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Rafale fighter jet deal: What does it mean for India?

April11/ 2015

During Prime Minister Narendra Modi’s visit to France this week, India asked France to supply 36 Rafale fighter jets in “fly-away” condition “as quickly as possible”. This is under a government-to-government deal, unlike the tender currently being negotiated by the Ministry of Defence with Dassault, Rafale’s manufacturer.

For that tender, Rafale had earlier been chosen as the Medium Multi-Role Combat Aircraft (MMRCA) for the Indian Air Force (IAF) after a stringent technical evaluation and global tender process which has lasted a decade. That tender proposed the purchase of 18 Rafale aircraft in “fly-away” condition, and 108 to be made operational by Hindustan Aeronautics Limited (HAL) under a transfer of technology clause.

Subsequently, the deal has been mired in controversies. It has been alleged that Dassault Aviation has refused to transfer technology, increased the price in violation of the original tender, and refused to take charge of timely deliveries for the aircraft produced in India.

The ostensible reason for India starting a separate process, away from the 126 aircraft deal, is to urgently meet the “critical operational necessity” of the IAF. IAF is now down to 34 squadrons from its authorised 42, and successive Air Chiefs have highlighted the necessity of expeditiously acquiring the MMRCA. This is way of rapidly alleviating the IAF’s most immediate concerns, while leaving room for future negotiations.

Dr Iskander Rehman, non-resident Fellow in the South Asia Programme at the Atlantic Council says, “I can only imagine the collective sighs of relief at this announcement, not only amongst the French employees of Dassault, but also within the IAF, which has repeatedly expressed its concern over the steady haemorrhaging of the Indian air fleet. This acquisition couldn’t have been more pressing in nature.”

The bold political call taken by the Indian government is also a reflection of the frustration on both sides at how bogged down the deal has got in terms of procedures and pricing negotiations. As it is a government-to-government deal, India should be able to get these aircraft cheaper. The negotiations over price are still on but experts estimate at least a 10% lower price for these 36 aircraft. With limited funds available for capital acquisition in the defence budget, monetary considerations are an important factor in any major Indian procurement.

The announcement, however, doesn’t talk about making Rafale in Hindustan Aeronautics Ltd (HAL), a core proposition of the original tender. This multi-billion dollar procurement thus runs contrary to Prime Minister Narendra Modi’s Make in India plan for the defence sector.

This has led to whispers of some other high-end defence technology transfers from France as a quid pro quo for this deal. One such technology being spoken about is the reactor for the Ship Submersible Ballistic Nuclear (SSBN) Submarine; India is currently in the process of making its first indigenous nuclear submarine, the Arihant. A nuclear submarine is seen as the best guarantor for a second strike capability in case of a nuclear conflict because it can stay underwater for longer periods than a diesel submarine, which needs to come to the surface for oxygen intake.

Speculation aside, there are doubts that France will part with such technology. “India badly needs help perfecting its SSBN reactors, but something tells me that that technology is way too sensitive for the French to part with it, even if India tries to strongarm them over the Rafale deal,” a French military analyst told to us.

Whatever be the case, India seems to have firmly thrown its lot with the Rafale. Already running a mix of seven different fighter aircraft, it is highly unlikely that India will stop at buying 36 Rafale aircraft which can equip only two squadrons. This should put an end to speculation about another rival MMRCA manufacturer bagging the 126-aircraft deal. However, Air Vice Marshal (retd) Manmohan Bahadur, Distinguished Fellow at the Centre for Air Power Studies though warns, “Nothing is certain. IAF has worked with only two squadrons of Mirage 2000 and two of Mig-29 earlier.”
The most pressing question that has cropped up after this 36 aircraft government-to-government deal is: what happens to the original tender of 126 Rafale fighters? The best option is for the ongoing negotiations to be completed under the current tender wherein India gets another 126 aircraft from Dassault.

If India doesn’t want another 126 Rafale fighters, it would have to go for the option of issuing a new tender process. That is an extremely time-consuming process, with no guarantee that Rafale will again emerge as the winner.
The third option for India would be to go for a follow-up government-to-government deal with France for additional Rafale aircraft. This could include an option for Transfer of Technology to make them in India.

AVM Bahadur suggests a way in which the current deal could help the Make in India programme in the defence sector. The Maintenance Transfer of Technology (MTOT) for these 36 Rafale fighters, Air Marshal Bahadur suggests, should go to a private vendor instead of HAL. The DPP (2013 revised) clearly specifies that nomination of DPSUs like HAL for MTOT can be done away with and the contract given to a private vendor.

“We have so far not leveraged the MTOTs. If we give the Rafale MTOT to a private player, positive spin-offs will happen as it will expose that vendor to R&D and modern technology,” AVM Bahadur said.

“It will take another five years for Rafale to go for maintenance, and that is a long enough period for a private player to create the capacity – hangars, jigs, procedures, equipment, trained manpower. Even HAL will have to do this from scratch, which is no different for a private player, and it is better we get the private sector in now,” AVM Bahadur added.
All the experts, however, agree on one thing. It is too early to conclude anything concrete about the 36 fighter procurements unless more details of the deal are made public by the government.

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