36 RAFALE

Full De­tails of Euro 4 bil­lion Make in In­dia & Off­sets Plan

SP's Aviation - - FRONT PAGE - (Courtesy: Live­fist)

Live­fist has ob­tained ac­cess to the first com­pre­hen­sive de­tails of France’s plans on what will eas­ily be the most chal­leng­ing com­po­nent of the Rafale deal: the off­sets. Off­sets in­volve in­vest­ments and sourc­ing that com­pa­nies man­u­fac­tur­ing the Rafale must make in In­dia amount­ing to half of the deal’s €7.87 bil­lion value.

As a po­lit­i­cal storm in­ten­si­fies around In­dia’s €7.87 bil­lion deal for 36 Rafale fighter jets from France, and sub­stan­tial fire fo­cused through al­le­ga­tions of pref­er­en­tial cor­po­rate part­ner­ships­for the €4 bil­lion in off­sets that Das­sault Avi­a­tion and its part­ners need to ex­e­cute, the Naren­dra Modi Govern­ment to­day pushed out more in­for­ma­tion by way of an an­swer in Par­lia­ment. The an­swer not only re­pub­lished cost fig­ures, with the im­por­tant dis­claimer that these fig­ures didn’t take into ac­count the cost of In­dia-spe­cific mod­i­fi­ca­tions, weapons and other ser­vices, but also cleared the air on al­le­ga­tions over whether In­dia’s apex Cab­i­net Com­mit­tee on Se­cu­rity was in the loop on the Rafale deal.

But as the govern­ment pre­pares to fight off in Par­lia­ment what ap­pears to be a dogged op­po­si­tion at­tack on the deal, Live­fist has ob­tained ac­cess to the first com­pre­hen­sive de­tails of France’s plans on what will eas­ily be the most chal­leng­ing com­po­nent of the Rafale deal: the off­sets. Off­sets in­volve in­vest­ments and sourc­ing that com­pa­nies man­u­fac­tur­ing the Rafale must make in In­dia amount­ing to half of the deal’s €7.87 bil­lion value. The off­sets are to be ex­e­cuted within seven years from the time the deal was signed — by 2023, that is.

In a se­ries of slides ac­cessed by Live­fist, the con­tours of the

‘Make in In­dia’ el­e­ments of the Rafale deal stand re­vealed for the first time. The de­tails that fol­low per­tain prin­ci­pally to the Rafale plat­form it­self, and doesn’t in­clude the

$1-bil­lion part­ner­ship be­tween France’s

Safran and In­dia’s De­fence Re­search and Devel­op­ment Or­gan­i­sa­tion (DRDO) for the Kaveri tur­bo­fan en­gine, a ma­jor thrust area for both coun­tries that will also count in the off­sets pro­gramme.

The de­tails be­low re­veal that Rafale has so far forged part­ner­ships with at least 72 firms for in­dus­trial sourc­ing ar­eas that span, among other Das­sault plat­forms, the Rafale’s air­frame, its Snecma M88 engines, radar, elec­tronic war­fare and avion­ics, aero­nau­ti­cal com­po­nents, en­gi­neer­ing and soft­ware. The slides be­low in­di­cate that Das­sault and its part­ners are in ne­go­ti­a­tions with tens more firms for off­sets op­por­tu­ni­ties. This, in ef­fect, is the first spe­cific and over­all sense of what In­dian firms will bring to the ta­ble on the Rafale.

This first overview of an off­sets ex­e­cu­tion plan is es­pe­cially of in­ter­est, given that In­dia’s off­sets poli­cies are widely re­garded by in­ter­na­tional ven­dors and gov­ern­ments as con­vo­luted, self-de­feat­ing, or, in the words of one prom­i­nent CEO, “a go­daw­ful mess”.

In Par­lia­ment In­dia’s ju­nior de­fence min­is­ter Sub­hash Bhamre said, “The quan­tum of off­sets in the In­ter-Gov­ern­men­tal Agree­ment (IGA) for 36 Rafale fighter jets is 50 per cent, which in­cludes in­vest­ments in terms of Trans­fer of Tech­nol­ogy (ToT) for man­u­fac­ture and maintenance of el­i­gi­ble prod­ucts and ser­vices. The cur­rent off­sets pol­icy of the De­fence Pro­cure­ment

The de­tails re­veal that Rafale has so far forged part­ner­ships with at least 72 firms and Das­sault and its part­ners are in ne­go­ti­a­tions with tens more firms for off­sets op­por­tu­ni­ties

per­mits the ven­dors to pro­vide de­tails of their In­dian Off­set Part­ners (IOP) ei­ther at the time of seeking off­set cred­its or one year prior to dis­charge of off­set obli­ga­tions. Ven­dor/orig­i­nal equip­ment man­u­fac­tur­ers (OEM) is free to se­lect his In­dian Off­set Part­ner.”

The first slide, per­tain­ing to air­frame off­sets and sourc­ing, lists the Das­sault-Reliance joint ven­ture firm (DRAL) as be­ing part of a group of com­pa­nies that will pro­duce mechanical parts and sub-assem­blies. Other com­pa­nies in this list in­clude In­dian ma­jors like L&T, the Mahin­dra Group, the Kalyani Group and Go­drej & Boyce.

Marked in red are joint ven­ture com­pa­nies that Das­sault and its part­ners have al­ready in­cor­po­rated in In­dia, in part, to ex­e­cute the Rafale deal off­sets. Apart from the Das­sault Reliance JV, the oth­ers in­clude Snecma HAL Aerospace Ltd (SHAe) for aero-en­gine com­po­nents and Thales’s joint ven­tures with In­dia’s SAMTEL for mul­ti­func­tion cock­pit dis­plays. The new Thales-Reliance joint ven­ture, named Thales Reliance De­fence Sys­tems (TRDS), not only plans to build tech­nolo­gies for Rafales in In­dia and world­wide, but also says it will ‘de­velop In­dian ca­pa­bil­i­ties to in­te­grate and main­tain radar and elec­tronic war­fare sen­sors’.

The de­tails re­vealed by Live­fist add sub­stan­tially to the level of de­tail of a con­ver­sa­tion that has so far in­volved much po­lit­i­cal cloak and dag­ger from both the govern­ment as well as the op­po­si­tion. The French Pres­i­dent de­parted yes­ter­day af­ter a four-day visit deemed mostly suc­cess­ful on the strate­gic front, though In­dia no­tably de­clined a spe­cific re­quest from the high­est lev­els of the French govern­ment to send out a mes­sage, while Pres­i­dent Macron was in Delhi, that the two coun­tries were in dis­cus­sions for 36 more Rafale jets.

Here’s more from the Rafale off­sets plan and the In­dian com­pa­nies that will be part of it. Rafale de­liv­er­ies to the In­dian Air Force be­gin in Septem­ber 2019.

20 Al­lo­cated / 14 un­der con­struc­tion

RADAR, EW AND AVION­ICS IN­TE­GRA­TION 13 Al­lo­cated

AERO­NAU­TI­CAL COM­PO­NENTS & EQUIP­MENT 14 Al­lo­cated / 2 un­der con­struc­tion

EN­GI­NEER­ING SOFT­WARE & SER­VICES 20 Al­lo­cated

PRIME MIN­IS­TER NAREN­DRA MODI WITH THE PRES­I­DENT OF THE FRENCH REPUB­LIC EM­MANUEL MACRON IN NEW DELHI ON MARCH 10, 2018 STRENGTH­EN­ING TIES:

DAS­SAULT AVI­A­TION FA­CIL­ITY: BORDEAUX-MÉRIGNAC, FRANCE

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