In the 1990s, when India was pursuing economic reforms, testing nuclear weapons and raising its profile internationally, its defence establishment began work on a homegrown military jet engine: the Kaveri, named after a river in the country’s south.

For a nation where self-reliance in industry is a mantra of both Narendra Modi’s government and those that preceded it, the ability to develop and build such powerful technology on its own soil — referred to in India as an “indigenous” product — is one of its biggest dreams.

But producing advanced fighter jet engines is a complex process and the knowledge to make them requires real-world experience built up over decades. Only five countries — notably the current permanent members of the UN Security Council — know how to build them: the US, UK, France, Russia and China. Beijing, however, is just moving from a reliance on imported equipment from Russia and only recently test flew a fighter jet with a supposedly homegrown engine.

India was eager to join the elite club. But despite years of research, prototyping and testing, the Kaveri flopped. India had failed to produce an engine with sufficient thrust to power its current generation of Tejas light combat aircraft. Instead, it plans to use a version of the Kaveri in future unmanned aerial vehicles (UAVs), or drones.

Yet India’s mission to build an “indigenous” military jet engine is back on. What it learned from its work on the Kaveri, not least its mistakes, may yet bear fruit. According to Indian defence industry officials, foreign diplomats and analysts, the world’s fifth-biggest economy is in an advanced stage of deliberations on producing its first world-class “Made in India” jet engine, working with a western partner that is yet to be decided.

While the foreign partner would bring its technological experience, the engine would be wholly developed and built in India — making it the first truly “indigenous” product of its kind. Once complete, the engine would be fitted into India’s new suite of fifth-generation advanced fighter aircraft due to be airborne by the mid-2030s.

A behind-the-scenes battle is now heating up, involving lobbying, horse-trading, and pledges about future ownership of intellectual property, to become the aerospace partner of choice for the world’s most populous country.

Jostling for the lucrative contract to help India fulfil its ambitions are three key players: General Electric of the US, the UK’s Rolls-Royce, and French group Safran. France and the US are already India’s second and third-biggest defence suppliers after Russia, whose aircraft and other military equipment India is diversifying away from.

Which partner New Delhi chooses would be freighted with geopolitical implications. It comes at a time when India’s international ambitions are rising, its military rivalry with China is deepening, its relationship with the US is expanding and the Modi government is aspiring to join the world’s top tables, including the UN Security Council.

Part of the attraction is simply one of scale. India will over time require considerable numbers of aircraft

On the table for the three companies — and the governments backing them — is a decades-long partnership across both defence and civil industries with a fast-growing economy, one that will depend on imported knowhow and kit for years to come.

“Part of the attraction is simply one of scale,” says Douglas Barrie, senior fellow for military aerospace at the International Institute for Strategic Studies. “India will over time require considerable numbers of aircraft as the air force looks to recapitalise combat aircraft fleets.”

India, says Philippe Errera, executive vice-president of international and public affairs at Safran, is “hugely important” for the group, “based on the present and looking into the future”.

“This goes beyond military jet engines, to include defence more broadly but also commercial engines,” he adds.

Last year, India managed to land an uncrewed spacecraft near the Moon’s south pole. But despite years of trying, it has yet to develop a viable, advanced military jet engine.

Developing an engine large and powerful enough for a civil jet is already extremely complex, analysts say. It relies on knowledge built up over decades, including which materials to use and why and on how to integrate the different parts.

A military jet engine that is capable of delivering world-class performance on a consistent basis brings with it an extra set of challenges, given the higher speeds and tolerances involved. This helps explain why more countries have nuclear weapons capability than the technology needed to keep a fighter jet in the air.

While large civil engines need to maximise fuel efficiency, military jet engines are about the amount of power an engine can produce in relation to weight of the aircraft, analysts say. “No other form of power apart from nuclear comes close to the level of power density you get in a gas turbine,” says one industry expert, who asked not be named because of the sensitivities around discussing large military deals.

