Rafale & MMRCA News and Discussions

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brar_w
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Re: Rafale & MMRCA News and Discussions

Postby brar_w » 06 Aug 2014 19:12

I have replied to Rien's posts in the Turkey thread

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Re: Rafale & MMRCA News and Discussions

Postby NRao » 06 Aug 2014 23:07

X-posting:

Jul 28, 2014 :: India To Sell Partial Stake in HAL

India will sell 10 percent of its 100 percent stake in monopoly military aircraft producer Hindustan Aeronautics Ltd. (HAL), a senior Defence Ministry official said. All formalities have been cleared and the 10 percent stake will be put on sale by October, the official said.

HAL, with an annual turnover of US $2.53 billion, is the country’s sole producer of military aircraft. It plans to use money from the sale to finance a $5 billion modernization of the company, said the MoD official.

HAL needs extra funds to add manufacturing facilities to produce the fighter aircraft that will be selected by the Indian Air Force for its $12 billion Medium Multi-Role Combat Aircraft program. The Rafale has been downselected and contract negotiations are underway.


So, the gov has no funds to support the MMRCA, to the extent they have to sell part of their assets to build that asset.

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Re: Rafale & MMRCA News and Discussions

Postby Manish_Sharma » 06 Aug 2014 23:42

Yup, they should buy readymade off the shelf turkeys, no ToT no manufacturing, who knows massa may get generous and let us make the toilet seats for C-27s

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Re: Rafale & MMRCA News and Discussions

Postby eklavya » 07 Aug 2014 02:32

NRao wrote:X-posting:

Jul 28, 2014 :: India To Sell Partial Stake in HAL

India will sell 10 percent of its 100 percent stake in monopoly military aircraft producer Hindustan Aeronautics Ltd. (HAL), a senior Defence Ministry official said. All formalities have been cleared and the 10 percent stake will be put on sale by October, the official said.

HAL, with an annual turnover of US $2.53 billion, is the country’s sole producer of military aircraft. It plans to use money from the sale to finance a $5 billion modernization of the company, said the MoD official.

HAL needs extra funds to add manufacturing facilities to produce the fighter aircraft that will be selected by the Indian Air Force for its $12 billion Medium Multi-Role Combat Aircraft program. The Rafale has been downselected and contract negotiations are underway.


So, the gov has no funds to support the MMRCA, to the extent they have to sell part of their assets to build that asset.


A few points:

1) The government has a "disinvestment" target of over Rs. 58,000 Cr for 2014-15. See:

Govt to sell part stake in SAIL, RINL, HAL in FY15

In the Budget, the government has estimated to collect Rs43,425 crore from selling stake in PSUs and another Rs15,000 crore from sale of residual stake in the erstwhile government companies.


2) In 2012-13, HAL made Net Profit of ca. Rs. 2,997 Cr (see p.11 of the HAL 2012-13 Annual Report):

http://www.hal-india.com/Annual-Report- ... nglish.pdf

This compares with Rs. 2,539 Cr in 2011-12, and Rs. 1,632 Cr in 2007-08. The Compound Annual Growth Rate (CAGR) in HAL Net Profit over the five year period from 2007-8 to 2012-13 is ca 13% p.a., which is a strong financial performance.

3) Furthermore, when one considers that HAL had a book equity value (or, Net Worth) of Rs. 13,378 Cr at year-end 2012-13, its Return on Equity (Net Profit / Net Worth) in 2012-13 was 22.4%, which is a quite outstanding return on the funds invested by the government (HAL's only shareholder) in the company.

Note: What HAL's main customer thinks about such healthy profits (and its correlation with the service provided by the company to its main customer) is another issue altogether.

4) What makes this performance even more remarkable, is that HAL had Rs. 16 Lakh :) of debt at year-end 2012-13 i.e. this company is nearly 100% equity funded, and is turning out RoE of 22%, which is the sort of performance that most company managers don't even dare have wet dreams about.

