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Indian Rafale Cost Criticism Raises Doubts on MMRCA

June 6, 2015 (Photo Credit: Dassault)

PARIS and NEW DELHI — India's criticism of a high price tag on the Dassault Rafale has sharpened public focus on French negotiations to extend sale of the twin-jet fighter beyond a planned 36 units for the Indian Air Force.

Indian Defence Minister Manohar Parrikar fueled speculation about the final size of the Rafale order May 31 when he said the French fighters were "way too expensive" and there was no longer a plan to buy a total of 126 Rafales.

But Dassault Aviation Chairman Eric Trappier said the 126-jet deal "is under discussion," although he admitted progress is slow.

"The Indian Air Force needs many more than 36 planes," Trappier told Defense News.

"There is an immediate need for 36. The negotiations for 126 are rather slow.

"They have an urgent operational requirement which does not allow time needed to set up the license, so they asked for 36 quickly," said the Dassault boss.

India has been negotiating to buy 126 Rafales under the Medium Multirole Combat Aircraft (MMRCA) program after beating the Eurofighter Typhoon to selection in 2012.

The future of that deal was clouded after the unexpected announcement by Indian Prime Minister Narendra Modi during a visit to Paris April 10 that India wanted 36 jets straight off the Dassault production line.

Modi cited "critical operational necessity" to buy the Rafales in fly-away condition.

Trappier said he hopes that particular deal will be signed by the end of the year.

The Indian defense minister's remark on the high price was understandable, a French defense specialist said.

Beyond the fly-away unit price, there is the "real price" that includes support and equipment such as a test bench, maintenance tools, manuals and training simulators. The technical support runs in hundreds of millions of euros and is a separate cost from the supply of spares and the aircraft.

Negotiations for the 36 units may have unveiled the full potential cost, after Modi's announcement of the planned purchase.

Leading US aerospace analyst Richard Aboulafia dismissed Indian suggestions Rafale was too expensive.

"When India talks about the high price tag, that's not believable because the LCA [indigenous Light Combat Aircraft] and the Sukhoi [Russian jets in their Air Force fleet] are huge cash devourers. India has several hundred Su-30s, and they are cheaper to buy than a Rafale, but cost far more to operate and maintain," he said.

"The Rafale is no more expensive than Eurofighter and the only thing less costly is Super Hornet or the F-16," said Aboulafia.

Trappier expects to pursue negotiations for sales beyond the 36, with some local production for Indian subcontractors picked by Dassault, Reuters reported last month.

One of the big stumbling blocks to the original 126-aircraft deal was terms for the involvement of state-owned Hindustan Aeronautics Ltd. (HAL) in local assembly.

A selection of Indian subcontractors by the French company operating as prime contractor would unravel the previous plan in which HAL would be co-prime contractor on the local build.

A Dassault sole prime contractor is seen as a return to the conventional foreign offset agreement rather than a more ambitious plan to transfer technology to a local prime contractor, an industry executive said.

The latter would be consistent with the "Make In India" campaign, intended to boost domestic industrial capability.

Dassault declined comment.

A French Defense Ministry spokesman declined comment on the remarks by the Indian defense minister.

Indian Ministry of Defence officials refused to say whether the 2007 request for proposals for 126 aircraft is dead and buried along with the proposal to produce Indian-made Rafales at HAL.

Aboulafia, though, reckons that further procurement of Rafale jets beyond the 36 being negotiated is almost guaranteed.

"Thirty-six is the sweet spot to disenfranchise Hindustan Aeronautics, which is the giant obstruction to this deal and gets the Rafale into the Indian force structure," Aboulafia said.

"If you're India, 36 isn't enough. The bed down cost of 36 new jets is huge. Incremental purchases of more are far less expensive. So by giving a requirement for 36 you guarantee further procurement, but get HAL out of the way," he said.

"So the way ahead for this deal is to buy it in blocks," he said.

"You have a situation where the competition is Russian or indigenous jets that aren't working. If they don't get Rafales, what do they buy, more Su-30s that keep breaking and really cost a lot? That would cripple your Air Force. Or buy the indigenous aircraft, which doesn't work either. Or you buy something that will work well," said Aboulafia.

Indian analysts, though, are divided as to what the future looks like for Rafale in Indian Air Force service.

"As far as the 2007 request for proposals [secured by Dassault] is concerned it is as good as dead," said Kapil Kak, retired Air Force air vice marshal and defense analyst.

But Vivek Rae, the former Indian MoD director general for acquisition, said it's too late to start looking again at other platforms.

"Rafale meets IAF specifications and was selected after a grueling evaluation process. It was a well-considered decision by IAF and the MoD. There is no scope for reconsideration at this stage. IAF needs to buy the same platform in the future to economize on operational and maintenance costs," he said.

Whatever the outcome of the Rafale debate, Air Force officers are looking for a quick decision about how to boost the strength of a fighter fleet that an Air Force officer described as "critically low."

Srinivasapuram Krishnaswamy, a retired Air Force air chief marshal and former service chief, said, "The Air Force has a significant shortage of combat aircraft. Numbers are well below those authorized and continue to dwindle as older machines retire. Considering the low rate of induction, IAF may take more than a decade or two to reach its authorized strength," he says

According to a report of India's parliamentary panel released in December, the IAF fighter strength is down to 25 squadrons with a required strength of 45 squadrons.

Out of the 25 squadrons, 14 are equipped with Russian-made MiG-21 and MiG-27 fighters, which will begin retiring beginning this year through 2024.

Fresh discussions have begun to reassess whether the Air Force needs more medium multirole combat aircraft or only single-engine aircraft to replace the MiG-21 and MiG-27 fleets, said an MoD source.

Bharat Karnad, a professor of national security studies at the Centre for Policy Research, said a possible solution might be to use greater numbers of HAL's single-engine LCA.

"The homemade LCA or Tejas-1/Mk-II would be far better for the short-range air defense role MiG-21 filled than the inordinately expensive Rafale," he said.

Email: ptran@defensenews.com, vraghuvanshi@defensenews.com

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