Civil airliners fly predictable route patterns and spend much of their time at cruising altitude; military jets have to fly at much higher speeds and with the ability to accelerate quickly. This means, for example, that the bearings in the gas turbine have to be developed to withstand greater tolerances. The engines also use afterburners, which provide a short burst of increased thrust by igniting additional fuel in its exhaust stream.

Complicating things further, most fifth-generation fighters — like the one being mooted by India — will have their engines embedded within the aircraft frame to minimise their radar and infrared signatures to help avoid detection. All these complexities extend the development and certification programme for military engines.

“India has a technology bottleneck which it has to pass through with gas turbines,” says Prasobh Narayanan, a senior aviation analyst at Janes in Bengaluru. “It is not able to crack that bottleneck on its own, and needs help.”

India has a technology bottleneck which it has to pass through with gas turbines. It is not able to crack that bottleneck on its own

India’s efforts to develop the Kaveri in the 1990s came at a time of acute strategic challenges, after the Soviet Union — its biggest military supplier — collapsed. New Delhi was also at loggerheads with Washington over its nuclear weapons programme, and began developing military ties with alternative suppliers such as France.

The situation today is far different. India has reconciled with the US and over the past two years the two nations have expanded co-operation in defence and technology. This partially reflects a shift in India’s threat perception; it now sees China, and not its neighbour and long-standing foe Pakistan, as the bigger danger.

Since Modi took power in 2014, he has stepped up efforts to bring foreign defence groups to India and promote more “indigenous” production in defence, urging private groups such as Tata, Adani and Mahindra to begin making defence products ranging from personnel carriers to drones.

However, the entry of these Indian conglomerates to the defence market over the past decade have failed to make up for the failings of its state-owned groups, led by Hindustan Aeronautics (HAL), India’s biggest aerospace producer. India’s Defence Research and Development Organisation and HAL are set to be the Indian partner in developing the new jet engine. HAL and India’s ministry of defence did not respond to requests for comment.

India abandoned plans for a “Make in India” project to produce French Rafale jets locally, opting instead to buy 36 imported jets in 2016. Today India also remains its biggest defence importer — not a point of pride for a country that aspires to boost its own industrial exports and create desperately needed jobs. China is going to be “increasingly active in the combat aircraft export market and with its own rather than Russian-sourced engines”, says Barrie of the IISS. But he believes Beijing is unlikely to compete in traditional western markets.

The world’s large aero-engine makers have been active in India for decades, forging partnerships with domestic contractors and setting up local manufacturing. Engines by Rolls-Royce powered the first flight of the Indian Air Force in 1933, while Safran is the leading supplier of turbine engines for the country’s military helicopters.

$1.8bn

Amount approved by the government for manufacturing, testing and certifying of five advanced military aircraft prototypes

90 years

Length of Rolls-Royce’s long history in India, involving multiple partnerships across the UK aerospace and defence group’s divisions

3,000

People employed by Safran in India (Bangalore plant, above), a workforce the French group says will increase with its expansion

After the Kaveri engine failed to meet performance criteria, HAL turned to GE engines, and uses the US producer’s F404 models in its first-generation Mk1 fighters.

During Modi’s state visit to Washington last year, GE announced it was ready to supply India with its newer F414 engines for the forthcoming Tejas Mk2. The agreement includes the potential joint production of the F414 engines in India.

GE signalled at the time that it believed that this positioned it well for future work. The US company said it would continue to “collaborate with the Indian government” on the engine programme for the more advanced fighter.

India’s commitment to building its own military jet engine is backed by significant funding. In March, its Cabinet Committee on Security approved funding worth $1.8bn for the manufacturing, testing and certifying of five prototypes for the Advanced Medium Combat Aircraft programme over the next five years.

Indian officials have spoken of inducting the planned jet into the Indian Air Force by the early to mid-2030s, leading to speculation among defence analysts in the country that it will soon decide who its partner on the “indigenous” jet engine will be.

