Defence Industry

Tough, Tortuous Road Ahead of Clinching Rafale Deal
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Issue Net Edition | Date : 15 Feb , 2016



With a view to meet the immediate, critical needs of the Indian Air Force (IAF) ,which is up against the problem of “squadron depletion” and  coinciding with the Indian Prime Minister Narendra Modi’s April 2015 visit to France, a government to government agreement was announced to acquire 36 Rafale multi role fighter aircraft in a flyaway condition.  In one fell swoop, this deal brought to an end the nagging uncertainty over boosting the combat fitness of IAF in the backdrop of the phasing out the Soviet era Mig-21 and Mig-27 fighter jets from the frontline fighting formations. As it is, the home grown Light Combat Aircraft (LCA) Tejas, taken up for development by the Bangalore based Aeronautical Development Agency(ADA) ,was originally conceived  of as a replacement for ageing Mig fighters. However, the inordinate delay in the developmental schedule of Tejas nudged the Indian defence establishment to announce Medium Multi Role Combat Aircraft (MMRCA) contest under which 126 fighters were to be acquired.

After the Rafale fighter of the French aerospace firm, Dassault Aviation, won the MMRCA competition, the request for proposal, for which was issued in 2007, the protracted negotiations for sealing the deal could not make much of ahead way. Moreover, the high cost of acquisition under MMRCA contract was another factor that paved the way for officially calling off of this defence procurement programme described as the mother of all defence deals. It was against this backdrop, that India short circuited the entire process by announcing a government to government deal for 36 Rafale aircraft. Under MMRCA deal, 18 fighters were to be supplied in a flyaway condition while the remaining 108 were to be manufactured by the state owned aeronautical major, Hindustan Aeronautics Limited (HAL) with technology to be provided by the vendor bagging the deal.

Significantly, to take forward the deal which had failed to make the desired level of progress, on January 25, India and France signed an inter-governmental agreement for the sale of 36 Rafale fighters to IAF. This agreement was among the slew of pacts signed between the two countries following wide ranging discussions between the Indian Prime Minister Narendra Modi and visiting French President, Francois Hollande, in summit level talks. Moments after signing this landmark agreement, Modi observed, “We expect that even the financial aspects pertaining to the purchase of Rafale jets will be resolved as soon as possible.”  However, experts familiar with defence procurement are of view that this no more than an exercise in “political and diplomatic bonhomie.” By no stretch of imagination, summit level talks can be an ideal backdrop for facilitating the progress of defence deals. Immediately after signing this agreement, Hollande had observed, ”These fighter jets are precisely those which are fighting against the ISIS. They have proven themselves against the ISIS and we are happy to be able to provide them to India.” But experts have been quick to point out that ISIS was never in possession of a full fledged air force supported by a well oiled air defence system.

As things stand now, a number of issues including cost, technology transfer, modalities of offset clause forming part of the deal, modifications to the fighter to enable it accommodate particular set of weapons eagerly sought by IAF as well as the mechanism for service and spares supply have all conspired to slow down the process of finalizing the deal. The high per unit cost of Rafale has been ascribed to the termination of MMRCA contract involving the acquisition of 126 fighters. According to sources in Dassault Aviation, the Rafale fighter cost element is determined by the number of fighters ordered and the type of weapons suite it carries. Negotiations between India and France to finalize the deal have been in force since the April 2015 announcement.

The biggest hurdle seems to be the difference in the price India is willing to pay and the one France has quoted. While New Delhi is willing to pay 8 billion Euros, France is not willing to settle for less than 11 billion Euros. Even so, the inordinate deal in finalizing this contract reflects the shortcomings of the Indian defence procurement programme. Of course, not long Indian Government sources had admitted  that negotiation process for Rafale contract had remained “complicated” from the word go.

In late January, Indian Government sources, had expressed the hope that the contract could be finalized in about four to six weeks. But as things stand now, it appears a tall order. Offset clause seems to be another sticky issue in the way of finalizing the deal in the original MMRCA tender, the quantum of the offset clause was fixed at 50%.However, in view of the contract being confined to the acquisition of 36 aircraft, there is a doubt whether, Dassault would agree for the offset clause at all .Recent media reports reveal that the issue of the offset has been finalised though the details have not been divulged. It is envisaged that as part of the offset clause Dassault and its partners, engine major Snecma and electronics systems provider Thales, would share some of the technological elements with Defence Research and Development Organisation (DRDO), HAL and some private Indian companies.

On another front, Indian insistence on the manufacturing of the components of the aircraft in India under the Make in India Programme could complicate the already tough negotiations. Another irritating issue in clinching the Rafale deal is the delivery schedule. France has conveyed to India that the kind of weapons suite that IAF was keen on equipping Rafale with would make for delay in the delivery schedule.

Once deployed, 36 Rafale combat jets will constitute the two squadrons of IAF’s fighting fleet. Rafale is a twin engine, multi role combat aircraft described as an air superiority fighter capable of providing aerial reconnaissance, ground support, in depth strike, anti ship strike and nuclear deterrence missions Like Tejas, Rafale is also a aero-dynamically unstable, delta wing fighter with a fly by wire control system.

