A recent controversy took the media into storm as it alleged India is procuring Dassault Rafales from France without Transfer of Technology at a price of 244.4 $ million of each.
So, now almost every one is feeling the biggest question in their mind –
IS INDIA PAYING TOO MUCH FOR ?
This is a far deeper topic to discuss and just cannot be answered in a simple ‘Yes’ or ‘No’.
1.Although the deal consisted of 126 aircraft but not all were to be provided by Dassault,Only 18 were to be provided with no hurry of delivery and 108 were to be made in India which obviously would have taken a lot of time to finally develop the technology here.
2.Now the deal consists of 36 aircraft but India will receive them starting from 2019 ,to know why India needs aircraft so early continue reading!
The aircraft in question here,Dassault Rafale is manufactured by Dassault and India is trying to buy these aircraft since 2007–2008.India is importing arms from Dassault Aviation ,a French Aircraft manufacturer since 1957.
A total of 6 aircraft manufacturers were bidding for the tender and to clear the tests set up by India.The 5 aircraft which were eventually rejected were-Grippen,Eurofighter,F-16,F-18,MiG-35.
India has many Aircraft retiring somewhere from present to 2024 and needs to import aircraft .Indian Air Force wants 45 fighter squadrons (18 in each squadron) for a two-front collusive threat. Many bombers and interceptors, all from the MiG stable, are to retire over the next 5–6 years.
India lost two fighter jets (MiG-21) during the Kargil War in 1999 (1 shot down and 1 due to engine failure), but the success of the French-made Dassault Mirage 2000 during Operation Safed Sagar impressed the Atal Bihari Vajpayee Government and they were happy to help IAF with the latest technology in Air Force.
The government issues a request for information (RFI) but there was scepticism in some international capitals about India’s ability to afford such a large tender, then estimated at $10.2 billion.
Action hots up after the normalisation of bilateral relations with Washington following the Indo-US nuclear deal in 2006. Besides the F-16 (made by arms and space major Lockheed Martin), the US government asks India to also consider Boeing’s F/A-18 Super Hornet. Government issues tenders asking six companies to test their fighters in India.
The competing companies — two American, three European and one Russian — submit voluminous bids, covering about 600 parameters. Planes start getting tested by Indian pilots at various locations from Leh at its coldest to restricted landing strips in the Indian Ocean and Bay of Bengal.
French company Dassault’s Rafale comes out on top on various parameters with the four-nation consortium’s Eurofighter in second place. Bids by Russia, both American companies as well as a Swedish company are rejected.
Dassault is officially acknowledged as having passed all the tests and emerged as the lowest bidder for 18 planes to be delivered in readymade condition and 108 planes to be made in India(Total =126). The deal by now is 50 per cent higher than the original estimates (Deal Value to be around 15 bn USD)
Negotiations with Dassault continue and are nearly finalised but BJP leader Yashwant Sinha and then Rajya Sabha MP MV Mysoora Reddy consider it their “patriotic duty” to complain about loopholes in the deal. Then Defence Minister AK Antony orders officials to re-examine the deal.
As elections approach, Antony citing inadequate funds decides to put the deal on hold despite vigorous campaigning by French politicians.
Taking everyone by surprise, Prime Minister Narendra Modi announces that India will buy 36 readymade Rafael planes from Dassault. On the fate of the 126-plane tender, Defence Minister Manohar Parrikar says this will now be a Government-to-Government (G2G) deal.
The relations must have been tainted due to actions in 2014. So, it is entirely possible that the Government is trying to entice the French by paying extra to acquire the aircraft as soon as possible and Rafale is the best option available right now. And it is the same aircraft that passed India’s tests on about 600 parameters.
These kind of deals are usually seen ongoing for years in a country like India but this time India seems in a hurry and is ready to spend extra to acquire the technology and end this deal as if India cancels the deal once more it will take a lot of time to find an alternative,bid for it ,test it ,confirm it and then finally receive it.
Before we discuss the claimed “high cost” of it , let’s have a look into why Indian Rafales are going to be the special .
Indian Rafales-A Game Changer:
Here is a part taken from an article written by Mr. Shiv Aroor
Link: Click Here
1) The Indian Rafale will be a modified version of the F3R standard that is currently on track towards qualification and validation in 2018 bythe French government and military.
2) The F3R Rafale is centered around integration of the MBDA Meteor beyond visual range air-to-air missile, the Thales TALIOS laser designator pod and the laser homing version of Sagem’s AASM Hammer air-to-surface munition.
3) The IAF has chosen for the moment to integrate the Israeli Litening pod on the Rafale for sensor commonality across platforms
4)Livefist confirms that the IAF has ‘optioned’ the TALIOS pod (which replaces the obsolete in-service Thales Damocles pod) for a possible future integration.
5) The IAF has similarly optioned the Sagem AASM Hammer system for a possible decisiononce Rafale deliveries begin, though it will hit the ground running with Israeli Spice guidance kits to begin with.
6) The Indian Rafale will sport the Thales AREOS recce pod. Rafale pilots on rotations over Iraq said the AREOS had been performing splendidly in the operational tempo there, especially with its ability to beam high-resolution images back to the Charles De Gaulle aircraft carrier, allied units in the air andon ground, as well as decision-makers.
7) The F3R also includes attendant software upgrades to onboard sensors and avionics.India’s Rafales will operate the Meteor BVRAAM
8) SCALP cruise missile India has opted for Rafales. The timing of Rafale deliveries to India is such that the Meteor will be concurrently operational with both the French and Indian air forces.