Rolls-Royce and Safran each insist that they are ready to work with HAL, the state-owned aerospace firm, to co-develop a bespoke engine that would entail a full transfer of intellectual property to India, including the right to include it in future exports.

Britain’s Rolls-Royce has emphasised its long history in India, which stretches back more than 90 years and involves multiple partnerships across its divisions.

“What we are talking about is a gear change,” says Alex Zino, director of future programmes for Rolls-Royce’s defence division. “Now is the time to co-create that IP and that capability in-country, so that it is owned in-country.”

India, Zino says, would have the freedom to operate, upgrade or modify the co-developed engine, should they partner. Rolls-Royce has been working on its proposal “through and with the UK government”, he confirms.

Safran, too, is promising India similar freedoms to own any engine technology it and HAL co-develop. The French company’s proposal would give India “strategic independence in terms of empowering the country to design, develop and produce state of the art military jet engines domestically and export them”, says Errera, the Safran executive.

GE’s offer, by contrast, would withhold a small portion of the IP on any future co-developed jet engine, according to two people familiar with its plans. “Some things the US, from a national security perspective, might want to retain,” says one of the people. GE declined to comment.

Some US officials remain wary of India’s continued close relationship with Russia, analysts say, meaning Washington and GE might be less willing to part ways with coveted technology in its entirety. Although India and the US are co-operating more closely than ever, including on defence, New Delhi retains ties and trading relationships with not only Moscow but other governments, such as Tehran, that are inimical to Washington.

Working in GE’s favour, however, is geopolitics and India’s deepening relationship with the US — part of a joint strategy to build an “Indo-Pacific” bulwark against China. India is already deploying multiple US defence platforms, including helicopters, howitzers, and mobility aircraft, and is in the process of agreeing a major contract for long-endurance UAVs with General Atomics.

“I think the American offer is the most serious one,” says Amit Cowshish, a retired senior civil servant formerly active in India’s defence ministry. “The Americans could possibly be pushing harder with the kind of clout they have, which is much more than that of any other country.”

France has made an appeal based on its own burgeoning relationship with New Delhi. Safran employs just under 3,000 people in India — a number it says will grow as it expands its operations there. The French group, in which the government holds an 11 per cent share, plans to open a maintenance facility in the aerospace and tech hub of Hyderabad, a city in southern India’s Telangana state, next year. The site will support the Leap engines Safran makes through its CFM International, a joint venture with GE Aerospace, and which power the majority of the Airbus A320 family of commercial jets.

“We have stood by your side through thick and thin,” Safran’s chair Ross McInnes assured an audience at India’s Defence Conclave earlier this month. “The same cannot be said of your other western partners,” he added, noting that France was the only western country that stood with India after the uproar over its nuclear tests in 1998.

Errera echoes the point, saying there is “more predictability and more stability in the relationship” with France than with its rivals. And unlike the US, where Congress needs to sign off on big defence deals, the French government could green light any future co-operation.

India’s government and HAL have given no indication of when they will issue the first “request for information” to potential engine partners.

Although India’s state-dominated defence establishment tends to move slowly, and with limited transparency, analysts and officials say New Delhi will need to quicken its pace if it wants to keep up on defence.

“If they don’t make the decision, soon they will be missing the deadline” for a decision on their engine programme, says Raji Pillai, resident senior fellow with the Australian Strategic Policy Institute, a Canberra-based think-tank. “India’s fighter jet numbers are depleting pretty fast.”

MILLIONS of pensioners will want to mark a key date in their diary for when they will receive the Winter Fuel Payment.

For the first time this year, the benefit, which is worth up to £300, will not be universal and only available to people claiming certain support.

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Previously anyone over State Pension age qualified for the payment designed to soften the pinch of energy bills during the colder months.

