Saturday, April 11, 2015

Big Indian Political Push Sees #RafaleDeal Through

The splendid irony of the the M-MRCA! After a decade of decidedly non-political tendering and selection based on performance and arithmetic, it has taken a hearty helping of political intervention to push a deal through. The commentary on a selection process that was once trumpeted as patent-worthy is a separate post that's waiting to be written.

The idea that India and France needed to come up with something completely separate from the stubbornly stalled M-MRCA negotiations became clear last year when then Defence Minister Arun Jaitley (who also headed the Finance Ministry in a dual charge) briefed Prime Minister Narendra Modi about the 'stall'. While price negotiations continued at the MoD, the political wheels had no choice but to begin turning. It was the first big indication that a rumours of a collapse were far fetched, and that this government actually intended to get a deal done, whatever that deal was. Pressure from the Indian Air Force helped. Two things began happening in tandem at the time.

The dialogue over 36 Rafales was straight-up political, and did not involve acquisition managers from either side. A channel was opened between the Indian and French governments, which kept the M-MRCA programme teams briefed about progress in discussions. By January this year, the deal was a real option on the table, with India conveying in uncertain terms that if the Indian Air Force were to commit to purchasing 36 Rafales outright, the financial and other terms needed to be markedly better than those under negotiations for the M-MRCA.

In fact, Defence Minister Parrikar was quoted to have said today, "The Rafale fighter deal is a great decision taken on terms and conditions that are better. The jets are to be inducted in IAF in a span of two years."

Parrikar, who played hardball on the M-MRCA negotiations, played (and continues to play) a central role in giving the French government and Dassault the clearest possible message that flexibility would be key to arriving at an 'out of the box' solution de-linked from the MoD negotiations, given that this was a real impasse with no forward movement visible. This happened in February. The French government agreed near instantly to the proposal of 36 aircraft bought outright from Dassault in the full configuration finalised under the M-MRCA technical bid.

Livefist's understanding is that while the the deal for 36 Rafales is separate from the ongoing M-MRCA negotiations (the joint statement clearly states that), there arithmetic is likely to work out as follows: The 36 flyaway Rafales essentially replace the 18 Rafales that were to be purchased outright as part of the M-MRCA, leaving the negotiations to arrive at a deal on the lincense-build of 108 Rafales at HAL. That's 144 Rafale jets under consideration, or eight squadrons. The precise numbers could sway depending on how things move in negotiations -- remember, sticking points over the Dassault-HAL license build remain.

The one solid reality today is this: India will fly the Rafale. There's no longer any doubt about the fact that the French jet will fly in Indian colours. Of course, there are several questions:
  1. Is the new deal an admission that the M-MRCA selection process & 'L1' centric procurement process has essentially failed?
  2. Does the new deal essentially say that the Indian procurement process cannot be purely technical, and will always finally need a political push?
  3. Could this decision have repercussions within the framework of the M-MRCA, in terms of possible action by Eurofighter, the L2 in the contest?
  4. How does the government combat perceptions now that an 'out of the box' political solution was necessary to push through a deal that should have been seen through on merits and negotiations?
  5. What repercussions does the new deal (note, it's still being negotiated) have on India's bargaining power across the M-MRCA table?
  6. Does the new deal get India a better over-all price?

29 comments :

Anonymous said...

Any deal of that scale in defence will only happen with political backing. To ever think otherwise was misleading and plain wishful thinking. It is actually harmful for India to think otherwise because it means that you forgo a major strategic and geopolitical tool. Doesn't work in the real world.

Besides it shows that the IAF really wants the Rafale after having evaluated it carefully against everything else realistically on offer and having lived with over a 100 su-30 mki for years. So I don't think India is getting the wrong tool.
Those whostill doubt will of course appreciate the L2's absence in the on going campaign in Syria and Irak

Hanonymous said...

Congratulations people.

Yes, or just shows how, exactly how, bureaucratic red tape is used to derail a process in India. By vested interests. Inside India.