Of course, India has informed the French side that IAF needs the jets as soon as possible.  France has made it clear that offset would increase the cost of acquisition and make for delay in the delivery of the fighters. Under the offset clause a foreign defence vendor bagging an order worth more than R.3000-millioin will be required to invest 30% of the contract value back into country by way of sourcing of materials and services, technology transfer or floating of joint venture. For MMRCA deal, the offset clause was fixed at 50%.

The original time line of two years envisaged for the delivery of the fighters after the signing of the contract appears doubtful .For Dassault Aviation, which, has already on hand, orders from Egypt and Qatar for Rafale fighters, will have difficulties in meeting the Indian timeline schedule. For the current production rate of Dassault is eleven fighters per year .Of course, Dassault Chief Executive, Eric Trappier, had some time back stated that it is planned to double the production rate of Rafale beginning 2018.  But this would not be relevant to meeting the delivery schedule planned for India.

The French side also drives home the point that India’s insistence on the setting up of two bases for the maintenance and servicing of the fighter would jack up the overall cost of acquisition. In this context, French sources say that both Qatar and Egypt have decided to go in for a single base for Rafales they would be acquiring.

France has made it clear that it is offering the Rafale jet to India at almost the same price as its Air Force is buying from Dassault Aviation.  India is also looking at the possibility of acquiring the naval version of the Rafale.

At the end of the day, the master stroke by Narendra Modi led Government seems to have given a new lease of life to Tejas about which IAF was not particularly enthusiastic on account of the delay. As a quid pro quo for dropping MMRCA, IAF will now procure a total of 120 Tejas fighters. While the first squadron of Tejas made up of 20 fighters will adhere to the original configuration, the remaining 100 will have vastly improved features to make them good enough to be a formidable frontline fighter aircraft of IAF. According to T. Survarna Raju, Chairman, HAL the 100 upgraded version of Tejas will have features like state of the art radars, improved missile systems and mid air refuelling capability. For Tejas, the IAF deal will prove to be a win win development.

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Radhakrishna Rao

Strategic analyst specializing in aeronautics, defence, space technology and international security.

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6 thoughts on “Tough, Tortuous Road Ahead of Clinching Rafale Deal

  1. Scrap the Rafale and send the French back home. They couldn’t fight in WW I or II, and needed the Indians to save their arse at both times. Now, they talk big to us, and jacked up the price of 36 Rafale from $ 4.6 billion to Euro 11 billion. At this rate, the French make the Russians look like angels for the amount they jacked up the price of the Vikramaditya.

    There is no face-saving in this for India to do, if it backs away from the Rafale deal. In fact, India should simply say “thank you, but no thanks!” to France and move on to manufacture the F/A-18 Super Hornet in India, offered by Boeing. The F/A-18 deal is the best in the world for India. Grab it now while the opportunity is ripe. Close your eyes, and get into the Super Hornet deal.

  2. “… a government to government agreement was announced to acquire 36 Rafale multi role fighter aircraft in a flyaway condition” – This is a meaningless statement since there cannot be a “fighter aircraft in a flyaway condition”. A “fighter aircraft” must be equipped with radars and other armament components depending on the environment it will be deployed in as well as the enemy it will face for combat. Suffice it to point out that there is no universal solution or “off the shelf kit” for this purpose.

    Read more at:

  3. The path to air adequacy is tough and tortuous because, like India’s suicidal anti national Constitution, laws, courts, bureaucracy ,police and politicians, there are far too many agendas riding on the purchase. So many indeed, that the ostensible purpose of purchase, which is” National Security” remains firmly ensconced at the rear seat where it has remained since Jabberlal Neckscrew put it there.

    The Harrier compares favourably as a strike and air superiority fighter with both the flying golden Swiss Knife, the US F-35 and the SU 35 S. The latter two have a higher operational ceiling are more expesnive to own and operate (particularly the F-35 which is a prohibitively expensive striker with many limitations). This place the Harrier in the slot occupied by the old Foland Gnat in the contemporary air combat theater in India’s vicinity.

    India does not have the necessary combat aircraft to enable the IAF to perform its ostensible role (I sometimes wonder whether the hundreds of Air Marshals who litter India have any better idea of what this is than their Neta-Babu Kleptocrat over lords). These 36 aircraft cannot in any way fill the long term (truly long term considering that the LCA has been in development since 1954 and, though it has changed names from Marut to Tejas, India still cannot make a fighter jet engine while those it has driven from India’s shores with its Reservations-Corruption Raj design and make the engines that it has to purchase). Nor will it substitute the acquisition of the perfect aircraft that meets air force requirement for the unforeseeable future while enriching the food chain that surrounds and infests it. But, it will serve to partially fill the gaping hole in India’s current air defence capability.

    • But I also disagree that 36 Rafale will fill any HOLE. India needs much bigger stuff than only 36. It needs hundreds of Generation IV and V aircraft. No point wasting money on something that won’t fill India’s hole. Better to start thinking at about 144 aircraft, and make your way upwards from there: that can satisfy India’s hole a lot better.

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