The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.
Sumeet Kumar Sharma, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur
After years of hiccups and renegotiations in the India-France Rafale deal, finally the two countries on 25th Jan 2016 signed an Inter-Governmental Agreement for the direct purchase of 36 Rafale fighter jets. But still certain financial issues need to be resolved. The current combat jet fleet of Indian Airforce is fast depleting and facing obsolescence, which makes this deal a must deal for IAF.
The MMRCA (Medium Multi-Role Combat Aircraft) tender was floated in 2011, to supply 126 multi role combat aircraft to Indian Air force. After an expert estimation of the quality, quantity, and other characteristics of all bidders, Dassault Rafale won the competition in 2012, but inability of previous government to make it conclusive led to delay.
The prime strategy of the Indian air force has always been based on quality of aircraft rather than quantity. Now to maintain that superiority, the IAF needs the most technologically sophisticated 4++ Gen Multirole aircraft to plug the gap and sustain the technological superiority. Rafale is the best choice for IAF as proved by their trials but still certain issues remain.
Let’s look into certain issues which might cause this deal to appear less worthy than it actually is.
- Price per aircraft is over Euro 100 million or about Rs.740 crores, which goes way beyond the top-of-the-line Russian fighter Sukhoi price. The deal is valued at around a whooping Rs. 60,000 crore.
- The initial deal was meant to strengthen the fleet by supplying 126 aircraft but the government stuck to 36. It also would have made sense to order them now as it would ensure a better price.
- The time constraint is a crucial issue. IAF has demanded a completely customized aircraft which would be built from scratch, resulting in longer time for delivery.
- The fear of sanctions is always there. Recently France refused the delivery of two Mistral class landing ships to Russia due to the Crimean crisis. Why would it not do so to India in case of a future war.
- The Sukhoi Su 30 is more powerful and has a larger but cheaper missile with greater range. The smaller Rafale is considered in aeronautical literature to be more maneuverable in a dog fight.
- The whole moto of IAF was to improve the quality and the striking power of the IAF, hence just purchasing 36 Rafale planes is not enough.
- The total cost of the French planes would be $324 million. Yet, in the same category, 72 Russian Sukhoi Su 30 planes can be purchased for $288 million with $36 million left over.
- http://indianexpress.com/article/india/india-news-india/india-france-ink- rs-60000-crore-rafale-deal/