On Friday, India signed a €7.87 billion deal with France to purchase 36 Rafale fighter jets, the delivery of which will start from 2019. The deal was signed by Defence Minister Manohar Parrikar and his French counterpart Jean Yves Le Drian. IAF has not procured any new fighter jets since the start of this century, the last one being the Sukhoi 30-MKI from Russia that was first ordered in the mid-1990s and later produced under license at state-owned Hindustan Aeronautics Limited facilities in India. Further, India’s arsenal is reducing at fast pace with MiG21s and MiG27s set to retire within next 10 years. India has demand of 44 squadrons (1 squadron=18 jets) but it is currently dwindling at 33. So, it was high time India signed a deal.

1. Introduction

dassault avaiation

The name ‘Rafale’ means ‘Gust of Wind’. It is designed and built by Dassault Aviation, a world-class aircraft manufacturing company.  Rafale is a twin-jet combat aircraft capable of carrying out a wide range of short and long-range missions. Due to its superiority, Rafale is in huge demand. Experts call it a 4.5 generation and only the US has 5th Gen Fighters in F22 and F35.

 2.  Capability

rafale in action

It is capable of carrying out all combat missions: air defence, interception, ground support, in-depth strikes, reconnaissance, anti-ship strikes and nuclear deterrence. Only 9% of the world’s fighter planes have the capability to carry out all these combat missions.

3. Pricing & Customizationcustomisation icon

The base price of the aircraft is about €91 million or about Rs. 680 crore. But, according to the deal, the Rafale will be customized with Indian-specific advanced weapons package and sensor arrays that will give the country edge in colder regions of Himalayas and Leh. This customization has taken the cost to Rs.1600 crore per aircraft for the whole deal.

4. Weapons Package

Meteor Radar missiles

The weapons package includes Meteor radar guided Beyond Visual Range (BVR) missile considered the best in the class with range of over 150 km and Scalp long range air to ground cruise missiles with range of over 300 km. Its integration on the Rafale means IAF can hit targets inside both Pakistan and across the northern and eastern borders while staying within India’s territorial boundary! On the other, India’s arch-nemesis Pakistan has only a BVR with 80 km range! The India specific modifications also includes Israeli helmet mounted displays, ability to start at cold bases like Leh, better radar, better detection and survival features among others.

5. Winner among the class

rafale

In an independent study, based on factors mentioned in Pierre Sprey’s fighter effectiveness study, France’s Rafale ranks first in the comparison between all the Western fighter planes of same class. And yes, this list also included the F16s. You can read the full study here.

6. Game Changer

The acquisition of Rafale aircraft is a game-changer in South Asia. Neither the Pakistan, nor China possess weapon of same class. In fact, such is the prowess of Rafale, that China was spooked when IAF shortlisted Rafale in 2011. An article published in Chinese Communist Party’s newspaper, The People’s Daily (French edition only), argued that India and France were supposed to be non-violent countries, how could they ink such a deal?

During the twentieth century in France there was a great writer called Romain Roland (1866-1944), the Nobel Laureate for Literature, who was strongly opposed to war. In India, there has been an illustrious politician named Mohandas Karamchand Gandhi (1869-1948) who was a pacifist leader, known worldwide for his fights against violence.

At present, their homelands are engaged in a sinister and repulsive arms race, which shakes and profoundly changes the international scene. If by chance these two great and illustrious men were still alive, what would they feel about this selfish and pernicious transaction and what opinion would they give in this matter?

Simply put, the enemy will need four Su30 or four F16D (latest acquired by Pakistan) or four JF17 (which again Pakistan has) to counter one Rafale with its existing capabilities.

7. 50 Percent Offset Clause

mohan parrikar signing the deal

There is a 50 percent offset clause under which French industry will invest half the contract value back in the country which is expected to develop some expertise domestically in the aerospace sector. 30 percent will be spent on aerospace industries and 20 percent into local production of Rafale components. This means that Indian companies, big and small, will get businesses worth over 3 billion euros. Furthermore, France has also offered to help India revive the unsuccessful Kaveri engine project for indigenous Tejas aircraft.