5) Now, using that 5y historical Net Profit CAGR of 13% p.a., I estimate a 2014-15 Net Profit of ca. Rs. 3,800 Cr. The BSE is trading at a Price/Earnings (P/E) ratio of ca. 18x. Using this average P/E of 18x and applying it to my estimated 2014-15 Net Profit of Rs. 3,800 Cr, gives HAL an estimated market value of Rs. 68,400 Cr or ca. US$11bn.

This compares, for example, with Dassault Systemes, which has a market capitalisation of ca. EUR12.5bn or US$16.8bn.

6) The report above suggests that HAL will be manufacturing the Rafale, which begs a few questions:

i) Did it have to compete for this business?

ii) Should it earn an RoE of 22% for its investment in manufacturing the Rafale, because that is the type of return required for the types of risks taken by HAL in manufacturing the Rafale?

7) Although HAL will have to invest capital to construct the manufacturing facilities for the Rafale, HAL will also earn a profit on its Rafale sales to the IAF. Judging by the figures above, HAL should profit quite handsomely from Rafale sales to the IAF, and the manufacture and sale of the Rafale will underpin its profitability for years to come.

8 ) So, assuming HAL does need to undertake a $5bn (or Rs. 30,000 Cr) investment programme to manufacture the Rafale and other aircraft (IJT, for example; or LCA Mk 1), the question is how to fund this investment. There are three potential sources of funding:
i) Debt: HAL could borrow quite easily, but its managers appear to have no appetite for debt finance
ii) Retained cash flows: even given its significant profitability, subject to the pace of investment, retained cash flows may not be sufficient to fund such a large investment programme
iii) Equity injection from shareholders i.e. currently, Government of India

9) Now, since we all know (if we didn't earlier, we do now) that the Government of India has a disinvestment target of Rs. 58,000 Cr per annum, it is hardly likely to be excited at the prospect of contributing more equity to HAL (even though such equity investment appears to earn a very healthy return: whosoever said PSUs are badly managed knows nothing about HAL :) )

10) So, assuming a market capitalisation for HAL of ca. $11bn, if the government does raise ca. $1bn by selling a 10% stake in an IPO, that helps it to keep investing in HAL, while keeping the budget deficit within bounds. HAL gets the money to build the Rafale, HAL makes large profits, shareholders get large dividends, and everyone is happy, right :)

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Re: Rafale & MMRCA News and Discussions

Postby member_26622 » 07 Aug 2014 04:02

@ eklavya - Finally someone running the numbers. Some questions on

1. You mention 5 billion investment (take out LCA and others), say it comes down to $ 3 billion. But selling 10% stake in HAL raises 1 billion. So where does the rest 2 billion $ come from?

2. MMRCA project is 20 billion $. HAL makes 5 billion profit with 25% margin for an investment of 3 billion $ over say 7 years (15 Rafale per year). Base interest rate is 10%, profit stream is 5billion/7years=0.71 billion per year, NPV of free cash flow is 3.5 billion in seven years. Basically the project break-even is in year 6 to recoup 3 billion $ investment - way too long. If you charge cost of capital for private business say 15% or more, you do not even recover initial investment of 3 billion $.

The bigger conundrum is about HAL and whether it is a suitable vehicle for 'indian-design' project. Every time HAL fails to deliver and IAF has to import, HAL ends up making more profits for taking on zero risk. The way the game is set up, HAL will prefer assembling low risk - higher profit imports over high risk - lower profit Indian designs. Only time HAL really loses is if IAF buys off the shelf imports.

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Re: Rafale & MMRCA News and Discussions

Postby Indranil » 07 Aug 2014 04:43

Excellent analysis. Unfortunately, I think the fallacy lies in thinking that the money from the disinvestment will be invested in HAL. It will pay for diesel in high end BMWs.

The only good thing for HAL I feel is the addition of stake holders, which would hopefully make HAL more answerable for its actions.

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Re: Rafale & MMRCA News and Discussions

Postby member_26622 » 07 Aug 2014 05:22

To think a bit further along above lines - One way any sizable investment in HAL will turn out to be profitable is when we 'export' assemblies/parts/servicing of the 'imported' plane. This is not going to happen with PAKFA, Rafale and Eurofighter, as we are the only sizable foreign buyer (that is a troubling sign in itself).