Look at it this way,india was without submarines, all being made none available for combat, all without aips. The destroyers are without air support, the sonars were not ready. Same with our AC.

India was with only su30mki as the air superiority fighter with a 50% availability rate. Some cag or other report said, we have 162 su30s, some six months back. 80-90-100 sukhois are combat ready.

On land, we have the issue of the new rifle, old tank, and the shortage of the basic requirements of the infantry.

You could say that Sir Anthony was really selling up the alley where India would have definitely, I repeat definitely lost a war with even Pakistan, forget China.

Let's remove the flab and make the sharp edges sharper.

It will boost the morale without propaganda.

Jai Hind.

Anonymous said...

Closing a deal is not something our babudom can do. It needed a political backup & will. Good this Government showed the spine. Now IAF will have about a 100 good fighters in the form of Modernised Mirages & Rafale.
Good the IAF pursued Mirage modernisation too.
If only our MoD had listened to IAF & bought 100 Mirage2000 after Kargil this tamasha of spending so much tax payer money would have been avoided. I hope successive Defence secrateries are denied their pension over this fiasco.

Anonymous said...

A panic decision thrust on the country by an almost blackmailing IAF.

Gessler said...

Not just about the price, what about the ToT? If the deal of 63 fighters isn't gonna be backed up by another larger batch of atleast 108 more...then ToT won't be there!

Anonymous said...

Hi Shiv Aroor,

NSR says ---

PM Modi and DM Parrikar pulling off India brilliantly from acute defense industry and political apathy malaise ...
I hope they succeed in it...

This deal should be viewed in overall picture...
1. Immediate delivery which helps IAF...also helps France to save its industry...
2. French came around on Nuclear Plants...local production of pressurized reactor cores will establish Indian Nuclear industry too...L&T...
3. $2 billion aid and smart cities...
4. Still supporting India for UNSC seat...
5. Support for make in India program...


DM Parrikar recently floated idea of acquiring Russian T-50 instead of FGFA to quicken the process...
Delivery to start from 36 months after decision of acquisition...

Considering the sorry state of HAL in absorbing and/or developing technology, I think this is the best scenario for India to build up the capabilities in all the segments...

Now what India must do is...

Bargain hard with France for Rafale and Russia for Su-35S...Whoever offers best terms and technology should be selected...

India must produce additional 40 to 80 Tejas I and Naval Tejas I...

It gives India time to improve technology development and develop aerospace manufacturing and sub-assembly development..

India must get on war footing on Tejas II and AMCA projects...

It must re-engine Jaguar immediately...

India must do joint projects with Russia on SU-30 and Mig-29 engines and avionics to develop reliable and powerful ones...

This is best short term solution for India to elevate HAL and other industries to supply future fighters and components in a timely fashion...

May GOD bless India and save it from troubles the world is seeing everyday...

Anonymous said...

Hi Shiv Aroor,

This is NSReddy...

I would like you to clarify to the readers about the Rafale version they have chosen...

Some says it is F3...whereas Egypt getting F3.3 and pretty soon everything will be coming out in F3R version...

If India chose F3 version, then it is very foolish of them to do so considering they are spending additional $45 millions per fighter to just upgrade Mirage 2000...and this price does not even include a new engine...

F3.3 and F3R has a better RBE2 AESA radara and Spectra EW...also they can fire Meteor...

I hope that they chose right version...which should be exact replica of whatever French Air Force is getting...including nuclear launch capability...

Thank you...

Anonymous said...

I do agree that the circus has lasted long enough and one needs to move forward one way or another. So kudos to PM Modi on the decision, although the M-MRCA L1 bidding process becomes a farce.

The joint statement makes no reference whatsoever to 108 further Rafales to be done in India. There is not even a reference to M-MRCA, only an indirect reference that the buy of 36 Rafales better have better price and terms than M-MRCA.

So this deal for 36 Rafales F2 is still contingent on lower pricing. What happens if price stays the same as M-MRCA?

Indian said...