8. Battle Ready

rafale squadron

This deal includes aircraft in fly-away condition, weapons, simulators, spares, maintenance, and Performance Based Logistics support for five years. Under a logistics-support agreement, Dassault will ensure that at least 75 percent of the fleet remains operational or air worthy at any given time. This means at any given time there will be 27 Rafale aircraft ready for operation and for five years India will not have to spend on maintenance of these 27 aircrafts. In contrast, only about 60 per cent of India’s frontline fighters, the Sukhoi-30 fleet remains operational at any given time in the current scenario.

9. Extra Concessions

indian pilots

Three other minor but important concessions include free training for nine IAF personnel, including three pilots; additional guarantee for 60 hours of usage of training aircraft for Indian pilots and six months of free weapons storage without charge (in case the Indian infrastructure is not ready for storing the weapons). The three concessions alone would make substantial saving for India. There is also provision of buying 18 more Rafale in next five years at same price if the response is positive from IAF and pilots.

10. Better Deal than UPA Government’s 126 Rafale scheme

Rahul and Sonia Gandhi

After the deal finalized on Friday, there has been widespread circulation of news that UPA government had originally planned for 126 Rafale at cheaper cost than the current price. But what they don’t say is that the Rafale would have been of same make and model as those used in France, meaning no India specific customization. Further, the deal did not have the extra concessions. If you are interested to know more, then read on. Else, you can skip it off.

After Dassault Aviation, makers of the Rafales, emerged as winners among the six aircraft (Swedish Grippen, American F16 and F18, Russian MiG35, Eurofighter Typhoon and French Rafale), the UPA government had agreed with French officials to calculate the price on the fixed cost formula that allowed the company to include additional price of 3.9 per cent inflation indices from day one of the deal. Out of 126 Rafales, 18 were supposed to be manufactured in France and delivered in space of couple of months, and the remaining 108 would have been manufactured by Hindustan Aeronautics Limited (HAL) in India.  So, had the India gone ahead with the UPA deal and the European Inflation Indices had fallen (as it indeed has), India would have ended up paying additional cost of inflation Indices (@3.9 per cent) which was already added at the initial negotiation itself. In short, India would have paid twice the price mentioned in the deal.

Moreover, there was confusion on the calculation of the basic price itself of the remaining 108 Rafales. It was later discovered that the cost of 108 Rafales would go up by Rs 150 crore per plane since the cost of the labour man hours in India were 2.7 times higher than in France!

Furthermore, the then Defence Minister AK Antony jeopardized the deal by putting down on file a careless remark that the negotiating team must come back to ‘him’ before finalizing the contract. Since, ‘him’ wasn’t clearly mentioned and the possibility of him not being in power anymore (currently), there was more confusion among the negotiators.

Keeping all of these factors in mind, the current MoD-IAF team scrapped the old deal and reworked the clauses in the deal. To bring down the cost, the Indian team asked French officials to calculate the deal on actual cost (Price as on today) plus European Inflation Indices (which varies like stock markets and is currently around 1 per cent per annum). The MoD also set an upper bound to the Inflation Indices to maximum 3.5 per cent a year. In other words, if inflation Indices goes down (chances of it going down are more, looking at the current situation of European markets) India will have to pay less. Even if it goes up India will not pay more than 3.5 per cent increase. This greatly reduced the price and at the cost of 96 regular Rafales, the team decided to go for Indian specific customization making the 36 Rafales the most superior of all in South Asia. In addition, the team was able to extract several concessions and 50 percent clause that will be helpful in long run.

However, given the condition IAF’s arsenal is in, it is debatable if 126 regular Rafales would have been the way to go than 36 best Rafales. It’s the classic case of age-old Quantity vs Quality.