F-35 has a huge order pipeline and it will be worthwhile buying 100 F-35's only if we can get some portion of the 3500 order pipeline work in return. Win-Win in my opinion but am still pitching for 500 LCA-I,II. Just having the thought of facing 500 4.5 gen jets is daunting.

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Re: Rafale & MMRCA News and Discussions

Postby Philip » 07 Aug 2014 05:38

So is Dassault or some associated entity going to pick up the 10% ? !

The bigger conundrum is about HAL and whether it is a suitable vehicle for 'indian-design' project. Every time HAL fails to deliver and IAF has to import, HAL ends up making more profits for taking on zero risk. The way the game is set up, HAL will prefer assembling low risk - higher profit imports over high risk - lower profit Indian designs. Only time HAL really loses is if IAF buys off the shelf imports.


This is HAL's comfort level.Why it delayed a decision for a couple of years on its workshare for the FGFA and then downsized its share to 15%? The proof of its design capability is the IJT and paper plane BTT.The LCA came under the ADA.Much easier to be spoonfed or "handheld" as some say.

As for Nik's statement about workshare for the F-35 ,read the Dutch take on the issue in the turkey td.There is very little left in the kitty to farm out,perhaps diapers?

With desi missiles coming on stream for the IAF's aircraft,MKIs,MIG-29s,LCAs,etc.,like BMos,Astra,Nirbhay in the future,and these aircraft also capable of integrating Israeli and Russian AAMs,ASMs,with options for European ones too,there is a huge menu for the IAF to choose from to spread this weaponry appropriately around its varied inventory.It does not need a "jack-of-all-trades-master-of-none" JSF and critically for close support and large numbers,the LCA is available if only HAL can get its series production into high gear.

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Re: Rafale & MMRCA News and Discussions

Postby abhik » 07 Aug 2014 09:17

indranilroy wrote:Excellent analysis. Unfortunately, I think the fallacy lies in thinking that the money from the disinvestment will be invested in HAL. It will pay for diesel in high end BMWs.

Exactly, HAl isn't going to see a dime. But then they don't need it anyway.
The only good thing for HAL I feel is the addition of stake holders, which would hopefully make HAL more answerable for its actions.

All the new shareholders will care about is profits, which HAL makes plenty of thanks to 'screw-driver assembly'. But its not going to be very good for indigenous projects where profits may be slimmer and much harder to earn.

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Re: Rafale & MMRCA News and Discussions

Postby member_27164 » 07 Aug 2014 11:11

$400 million is the LIFECYCLE cost. It includes fuel and weapons for the next 35 years.

@viv s,
sorry but i must disagree. if we compare fuel price history of USA and india i am sure that 400 million will not be the life cycle cost for indian f-35.

please refer following links for historical data of fuel prices in usa and india.
http://www.gasbuddy.com/gb_retail_price_chart.aspx
http://in.reuters.com/article/2011/05/1 ... E420110514

looking at it price hike in usa in last 10 years is somewhere below 100% with ups and downs. while it is somewhere above 100% in india mainly with ups and hardly any downs. given the inflation rate in india one can easily assume that fuel prices for next 35 years will be ever increasing. so my point is fuel cost estimation does not fit in indian context.
other points to sonsider are:
- will india get the plane at 200 million each?
- will india get weapons at the same rate as usaf is getting (case in consideration: the recent price of ultralight gun for indian army deal)

yes, there are few assumptions from my side like fuel prices are not exactly of aviation fuel and i havent done deep analysis on the figures. but still i am not convinced with 400 million life cycle cost.

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Re: Rafale & MMRCA News and Discussions

Postby Viv S » 07 Aug 2014 14:12

aditya_dange wrote:
$400 million is the LIFECYCLE cost. It includes fuel and weapons for the next 35 years.

@viv s,
sorry but i must disagree. if we compare fuel price history of USA and india i am sure that 400 million will not be the life cycle cost for indian f-35.


$400 million is not the cost for the US either. Its the cost to Australia, and its priced in AUD.

