Fi­nally: Rafale Deal in ‘fi­nal-stage’

With the break­through in the deal of the 36 Rafale jets, fi­nally, there is the prover­bial ‘light at the end of the tun­nel’!


Af­ter pro­tracted ne­go­ti­a­tions that have been go­ing on for the last one year be­tween the In­dian Min­istry of De­fence (MoD) and Das­sault Avi­a­tion of France for the pur­chase of 36 Rafale medium multi-role com­bat air­craft (MMRCA) in fly-away con­di­tion ap­pears to have reached the ‘fi­nal stage’. As against the to­tal cost of the project pitched ini­tially by Das­sault Avi­a­tion at $12 bil­lion (Eu­ros 11 bil­lion or ` 80,000 crore), the rep­re­sen­ta­tives of the MoD in­volved in the con­tract ne­go­ti­a­tions have suc­ceeded in scal­ing down the fi­nan­cial bur­den sub­stan­tially and are re­ported to have fi­nalised the cost of the project at $8.8 bil­lion (Eu­ros 7.8 bil­lion or nearly ` 59,000 crore). Sub­ject to no fur­ther im­ped­i­ments, the con­tract is ex­pected to be signed within three to four weeks from now and the first few air­craft are ex­pected to be de­liv­ered within 18 months of the date the con­tract is signed. This in­deed is a wel­come break­through es­pe­cially for the In­dian Air Force (IAF) whose ef­forts to pro­cure the MMRCA since 2002 had so far failed to fruc­tify. This break­through has come nearly three months af­ter Prime Min­is­ter Naren­dra Modi and French Pres­i­dent François Hol­lande signed a mem­o­ran­dum of un­der­stand­ing (MoU) for the di­rect pur­chase of 36 Rafale com­bat jets when Presi-

dent Hol­lande had been in­vited as the chief guest at the Repub­lic Day pa­rade and re­lated func­tions in Delhi this year. (We had pub­lished the ar­ti­cle ‘Fi­nalise the Rafale Con­tract’, warn­ing of the con­se­quences to IAF, on pages 8-9 of SP’s Avi­a­tion 1/2016).

With the sig­nif­i­cant tem­per­ing of the value of the con­tract, for Das­sault, it is a sig­nif­i­cant climb down as the orig­i­nal equip­ment man­u­fac­turer has also agreed to an ‘off­sets obli­ga­tion’ of 50 per cent of the value of the con­tract as against its orig­i­nal stand of 30 per cent. French com­pa­nies such as Safran and Thales will join Das­sault in pro­vid­ing state-of-the-art tech­nolo­gies in the regime of stealth, radar, thrust vec­tor­ing for mis­siles and ma­te­ri­als for elec­tron­ics and mi­cro­elec­tron­ics. For its part, the In­dian aero­space in­dus­try can look for­ward to in­fu­sion of a healthy dose of funds to the ex­tent of $4.4 bil­lion. If th­ese funds are cor­rectly utilised, the In­dian aero­space in­dus­try can and should re­ceive the nec­es­sary im­pe­tus to scale greater heights.

The fact that this govern­ment-to-govern­ment deal for the 36 Rafale MMRCA has been fi­nalised within a year of the ini­tial in­for­mal agree­ment be­tween French Pres­i­dent Hol­lande and Prime Min­is­ter Modi and that the IAF can ex­pect to in­duct the first air­craft by the end of 2017, only serve to re­in­force the be­lief that for pro­cure­ment of ur­gently re­quired high value mil­i­tary hard­ware for the In­dian armed forces, di­rect deals with govern­ments in­volved would be a far bet­ter op­tion as com­pared the sys­tem of global ten­der man­dated un­der the De­fence Pro­cure­ment Pro­ce­dure (DPP) that had been in vogue for some years. In­ci­den­tally, the lat­est ver­sion of this doc­u­ment, dubbed as DPP 2016, was un­veiled by De­fence Min­is­ter Manohar Par­rikar at De­f­expo 2016 at Goa in March. How­ever, DPP 2016 is yet to be put through bap­tism by fire to es­tab­lish its ef­fi­cacy.

As per the orig­i­nal ten­der for the MMRCA floated in Au­gust 2007, the IAF was to re­ceive 126 air­craft equiv­a­lent of six squadrons. The deal for 36 Rafale jets cur­rently in progress would pro­vide the IAF with par­tial re­lief with the in­duc­tion of just two com­bat squadrons. The num­bers are clearly in­ad­e­quate to ad­dress the de­bil­i­tat­ing short­ages in its fleet of com­bat air­craft that the IAF is con­fronted with. Op­tions there­fore need to be ex­plored to find ways to close the ever-widen­ing and crip­pling gap that is des­tined to worsen in the next few years in the com­bat fleet if no ur­gent steps are taken to fast-track build­ing of fourth-plus or fifth-gen­er­a­tion com­bat plat­forms in the num­bers re­quired to re­store the op­er­a­tional edge of the IAF against its po­ten­tial ad­ver­saries. Fol­low­ing the re­al­i­sa­tion of the con­tract un­der dis­cus­sion, one of the op­tions be­fore the na­tion would be to ex­plore the pos­si­bil­ity of man­u­fac­tur­ing the Rafale jets in In­dia un­der the ‘Make in In­dia’ scheme both for the In­dian and global mar­kets.

With the break­through in the deal of the 36 Rafale jets, fi­nally, there is the prover­bial ‘light at the end of the tun­nel’!

The 36 Rafale deal for the In­dian Air Force reached the ‘fi­nal stage’


Strength­en­ing ties: (left) Prime Min­is­ter Naren­dra Modi with the Pres­i­dent of France François Hol­lande in Paris on April 10, 2015; (right) Prime Min­is­ter Modi with Pres­i­dent Hol­lande, who was the chief guest at the Repub­lic Day in New Delhi, on Jan­uary...

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