Army is crazy about Rafale! Now Navy wants to buy 114 jets, will French company Dassault accept this condition?

New Delhi: The French company’s war plane Rafale has been liked by the Indian Army. Apart from being unmatched in firepower, Rafale has also met the standards of India’s defense infrastructure, hence now the Navy also wants the Marine version of Rafale for itself. For this, talks are also going on with French company Dassault Aviation. But there is a special discussion going on in the army and the government that the condition of cost effectiveness should not be ignored in the purchase of aircraft. The method of calculating the price of Rafale Marine is coming in the way of this objective. The price is being decided on the basis of Rafale deal only. There is talk of increasing the price of Rafale, which was fixed in 2016 as per the needs of India, according to inflation. In such a situation, the Navy will have to spend more money per Rafale than the Air Force.

The then Defense Minister’s emphasis was on cost

In fact, the then Defense Minister Manohar Parrikar had issued a strict warning in 2015 regarding the rising cost of purchasing Rafale fighter jets. The Indian Air Force had earlier started talks to buy 126 Rafale. Dassault continued negotiations with the Indian Defense Ministry for more than three years, but negotiations stalled primarily due to concerns over the aircraft’s high cost and the terms of local production.

Parrikar had stressed the need for a cost-effective deal. his/her intention was clear that India could not afford lavish expenditure on the purchase of war aircraft. he/she also said in a press conference that the Air Force needs to consider the budget for purchasing its fighter aircraft. Although he/she did not disclose the rate at which the deal is being done, he/she expressed concern about the impact on the country’s defense budget. he/she had highlighted how the Rafale deal could potentially eat up half of India’s defense capital budget.

Furthermore, Parrikar had expressed disappointment over Dassault’s reluctance to fulfill key conditions of the tender. Under the IAF’s initial proposal, Dassault was to guarantee 108 Rafale fighter jets, which would be manufactured in India by Hindustan Aeronautics Limited (HAL), while the first 18 jets would come fully assembled from France. Dassault was reportedly hesitant in taking full responsibility for the quality and timelines of the fighter aircraft manufactured by HAL.

Due to high price, only 36 Rafales came instead of 126.

Due to this, talks came to a halt but Parrikar did not budge on his/her terms. he/she had told how he/she had clearly told Dassault to send a person to resolve the differences. he/she said that whatever may be the case, the conditions of the tender will have to be fulfilled. They cannot be weakened.

A lengthy round of negotiations with Dassault then followed and the Indian government reduced the initial plan of 126 fighter jets to 36 Rafale jets, which were purchased through a government-to-government deal between India and France in 2016. The cost of these 36 Rafale jets was approximately €7.87 billion (about Rs 59 thousand crore at that time), which included the guarantee of aircraft, additions and subtractions as per India’s needs, weapons and maintenance.

Rafale won hearts, now even Navy is fascinated

Now that the Navy is also keen to induct the naval version of the Rafale, the Rafale Marine, into its fleet, pricing remains a sticking point. The new deal will be based on the 2016 base price, taking into account inflation over the past eight years. The price of the Rafale Marine, with inflation adjustment, is expected to be significantly higher than the 2016 deal.

The Air Force is looking to buy 114 Rafale Marines, but is also feeling the pressure of its pricing strategy. This has a direct impact on the tender of Medium Multi Role Fighter Aircraft (MRFA) of the Air Force. If the 2016 cost of the Rafale jets is applied after taking into account inflation and the cost of setting up a manufacturing facility in India, the price of each jet could be even higher.

Will Dassault accept this condition?

The condition of manufacturing in India is the most important condition of the MRFA deal. This is making the deal more complicated. This condition requires Dassault to undertake significant technology transfer and build assembly lines in India. Its expense will increase the final price significantly. In the MRFA tender, it has been said that most of the aircraft will be produced in India.

Both Dassault and HAL will have to invest heavily to set up assembly lines, train workers and ensure the quality and reliability of the Rafale manufactured in India. This raises the question whether Rafale is still a cost-effective option for India in the long run, when combined with inflation adjusted prices and the high cost of local production, a point strongly emphasized by former Defense Minister Manohar Parrikar. Keep in mind that the 36 Rafale jets purchased for the Air Force in 2016 were completely manufactured in France.