In USD terms, the lifecycle cost would be about $370 million. (1 AUD = 0.93 USD)

please refer following links for historical data of fuel prices in usa and india.
http://www.gasbuddy.com/gb_retail_price_chart.aspx
http://in.reuters.com/article/2011/05/1 ... E420110514


I am afraid those historical numbers are hugely distorted by our system of taxes, duties and subsidies, wherein petrol sales have been (and still are, albeit to a lesser extent) used to subsidize diesel. The Administered Pricing Mechanism was discontinued as late as 2002 and full deregulation of prices commenced just three years ago IIRC.

All the same, for reference -

PETROL -

US - Rs 60/lit
India - Rs 75/lit
Australia - Rs 85/lit

DIESEL -

US - Rs 60/lit
India - Rs 60/lit
Australia - Rs 90/lit

There's significant variation within each country and prices obviously keep fluctuating, but these round figures are sufficient to gain a broad perspective. The costs are higher still in Europe (Rs 135/140 for petrol/diesel in the UK).

looking at it price hike in usa in last 10 years is somewhere below 100% with ups and downs. while it is somewhere above 100% in india mainly with ups and hardly any downs. given the inflation rate in india one can easily assume that fuel prices for next 35 years will be ever increasing. so my point is fuel cost estimation does not fit in indian context.


The petrol/diesel talk is ultimately pointless because they are all retail prices and aren't relevant to the IAF. Oil in general is a globally traded commodity and the cost of aviation fuel is ultimately dependent on the cost of crude plus refining cost and taxes.

1. The price of crude does not vary hugely with region.
2. Cost of refining in India is relatively low
3. Taxes on fuel are not relevant to the defence forces.

other points to sonsider are:
- will india get the plane at 200 million each?
- will india get weapons at the same rate as usaf is getting (case in consideration: the recent price of ultralight gun for indian army deal)


An FMS purchase entails simply sticking an export order onto an existing US DoD order at the same cost (plus 3% service fee). The price paid by India will remain the same as what is being paid by all FMS customers (such as Israel).

As for as the M777 purchase is concerned -

Australia

Order - 57 units
Cost - $248 mil

Unit cost (upto) $4.35 mil in Jul 2008. (DSCA)

India

Order - 145 units
Cost - $647 mil

Unit cost (upto) $4.46 mil valid Jan 2010 to Oct 2013. (DSCA)

Quite comparable.
________________

The new price for India is significantly higher because the gun is now out of production for all means and purposes. US orders ended a while back and the manufacturing facility in the UK is being closed by BAE. At this point, if the MoD still wants to buy the guns its more sensible to directly negotiate terms with BAE, instead of going through a defunct FMS channel.

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Re: Rafale & MMRCA News and Discussions

Postby Philip » 08 Aug 2014 07:33

BK at it again,rooting for the LCA against buying the Rafale.Spend the billions in India and build up our infrastructure.
http://www.newindianexpress.com/columns ... 368799.ece
Favour Tejas to Meet IAF Needs
By Bharat karnad
Published: 08th August 2014

Winston Churchill, as the First Lord of Admiralty in 1911, is credited with “technological prescience” by British commentators for building the 12-inch gunned Dreadnought-class battleships. When the First World War began, the Royal Navy’s Grand Fleet was the British force to keep Kaiser Wilhelm II’s seaward ambitions in check even as an unprepared army was mowed down by the German juggernaut, in the opening phase.

Remarkably, the Churchillian kind of prescience was manifest in Jawaharlal Nehru’s nursing a weapons-capable nuclear energy programme because he believed India could not afford to miss out on the “nuclear revolution” as it had done the “gun-powder revolution” consequenting in its enslavement. And, in the conventional military field, it was evident in his seeding an indigenous defence industry with combat aircraft design and development at its core. Nehru imported, not combat aircraft but, a leading combat aircraft designer—the redoubtable Kurt Tank, progenitor of the Focke-Wulfe warplanes for Hitler’s Luftwaffe. Tank succeeded in putting an HF-24 Marut prototype in the air by 1961 and in training a talented group of Indian designers at Hindustan Aeronautics Limited (HAL).

