BAE to enjoy Indian summer with £1bn order for Hawk jets

BAE Systems is close to landing a controversial £1bn order for its Hawk trainer jets from the Indian government after more than a decade of talks.

In what has become a rags to riches story for BAE's factory in Brough, Humberside, this will be the second big order for Hawks after the UK Government last week prom- ised to spend £800m. Sources close to the talks revealed that the Indian contract could be confirmed "within a matter of weeks", although the final details have yet to be agreed.

The deal comes after intense lobbying by the British Government, with Prime Minister Tony Blair, Deputy Prime Minister John Prescott, Defence Secretary Geoff Hoon and Foreign Secretary Jack Straw taking it in turns to persuade the Indians to buy the jets.

In the last few days, George Fernandes, the Indian defence minister, has set up a special parliamentary committee to ensure that an order for trainer jets is placed quickly. The Hawk is the favourite.

Earlier this month, Mr Fernandes told the Indian parliament: "We are in the last stage to procure the advance jet trainers. We have asked the British Government a question pertaining to this particular jet trainer. If the answer comes today, we will buy it tomorrow."

A well-placed source said the question the minister was referring to was whether the British Government would itself place an order for Hawk trainer jets. The Indian government was worried that without the security of a British order, the ageing Hawks may become obsolete.

But the British order came in on Wednesday amid much controversy. Mr Hoon, backed by Mr Blair, overruled advice from his own officials and Chancellor Gordon Brown to buy 20 Hawk jets and establish an option on a further 28.

Mr Brown wanted Mr Hoon to open an international competition for the supply of the jets. Privately he made it clear that, over the life of the contract, a rival bidder could save taxpayers up to £1bn. Ministry of Defence (MoD) officials had already held discussions with other firms and were thought to be particularly impressed with the Aermacchi jet, developed by Italy's Finmeccanica.

Trade and Industry Secretary Patricia Hewitt supported Mr Hoon, but controversially refused to offer the Defence Secretary any industry grants to help the deal.

An MoD spokesman said: "We hope the Indian government will reach a decision as soon as possible. Hopefully, our decision will give them the confidence to place the order."

A Department of Trade and Industry spokesman said: "The export potential [of the Hawk] was taken into account when the decision was made."

Some Government sources in the UK have criticised the Indian administration for dragging its heels over the deal. The Hawk is in competition with the Russian MiG-21, dubbed the "flying coffin" because more than 50 have crashed since January 2000. On Friday Mr Fernandes, who is in his 70s, flew in the two-seater MiG. But this was dismissed as a publicity stunt.

News that the Indians are close to signing for the Hawk marks a dramatic reversal in its fortunes. Earlier this week, BAE was preparing to meet unions to discuss the possible redundancy of up to 470 Hawk workers in Brough.

With the British contract in the bag, BAE will also be able to muscle into an MoD Private Finance Initiative project worth up to £20m. This is to provide the Royal Air Force, Army and Navy with training facilities for at least 20 years. The project will involve the transfer of the forces' training air fleet, nine bases and personnel to the private sector.