1. IAF needed 100 Mirage 2ks badly Decade back.and Govt Created MMRCA Story ..

2. Price Negotiation Comity could have derailed the deal or at-least delay the arrival of Rafale as much as they could (until we fight another bigger Kargil ..to make request to France ,Russia Israel or US) to send some help (new fighters ASAP like we did in previous Kargil War while our soldiers were fighting and dying on war front and French engineers were fitting targeting pods in Mirrage-2Ks at Air Bases and Israel was sending Ammo from their War reserve to US on urgent basis) :-)

3. Looks some Media + Politicians + Babus are arranged in India to Help Pakis to win at-least one WAR with India at the cost of Numerous Our Brave Soldiers Lives.

4. Army dont't have Guns, Ammos.
Air Force don't have latest Fighter Planes and their Ammos.
Navy do not have Air Defence Missiles , Torpedos , Sonars.

5. And yet if some responsible person in Govt takes a call ,while understanding these weaknesses within our Armed Forces...we become so analytical..judgmental and question thrower...

6.I can raise 1000 question on if Mr Modi had not taken this call and signed the deal...what IAF would do in the Wartime if that happens in next few years....?

Please ask any ...any IAF warriors and Air-Men..what they say ?

Anonymous said...

NSR says ---

Just like with USA government to government sales, like C-230J, C-17, P-8I, etc, India should ask for the exact model that French Air Force is getting...



The latest F3.3 has the best AESA and EW capabilities...



If people are aware of Mirage-2000 upgrade, then they would not go with F3 version at all...

Mirage 200 upgrade costs $45 millions/plane and it does not include an engine or AESA radar...



Very foolish of India to ask for F3 model...

We are desperate for fighters but France economy is in shambles too...

So get their latest version at the price they are delivering it to France government...



Rafale F3.3 with nuclear interface will be good enough for India for a long time...

deb said...

Good terrain hugging jet. Good quality European technology.

Anonymous said...

Few thoughts from a perplexed Frenchman ...
HAL is the gremlin that needs to be taken out.
Just allow Dassault to choose private partners to manufacture Rafale in India. Air Marshall PS Ahluwalia seems to think so ...http://www.ndtv.com/video/player/the-buck-stops-here/the-rafale-jet-deal/363109
Scrap MMRCA entirely and iron a new deal, gov to gov, for the Indian made Rafale.
Ask France for the plans of K15 nuclear reactor after the deals are inked ..I think we owe you one.

Anonymous said...

NSR says ---

Anon 1:34 AM

You have some important points...

Just like France depends on Dassault and Airbus heavily, India depends on HAL although it is no where near the status of them...

I agree with Dassault and Airbus picking up private companies for partnership...
However, in the end there must be a company that assembles all those sub assmeblies and tests and integrates and guarantees the quality and future servicing ....
That company in India is only HAL and so Dassault must work with it for the good of project, India and of course France...

Just remember India badly needs fighters but France also badly needs sales to keep the aerospace base and jobs in a very weak economic situation...

So I propose that the two governments work together for the greater good of India and France and their economies...

Is K15 nuclear reactor used in nuclear submarines?

Just remember the basic principles of scratching the backs of both for the relief and a good feeling...

I am a perplexed Indian-American and worked in space and defense industry all of my life...So I know a little about private companies shutting as soon as the work is over...
HAL will not be shut at all...It needs to be there to service Mirag-2000 and Rafale...No one else does it...

I hope that both governments picks the ball and carries it forward...

SK said...

I think HAL is the most wretched institution in Indian Aerospace. Can you believe these buggers have been making MiG-21, Jaguar, AJT Hawk and Sukhoi 30MKI, yet it has learnt nothing so far. Hence, the production of LCA is even stuck. It is full of bunch of lunatics who enjoy full job security on the cost of national security.

HAL needs to be divided into HAL, Hind Helicopters and Hind Engines Limited. Then accountability and production problems will be streamlined.

And it is high time, HAL is given options. It cannot produce everything - from trainers to fighters to transport aircraft to spacecraft. Choose some niche area and stick to it. You get one out of three or two out of three fighter production contracts. HAL can not be allowed to grab production of everything. Buggers will neither produce nor refuse and keep us in the same pit where India has been for last 60 years.