By the time the Tank-trained Raj Mahindra-led team designed the successor Marut Mark-II, Nehru was gone and neither Lal Bahadur Shastri nor his successor, Indira Gandhi, unfortunately had the strategic vision or technological prescience to provide political support for it. Indira permitted the purchase of the British Jaguar aircraft for low-level attack, leading to the termination of the Marut Mk-II optimised for the same mission. It ended the chance of India emerging early as an independent aerospace power in the manner Brazil and Israel have done in recent years. The inglorious era of importing military hardware was on. The resulting vendor-driven procurement system has decanted enormous wealth from India to arms supplier states—Russia, UK, France, the United States, Israel and Italy.

Arun Jaitley, the BJP finance minister-cum-defence minister, is saddled with the familiar problem of too many high-cost government programmes and too little money. He has an opportunity to reduce the huge hard currency expenditure involved in buying foreign armaments and reverse the policy of ignoring indigenous options and private sector defence industrial capability. He can give the lead to the Indian military as the British Treasury had done to the Admiralty in 1918-1938 by pushing for the development of aircraft carriers when the Royal Navy was stuck on the Dreadnought.

There are two far-seeing decisions he can take. With the US bid of $840 million for 150 M-777 light howitzers (without technology transfer) rejected as cost prohibitive, Jaitley can instruct the army to test and induct the modern, ultra-light heliportable gun, to outfit the new offensive mountain corps, produced jointly by a private sector company and an American firm, Rock Island Arsenal, that’ll cost less than half as much. And he could terminate the Rafale contract and, importantly, restore responsibility for the Tejas programme to the IAF, which was kept out of it by the science adviser—SA—to defence minister V S Arunachalam in the 1980s. It will mean IAF funding further developments in the Tejas programme from its own R&D budget which, according to an ex-senior defence technologist, can be increased to any amount, and was the course of action recommended by the Aeronautical Development Agency (ADA) and SA. It will render IAF accountable to Parliament.

The choices before the BJP government are stark. Is it pragmatic to channel in excess of $30 billion to Paris that’ll keep the French aerospace sector in clover and help amortise the multi-billion Euro investment in developing the Rafale, which has no customers other than IAF? Or, use the present difficulties as an opportunity to fundamentally restructure the Indian military aviation sector?
This last will involve getting (1) HAL to produce the low-cost (`26 crore by HAL’s reckoning) Tejas Mk-1 for air defence with 4.5 generation avionics, low detection, and other features, for squadron service, and to export it in line with prime minister Narendra Modi’s thinking and to defray some of the plane’s development costs, and (2) ADA and the Aircraft Research & Design Centre at HAL to redesign Tejas Mark-2 as a genuine MMRCA with the originally conceived canard-delta wing configuration (whose absence has made the Mk-1 incapable of meeting onerous operational requirements, like acceleration and sustained turn rates in dogfights) and having it ready for production by 2019—the dateline for Rafale induction.

With the Rafale potentially out of the picture and IAF left with only a limited-capability Tejas for air defence, security needs for the next 15 years until the Russian Fifth Generation Fighter Aircraft enters IAF in strength, can be met by buying additional Su-30s and MiG-29s off-the-shelf and/or contracting for larger numbers of the Su-30s to be built by HAL with a deal to get the private sector to manufacture the required spares in-country, all for a fraction of the cost of Rafale. Some Service brass do not care for Russian aircraft but Su-30MKI and MiG-29 are already in IAF’s employ, and are rated the two best warplanes available anywhere (barring the discontinued American F-22) for combat and air defence respectively. A new Su-30MKI, moreover, costs $65 million, which is slightly more than what India forks out for upgrading the 30-year-old Mirage 2000.