9) India’s Rafale will deploy the in-development BrahMos NG missile in either atwin or single weapon load-out when the system is ready from 2021. The MBDA Scalp and BrahMos will provide planners with unique subsonic/supersonic stand-off attack options available to no other air force in the world.
10) Modifications, coding extensions and testing will be conducted in India with assistance from Thales and Dassault. The Rafale deal also includes assurances for coding extensions to other in-development Indian weapon systems, including the Astra BVRAAM.
11) The Indian Rafales will sport the full integral SPECTRA Electronic Warfare System which confirms Rafale’s outstanding survivability against modern airborne and ground threats.
12) Rafale’s explicitly stated nuclear delivery capability was a marked strength in the then six-way fighter contest. With India’s upgraded Mirage 2000 jets to hold fort for another fifteen years as IAF’s nuclear delivery aircraft, the Rafales explicitly take on that onerous role next.
13) Indian Rafale will be the first IAF combat aircraft that stands technologically linked to improvements being progressively added to Rafales in the French military.
So, this the quality of the Rafales India is going to getget
Now , come at the price controversy.
Analysis of Price:
Total cost of 36 Dassault Rafales are said to be 8.8 Billion US $.
The fly away cost for one single Rafale airframe =$85 Million
36 Rafales = 36 x 85 = $3.06 Billion
Weapons package per Rafale costs around= $20 million
So for 36 it will cost 36 x 20 = $720 Million (alternative source says $900 Million)
Setting up of two bases and maintenance depots costs $1.2 Billion
The deal said that it would cover 10 years of maintenance and spares. The total LCC is calculated for 40 years and it comes to around 2.5 times the price of airframes (average).
Hence, for 10 years = 2.5 x 3.06 / 4 = $1.92 Billion ($53.4 Million per Rafale)
$1.72 Billion is for ToT and covers the 50% offsets (that means, 8.8 / 2 = $4.4 Billion will be re-invested back in India)
So , total costs = (3.06+.9+1.2+1.92+1.72)$ Billion= $ 8.8 Billion
(Source: Click Here)
In other source, it is explained as,
Setting up of two bases, logistics and engineering/maintenance infrastructure along with support for 10 years will cost $2.5 Billion.
Customization as required by the IAF that includes increased high altitude and hot weather performance, Indian weapons, improved engines etc will cost $2 Billion.
An additional clause added to the IGA that gives autonomy to the Indian Govt. whether to opt out from buying additional tranches of Rafales (excluding the follow on 18) without any financial repercussions and other conditions including an inflation cap at 3.5% will add another $500 Million.
Thus total cost = (3.06+.72+2.5+2+.5) $ Billion = $8.78 Billion
(Source: Tejas India’s MRCA)
If the price is considered in Euro ,
Price of 36 aircraft is about 3.42 billion Euros. The armaments cost about 710 million Euros while Indian specific changes will cost 1.7 billion Euros.
Associate supplies for the 36 fighter jets will cost about 1.8 billion Euros
Performance based logistics will cost about 353 million Euros.
Total Cost including some other factors is 7.87 Billion Euro
Link: Click Here
If India goes for remaining 90 Rafales for MMRCA, then has to pay only for the airframes, weapon and maintenance, since the two bases being set-up can handle three squadrons each without major expenditure.
So it wil be 90 * ( 85 + 20 + 53.4 ) = $14.7 Billion excluding another $500 Million for upgradation of the bases. (again with 50% offsets) maximum.
So the total cost for 126 Rafales will be
= (8.8+14.7) $ Billion = $23.5 Billion
(Note – The figures are estimates and only provided to give an idea as to the real cost break-up structure. The cost for 90 remaining jets will increase due to many causes even may be for Make in India ; initiative for setting up assembly line. But again the reinvestment will compensate most of the additional cost)
Thus, whatever may be in future, it should not cost more than $24 Billion for total 126 Rafales
Source: Click Here
Now , a recent allegation says , the previous negotiation was to be of 10.2 Billion US $ in 2012 conversation rate. It is mentioned that according to the deal, 18 jets would come in fly away condition whereas 108 would be manufactured by HAL ,there would be ToT and 50% offset clause.
Now according to this report , the cost of the program was projected at US$12 billion (Rs42,000 crore) in 2007. The cost increased to US$18 billion (Rs90,000 crore) in January 2012 when the lowest bidder was declared.
Link: Click Here
The same source says, “The price hike would mean that the deal would cost India nothing less than $28-30 billion (Rs1.75 lakh crore-Rs1.86 lakh crore),” said an Indian Air Force (IAF) official, who is privy to discussions of the cost negotiation committee”. This same source also says , ” Eighteen of the 126 planes will be purchased directly from Dassault, while Hindustan Aeronautics Limited will manufacture the other 108 under a licence,at an upcoming facility in Bangalore. ”
No mention of Transfer of Technology , even in 2014.
So , according to the source mentioned , the total cost of 126 Rafales was estimated 28-30 Billion US $ , even without Transfer of Technology and many other conditions in 2014 , before the General Election 2014.
Here, as explained, with Transfer of Technology, full customization according to India, best quality weapon package 126 Dassault Rafale will not cost more than 23.5-24 Billion US $. So a possible profit of 6.5 Billion US $ actually.
So, Dassault Rafale deal by India is one of the best, one can actually expect.
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