be valued at about $9 billion, Royce Caplinger, managing director of Lockheed Martin's India unit, said in an interview yesterday in New Delhi.

India's government will soon invite the bids to replace aging, Russian-made MiGs, the defense ministry said June 29. It marks the first opportunity for Lockheed and Boeing Co. of the U.S. to sell combat aircraft to India.

``We are working at identifying Indian companies, public or private, whether it's offsets or research and development,'' Caplinger said, without elaborating. ``We are not looking at near term but long-term ventures with Indian industry.''

``Offsets'' refer to the Indian government's requirement that overseas companies that win orders in the country produce locally and form ventures to buy components.

A majority of the jets will be built in India through transfer of technology, and some will be bought off the shelf from the successful bidder among the U.S., Russian and European companies competing for the contract, the defense ministry has said. This will be the biggest order for combat planes in 15 years, according to Boeing.

`Hard Fight'

``We will work with the Indian government and the industry for the best possible offset package,'' Caplinger said. ``We will fight for this thing as hard as we know how.''

To win the contract, Lockheed will have to beat offerings from Chicago-based Boeing, Russia's MiG Corp., Eurofighter GmbH of Europe, Sweden's Saab AB and France's Dassault Aviation SA.

The fighters offered will be evaluated by a team to determine if they meet the needs of the Indian Air Force, the defense ministry said.

The chosen manufacturer will have to provide life-time support and performance-based warranties for the 126 planes, which are likely to be in service for 40 years, according to the ministry. The selection will be ``competitive, fair and transparent,'' it said.

Purchasing fighter jets from U.S. companies would boost the ties between the world's biggest democracies. Last year, the U.S. pledged to lift a ban on nuclear exports to India.

Each government with companies involved in this fighter competition will do everything possible to influence the Indian government, Caplinger said. ``It is for all the jewels.''