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Tycho doesn't respect creating the launcher arguments ini specified in the product file when packaging as "eclipse-application"; "eclipse-repository" does. This issue (https://issues.sonatype.org/browse/TYCHO-269) on the old bug tracker contains a patch to resolve this issue, but perhaps that is not the right solution given that "eclipse-repository" already handles this.
as per https://docs.sonatype.org/display/TYCHO/Discussion+on+eclipse-repository+packaging+type+clean-up#Discussiononeclipse-repositorypackagingtypeclean-up-Migrationpathfromeclipseapplication I don't expect investments into packaging type eclipse-application. I recommend using packaging type eclipse-repository http://wiki.eclipse.org/Tycho/Packaging_Types#eclipse-repository which has support for building .products.
I was able to switch my build over to using "eclipse-repository" and thus don't need this change anymore.
Thanks for this info. Since this bug only affects the more-or-less deprecated "eclipse-application" packaging type, I'll mark this as wontfix.