Most households do not need to apply for The Winter Fuel Payment and will automatically be paid the cash.

If you qualify, you’ll get a letter telling you:

• How much you’ll get
• Which bank account it will be paid into

Payments are £200 for eligible households or £300 for eligible households where someone is aged over 80.

If you do not get a letter or the money has not been paid into your account by January 29, 2025,  contact the Winter Fuel Payment Centre.

The deadline for you to make a claim for winter 2024 to 2025 is 31 March 2025.

By this date, the payments will be processed for those who qualify, with most receiving the money directly in their bank accounts.

For the vast majority of pensioners, the money will land in their bank accounts without the need for action, as long as they have been receiving certain benefits such as Pension Credit, Income Support, or Universal Credit.

If you do not receive your Winter Fuel Payment by the January 29 deadline, it’s important to act promptly.

You will need to contact the Winter Fuel Payment Centre on 0800 731 0160 to make a claim.

Keep in mind, the deadline for submitting a claim for winter 2024-2025 is March 31, 2025.

The payment is now restricted to pensioners who are claiming certain means-tested benefits. This includes:

• Pension Credit (a key qualifier)
• Universal Credit
• Income Support
• Income-related Employment and Support Allowance (ESA)
• Income-based Jobseeker’s Allowance (JSA)

In particular, those claiming Pension Credit should make sure to apply for it, as this benefit is the gateway to receiving the Winter Fuel Payment.

Pension Credit can top up your weekly income to £218.15 if you’re single or £332.95 for couples.

Notably, over 800,000 pensioners are missing out on this benefit, and without it, they won’t qualify for the Winter Fuel Payment.

HOW TO CLAIM

If you think you are eligible, it’s essential to claim Pension Credit as soon as possible.

The latest claims can be backdated for up to three months, with the final date to claim for the 2024-2025 Winter Fuel Payment being December 21, 2024.

If you’re already receiving Pension Credit or another qualifying benefit, the Winter Fuel Payment will be paid to you automatically.

With over 800,000 pensioners potentially missing out on Pension Credit, it’s critical for those eligible to act now.

Not only will this ensure you get the Winter Fuel Payment, but it can unlock additional support throughout the year.

If you don’t get your Winter Fuel Payment by January 29, 2025, don’t delay – contact the Winter Fuel Payment Centre and make your claim before the deadline.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories

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For some, rejection just means a stronger resolve to get a deal done. Alimentation Couche-Tard has told Japan’s Seven & i Holdings that it is willing to pay about $47bn to take over the convenience store giant — a fifth more than its first offer. Still, the Canadian operator could end up jilted.

Seven & i shares surged more than 10 per cent in Tokyo morning trade following reports of the proposed all-share buyout. The latest approach follows an offer of $38.5bn in September, which the Japanese group received and rejected, saying it “grossly” undervalued the group. 

Couche-Tard has good reason to make an aggressive push for this deal. Unlike in Japan where three groups — 7-Eleven, FamilyMart and Lawson — control about 90 per cent of the country’s convenience store market, the US market is highly fragmented and presents ample opportunity for a new leader to win market share from local rivals. 7-Eleven and Couche-Tard’s brands would give it a combined market share of about a fifth in the US, making it the country’s biggest convenience store operator. 

The US is an especially lucrative market for convenience stores with sales hitting a record $860bn last year. That is reflected at Seven & i, with three-quarters of group revenues coming from outside Japan, mostly from North America. Recent trends also make an acquisition of a Japanese group more attractive — fuel sales have been decreasing while prepared food and beverage sales have been rising. In Japan, convenience store sales consist primarily of food and beverages.

But for Seven & i, the offer comes at a time when there is a rosy outlook at home too. Convenience store sales in Japan rose last year to a record high of $78.6bn, the third straight year of sales growth for the sector, according to industry data. Increasingly frequent heatwaves in Japan have made ice cream and drink sales especially lucrative.

