Rafale order no guarantee for $20-bn MMRCA deal: Experts

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New Delhi | Published: April 13, 2015 1:10:59 AM

Prime minister Narendra Modi addressed the Indian Air Force’s urgent requirement with the order of 36 “ready-to-fly” French Rafale fighter...

Rafale, Rafale jet, Rafale deal, Rafale aircraft, Narendra Modi, France, India France deal, Subramanian Swamy, Dassault aviation, Rafale Fighter aircraft row, Economy NewsHow the Rafale proposal will have a bearing on the -billion deal is uncertain, say several former IAF officers involved in the MMRCA negotiations. (Reuters)

Prime minister Narendra Modi addressed the Indian Air Force’s urgent requirement with the order of 36 “ready-to-fly” French Rafale fighter jets last week. Experts, however, say the deal can’t be expected to lead to a guaranteed conclusion of the planned $20-billion 126 medium multi-role combat aircraft (MMRCA) tender.

How the Rafale proposal will have a bearing on the $20-billion deal is uncertain, say several former IAF officers involved in the MMRCA negotiations. Former Air Marshal M Matheswara told FE, “The joint (Indo-French) statement makes it very clear that this is an inter-governmental agreement for 36 aircraft, complete with all support and maintenance issues covered, outside the ambit of the MMRCA negotiations under way for the last three years.”

This can now lead to two possibilities, opines Matheswaran, also an advisor to state-owned Hindustan Aeronautics: “The first is that the earlier MMRCA process gets scrapped and the government keeps the option of procuring the remaining, or even more,  through the government-to-government channel, taking into consideration the Make in India focus, technology acquisitions, collaborations for indigenous  programmes and export market share. This could be more of Rafale, which is less likely, or any other aircraft that meets all the considerations above and, in particular, lower costs.”

“We must remember that the Rafale does not have enough export share for the Indian manufacturer to become part of its global supply chain. The second option is that the current negotiations are brought to a logical conclusion and the contract is signed in the future. The second possibility, in my opinion, is a remote chance now,” he pointed out.

French President Francois Hollande in Paris referred to the tender for 126 fighters as “a separate process under way”, setting at rest speculations around the cancellation of the 2007 tender. This, some believe, has effectively closed the door for the Eurofighter Typhoon re-emerging as a contender.

Despite several rounds of intense negotiations, the defence ministry and France’s Dassault Aviation have not been able to strike a deal on price escalation and assumption of responsibility for the 108 aircraft that have to be made at HAL Bangalore, under transfer of technology. This gave rise to doubts that the deal was on shaky territory.

France needs export deals for the Rafale as its government plans to cut annual domestic orders in 2016. As a result, foreign customers are needed to keep the production line running. The family-controlled company in February signed a contract to deliver 24 fighters to Egypt as part of a $5.6-billion deal.

India has already announced that the two new squadrons would be inducted into the IAF in two years. France has agreed to conclude an inter-governmental agreement for supplying the aircraft on terms better than those offered by Dassault Aviation in the MMRCA tender.
Dassault Aviation is exultant. “Just as we are delivering the first upgraded Mirage 2000, I am delighted by the decision of the Indian authorities which gives a new impetus to our partnership for the next decades and comes within the scope of the strategic relationship gathering France and India,” declared Eric Trappier, chairman and CEO of Dassault Aviation.

Political considerations were a significant factor against Rafale’s final competitor, the Eurofighter Typhoon. As this aircraft is produced by a consortium of four nations (Germany, Italy, the UK & Spain) — each with different foreign policies and varying tolerance to arms exports — Indian officials were a bit nervous about their ultimate reliability as a single supplier.

Germany has been a long-standing aviation partner. German companies — essentially the former Messerschmitt-Boelkow-Blohm — helped HAL develop the Light Combat Aircraft and the Advanced Light Helicopter, Dhruv. These links were the reason why the Eurofighter bid was led by Germany’s Cassidian,  and not the UK-based BAE Systems.

Italy has never sold a major weapon to India, so it could bring neither influence nor reputation to support the Eurofighter while the third partner, Spain, is totally absent from the Indian military landscape.

This made BAE Systems the best-known Eurofighter partner in India. In 2003, BAE sold £1.5-billion worth of Hawkjet trainers to India, with a follow-on £500-million order in 2010. If all factors are taken into account, the Eurofighter partner nations posed an even bigger issue: in case of war, the German law would prohibit delivery of weapons and spares, Italian law and public opinionwould demand an embargo while Spanish legislation is not very clear.

Weapons also played a significant role in persuading India to opt for the Rafale: not only is its weapon range mostly French-made, and thus not subject to a third-party embargo, but so are all of its sensors. Eurofighter, whose air-to-air missiles include the US-made AIM-120 Amraam and the German-led IRIS-T, and whose primary air-to-ground weapon is the US-made Paveway, was obviously at a competitive disadvantage in this respect.

Interestingly, the ‘mother of all deals’ has got even bigger, throwing up a question: how will the Modi government pay for it?

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