Kana said...

This deal if anything reduces Indian bargaining power over the "remaining" tranche which is supposed to include increasing-until-"full" ToT, but that bargaining was long ruined by competing factions within Indian gov, HAL, etc, sabotaging any rational process based on established contract norms. If those negotiations are to return to rational conclusion, India would do well to re-assess what it wants out of them and what it get for what it is offering, and adjust it's posture to maximize the benefit.

Rather than keep focusing on "small time" returns, IMHO India needs to use imagination to see what maximal good this program could achieve, and how this platform will be upgraded to maintain relevant in the future is a huge part of that. France will upgrade Rafale, India will need to upgrade Rafale, so why not sweeten Dassault/et al's interest by offering to co-fund the Rafale upgrade cycle, allowing integral Indian involvement in pushing the cutting edge, i.e. deeper ToT, along with ensuring full national sovereignty over the product cycle. India, and indeed France, may not be able to commit to purchase/production schedules for those future upgrades/blocks, but co-funding of R&D can be contractually established along with equal purchase pricing access for both parties when they do go ahead with production order. This is exactly the ToT India wants when pursuing AMCA, NOT current-gen tech, India wants to co-dev (with France) the fundamental R&D to a point just before it becomes "fitted" for a specific iteration in a Rafale upgrade, but India will also take that tech "hot off the press" to apply to a different iteration for AMCA, not being constrained to what makes sense for Rafale. For France this is good because they de-risk their upgrade cycle, with the expensive dev costs split, and some Indian purchase (thru JV) practically ensured although without specific time-line (whose inflexibility can be seen to hamper e.g. Eurofighter).

Any speculation that now Eurofighter has an "in" to compete for remaining purchase including ToT is delusional... The maintenance, training, and weapon integration for the initial Rafale tranche are sunk costs that any competitor would need to "magically" make up for in order to beat Rafale.

Anonymous said...

You are getting the F3.3 standard. The F3.R will come off the production lines in 2018, unless India wants to wait till then is going to have to live with the F3.3.

Krish said...

OK. Good that IAF has got Rafale now, through direct purchase. At least, the itch is over.

Now, regarding the single engine fighter, will LCA-Tejas Mk-1 get some good orders for about 5-6 squadrons for its production line justification?? It can even be the trainer version for LIFT training. But orders matter more now as they will determine the annual rate of production - from eight/yr to 24/yr.

Or IAF will wait till 2025 when "Tejas Mk-2 onleeeee" comes after IOC ??? Is IAF going to wait for another stretched delay to justify another import? Or it will take control of LCA project and help develop at least one combat fighter of Indian origin? I hope I am not looking at HAF MARUT repeat ??

People will be lookin now, that's for sure ---

Abhiman said...

This is a pragmatic decision by our PM. It provides immediate relief to the IAF, besides saving India from diplomatic embarrassment.

Now, let's cancel the remaining order of 108 jets to be licenced produced (read: copy-pasted) by HAL in India.

LET'S INCREASE THE ORDER OF TEJAS MK.1, AND EXPEDITE THE TEJAS MK.2.


____________________

Let's abandon the PAK-FA. Let's build the AMCA.

Anonymous said...

With 36 jets as G2G purchase MMRCA tender is good as scrapped. No guarantee that GOI will place further orders for Rafale.

Dalip Bhati said...

I dont know why people always blame Russia for shortage of spare parts almost all equipment comes with ABC and VED analysed and categorized parts if people in India (Defense Ministry) cannot understand how to order accordingly why blame others this is what happens when BaBus are at helm of affairs (Who have at maximum done a stint of 7 days of Armed forces attachment during their probation) -- Shri Parrikar has taken right decision in including the Armed forces in the loop of military decision making

Anonymous said...