Since Couche-Tard’s first approach, Japan has designated Seven & i as a “core business” that is essential to national security. As foreign investors would be required to go through a security review to take over a Japanese company anyway, the designation does not necessarily change much for Couche-Tard. But the designation does suggest that striking a deal will not be easy. 

Seven & i investors should benefit regardless. The stock is up 45 per cent from an August low. It now trades at a forward earnings multiple of approaching 22 times. Meanwhile, the Canadian company’s interest has already prompted Seven & i’s management to consider an overdue pruning of its conglomerate structure. As the offer price rises, the urgency to mount those defences will only increase.

june.yoon@ft.com

TENS of thousands of pensioners are set to get tax demands this year for the first time since they retired.

A new freedom of information request by LCP Partners, reveals that nearly 700,000 people received a bill in the post last year, for an average of £665 each. 

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This was an increase of over 120,000 people compared with two years earlier.

One reason given for the rise is the year-on-year freeze in the value of personal allowance, coupled with a steady increase in the value of the state pension.    

The personal allowance threshold, which is the rate at which people start paying tax, has been frozen at £12,570 since April 2021.

The government freezes tax thresholds as a way to raise extra cash without directly increasing taxes.

But as wages or income from pensions rises each year, more people are being dragged into paying tax, or into higher tax brackets.

Steve Webb, partner at pension consultants LCP, told The Sun the “long-term freeze” in the value of the tax-free personal allowance could be financially damaging for pensioners.

He said: “Although an average bill of £665 may not sound very large, it could be the equivalent of about three weeks’ pension and a pensioner whose income is only just above the tax threshold may not have such a sum readily available”.

It is possible that the number of pensioners set to receive tax demands could rise over the coming years.

This is due to the triple lock, which means the payment made to those aged 66 and over rises every April by the highest out of inflation, the average UK wage increase, or 2.5%.

We don’t know yet what the rise will be but the ONS is set to release its inflation figures next week which should give us an indication.

Internal Treasury calculations, previously published by BBC, show that changes would take the state pension to around £12,000 in 2025/26, from £11,501 currently.

This could lead more and more elderly people into paying tax on their pensions.

What to do if you get a letter?

HMRC is sending out letters to thousands of pensioners as part of its “simple assessment” process which assesses who needs to pay what tax.

HMRC previously said that the letters going out will include a detailed calculation of any tax due for income they received between April 2023 and April 2024.

They’ll need to pay what they owe using Simple Assessment.

If you do get one of the letters, don’t stress, as you have until January 2025 to pay the bill.

You can even pay the fee using instalments as long as it’s fully paid by the deadline.

There is an online guide Simple Assessment guide for pensioners with more information for pensioners who receive a demand.

Is there anything I can do to avoid it?

Laura Suter, director of personal finance at AJ Bell, previously told The Sun that pensioners “looking to reduce their tax bill need to think about how they can maximise their tax-free income”.

“For example, any withdrawals made from their ISAs will be free of any tax. so they can use that pot of money to boost their income without impacting their tax bill.”

An ISA is a type of savings account in which you can save up to £20,00 a year tax-free.

Ms Suter also suggested that couples can organise their finances so they ensure they are each making use of their tax-free allowances, which might involve moving money or assets between themselves.

Helen Morrisey, head of retirement analysis at Hargreaves Lansdown, added that pensioners might want to use some of their pension to top up their income.

She said: “Most people can access 25% of their pension as a tax-free lump sum so they may decide to use this to top up their income without pushing up their tax bill.”

However, she also warned that pensioners below the personal allowance are going to find it increasingly difficult to avoid paying income tax in the coming years.

The finance expert added: “A full new state pension hits just over £11,500 per year and even relatively modest 3.5% annual increases would see people pushed over the threshold by the time the threshold freeze ends.”

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Volatility in the $27tn US Treasury market has surged to its highest level since the start of the year, as nervy investors quickly readjust their expectations for how quickly the Federal Reserve will cut interest rates.

Stellar jobs numbers on Friday sparked one of the biggest daily swings in bond yields this year, as investors pencilled in a slower pace of rate cuts. The 10-year yield, which had been falling since late April, jumped 0.13 percentage points on the day as prices fell, and is now trading above those levels at about 4.02 per cent.

Investors are now bracing for potential further volatility on Thursday when US consumer price inflation data is released.

“The market is still lurching from one narrative to the other on an almost weekly basis,” said William Vaughan, associate portfolio manager at Brandywine Global Investment Management.

The Ice BofA Move index, a gauge of bond investors’ expectations of future volatility in the Treasury market, jumped on the jobs data to its highest level since January and has remained elevated.

“Because the Fed has been data-dependent, [for] every economic number, you have this volatility risk,” said Leslie Falconio, head of US taxable fixed income strategy in UBS Asset Management’s chief investment office.

The jobs data dashed investor hopes of a half-percentage point cut at the Fed’s November meeting. Investors are now expecting two quarter-point cuts by the end of the year, according to swaps markets.

New York Fed president John Williams told the Financial Times this week that the central bank was “well positioned” to pull off a soft landing for the US economy. But decisions would hinge on the data, rather than following a “preset course”, he said.

Economists are forecasting a slight fall in annual consumer price inflation to 2.3 per cent in September when figures are published on Thursday.

“If we see a small miss to the downside on CPI tomorrow then I think the rally in Treasuries could resume,” said Craig Inches, head of rates and cash at Royal London Asset Management.

“By contrast, a strong inflation number would likely see a very sharp re-rating of interest rate expectations, and call into question the ability for the Fed to cut further in 2024.”

Jeffrey Sherman, deputy chief investment officer at asset manager DoubleLine, said on a webcast on Tuesday that it felt like the US economy is “still in a decent spot”.

But “things could fall apart if we decide to all save money and we don’t want to consume any more”, he added. “We’re not out of the woods yet.”

SIR Keir Starmer has refused to rule out a National Insurance hike for employers despite Labour’s manifesto vowing not to do so.

Tory leader Rishi Sunak grilled the PM three times, demanding to know if he would stand by his pledge.

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But Sir Keir dodged the questions, leaving the door wide open for a tax raid on employers.

Labour’s manifesto stated that “Labour will not increase taxes on working people, which is why we will not increase National Insurance, the basic, higher, or additional rates of income tax, or VAT” .

In their first exchange at Prime Minister’s Questions after party conferences season, Mr Sunak said: “Can he confirm that when he promised not to raise income tax, National Insurance or VAT that commitment applies to both employer and employee national Insurance contributions?”

Sir Keir replied: “As he well knows I am not going to get drawn on decisions that will be set out [at the Budget].

“We made an absolute commitment in relation to not raising tax on working people.

“He of course was the experts’ expert on raising taxes.”

Asked the same question again, Sir Keir would only go so far as to say that he would stick to the promises made in Labour’s manifesto.

The PM also refused to rule out changing fiscal rules to increase Budget spending power.

It comes amid speculation Rachel Reeves could do to potentially unlock up to £57bn in additional spending on infrastructure.

Replying to Mr Sunak, Sir Keir said: “This is literally the man who was in charge – 14 years they crashed the economy. What did they leave? A £22 billion black hole.”

The Tory leader then told the Commons: “He has opened the door to raising employer National Insurance contributions including on pensions and fiddling the figures that he can borrow more.”

Shadow Chancellor Jeremy Hunt also hit out on Twitter: “The Prime Minister has today left the door open to the Labour Party breaking their promises to the British people by raising taxes and increasing borrowing, leaving future generations to pick up the bill and risking higher interest rates.

“Keir Starmer and Rachel Reeves should have had the courage and conviction to be honest about the tax and borrowing plans they always planned.”