36 Rafales F3.3 @ 4 Bn vis-a-vis 24 Rafales F3.3 by Egypt @ 5.9 Bn and you will know that we actually have a good deal! Operational necessity and significant capability voids has actually forced this innovative decision. Trust the AF professionals to have chosen wisely. It is not an arbitrary decision, if one has been following the process followed.Yes 108 more are to be manufactured in India. Those negotiations appear progressing - now with this it will conclude fast. Indians are known to bargain hard, except where vested interests take over. As far as Russian tech is concerned, there are significant issues related to SU-30s. So let us not put all our eggs in one basket. French getting money from us? Yes, obviously they will.It is a purchase, so money will go to the seller from the buyer. Remember, they were the L1, the lowest quote on tender.

Anonymous said...

There is another implication of this deal. FGFA will be delayed several years as there is unlikely money for both FGFA and Rafale. Given PAK-FA is being delayed by the Russians, FGFA is delayed in any case, so no 5th generation fighter for IAF at least a decade or longer, at least with the current baseline plan whatever that means.

Anonymous said...

History will ask, with 20 billion USD (2G scam worth) India could have bought Dassult Aviation with its annual profit of 3 billion USD

This could have built aviation technology capability

Created huge number of jobs

With its profit, over a decade & good mgmt. India could have self paid cost of 150 Rafael Jets along with extra 10 billion still left to invest & improve aviation industry of India

Bad Deal !! no deep thinking by Indian State ...........

Anonymous said...

NSR says to...

Anonymous said... 9:22 AM....

You are getting the F3.3 standard. The F3.R will come off the production lines in 2018...

Thanks and how do you know and source???

F3.3 is pretty good...They can be upgraded when French Air Force upgrades them to F-3R standard...

France has greater responsibility now to make it work for this order and also for the possible production in India with TOT..

France should also make a bold decisions...Their track record on Scorpene and Mirage-2000 upgrade does not inspire confidence but I hope that they work hard and secure economic activity in France and India too...

Anonymous said...

Seen the outcome of this crazy procurement process, but something not clear is still in my mind.
Rafale was selected on the basis of being L1, so less costly than the Eurofighter, but not because it was better performing.
We have seen that the reality of rafale being less costly than Eurofighter was not true (4 billion euro for 36 Rafale) and that the price proposed by the French when they submitted the tender was a marketing game that didn't work (I cannot understand why India still have relation with France after this unfair trick. At the end, if India lost more than 3 years is because French tried to adapt the tender rules to their interests).
My question is: OK, India have now decided that for strategic deals better to go G2G, but why selecting the Rafale when the Eurofighter is a much better option in terms of performances and the only one that can claim to be clearly superior to Chinese Su-30 etc.? And don't tell me because the nuclear capability as that is only for French bombs so it is not useful for India.

Sudip Das said...

-India needs fighter aircrafts as soon as possible . Hence two sqadrons of Rafale (version to be confirmed) at an attractive price is welcome .
Now it is confirmed that the MMRCA tender will be scrapped.
The following needs to be answered :
Six squadrons of Rafale was planned by the MMRCA tender, how many more Rafale squadron will be procured , will it be like Mirage 2000 and Mig 29 procurement
What happens to make in India by HAL
The French do not want to transfer technology and it seems they are successful in doing so by dragging the MMRCA TENDER FOR OVER TWO YEARS

Old Delhi said...

I am surprise by the continual Rafale and IAF bashing from some people. Do these persons think that the IAF is so stupid that they choose a bad plane ? Who will have to risk their life againts adverse jets or in bombing adverse troops ? IAF pilots. When your life is in danger, you choose the best machine. If the Eurofighter was so good, why don't we see them in Syria and in Lybia ? Because they have low capacity in ground attack. So the IAF choose the Rafale because it was best choice.

Unknown said...

YOU AR RIGHT OLD DELHI

Anonymous said...

Now the logical next step is to ensure domestic capacity of LCA and make the heads roll in DRDO and HAL who have fooled the country for past thirty years.

We must sack all of them, and stop pension of those delayers who have retired as a lesson, and employ best brains. Enough of fooling the nation.