Had the design-wise more challenging canard-delta winged Tejas, recommended by four of the six international aviation majors hired as consultants, not been discarded and international best practices followed from when the Light Combat Aircraft programme was initiated in 1982, ADA (design bureau), HAL and IAF would have worked together. IAF would have inputted ideas at the design and prototype stages, HAL produced the prototypes, and IAF pilots flown them. The design validation and rectification, certification, pre-production, and production processes would then have been in sync and progressed apace. The Tejas air defence variant will have entered squadron service and the larger Mk-2, close behind, occupied the MMRCA slot. The lessons are that indigenous weapons projects demand integrated effort, weapons designers need to be less diffident and Indian military ought to helm indigenous armaments projects. Jaitley can ensure these things happen.


This the tough option for the GOI to take.However,it requires a "leap of faith" in HAL,ADA,& co. to deliver the goods.From their track record,unless the entire DPSU DRDO structure is restructured,revamped and made accountable,as in other countries,we will still be in the "import era" a decade+ from now.This also requires cracking heads in both the IAF and DPSU establishments and tackling babudom,the "experts in Indian defence",who negotiate the deals with an eye on the "main chance".At the moment "Jet Li" is wearing the two turbans of Defence and Finance.Underneath is one v.astute brain that needs to work like a wizard in his recommendation to the CCS.

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Re: Rafale & MMRCA News and Discussions

Postby brar_w » 08 Aug 2014 07:44

Somewhere down the line some leap of faith absolutely has to be made. Its been made by all nations. No need to totally risk everything and let go of the rafale. A scaled down acquisition program is something definitely worth considering. If the MOD views the rafale as a something that makes squadron numbers with a very capable fighter while they develop a competent MKII then it should try to procure the rafale at a cost that makes sense. It may mean that we buy most of the jets from the french line that is already set up and churning fighters. TOT aspect can be discussed but the deal could be structured farther away from raffle's technology and more closer to the future technology we seek. Think UCAV's , AMCA propulsion, AMCA AESA, Gallium nitride EW and advanced system integration. The only problem with the rafale is the cost once everything is put together. Thats a 5th gen price in a 5th generation delivery timeline. We can't deter china with an unlimited budget that procured FGFA and Rafales. They'll always have the edge given their acquisition costs for 5th generation and advanced flanker variants is going to be dirt cheap and what-ever they lack in capability they'll make up in numbers. The only way the IAF can create a successful deterrence with the projected 5th generation and advanced 4.5th generation fleet of the PLAF is through an effective development and acquisition of the LCA MKII, and the AMCA. Here the Rafale and to a lesser extent the FGFA are short-medium term solutions at best.

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Re: Rafale & MMRCA News and Discussions

Postby Rien » 08 Aug 2014 10:08

Philip wrote:This the tough option for the GOI to take.However,it requires a "leap of faith" in HAL,ADA,& co. to deliver the goods.From their track record,unless the entire DPSU DRDO structure is restructured,revamped and made accountable,as in other countries,we will still be in the "import era" a decade+ from now.This also requires cracking heads in both the IAF and DPSU establishments and tackling babudom,the "experts in Indian defence",who negotiate the deals with an eye on the "main chance".At the moment "Jet Li" is wearing the two turbans of Defence and Finance.Underneath is one v.astute brain that needs to work like a wizard in his recommendation to the CCS.


Cancelling Rafale is the smart move. If Rafale had come in at its original financial cost, it would made sense. But at this price, it's too expensive. Modi has started reforming the PSUs and divestment and allowed entry of private sector companies. But much more of that is needed.

HAL needs to indigineze its aerospace raw materials. Even the nuts and bolts to make the Su-30 MKI at Nasik are imported!The titanium and everything else!This is an incredibly senseless thing to do, and puts HAL in direct defiance of the governments 50% indigenization policy.

With entry of private sector and a reformed HAL we can be 100% indigenous. We can already make our trainers, and helicopters, and the Tejas replaced the Mig-21. With the AMCA we can replace most of the other imported systems, and the 50% local PAKFA will serve us well.

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Re: Rafale & MMRCA News and Discussions

Postby P Chitkara » 08 Aug 2014 16:14

For a few minutes, put yourself in the raksha mantri's shoes. Let us talk about the leap of faith and I am playing devils advocate here.

In last 30+ years, what has the DPSU setup done to instill faith in them? Milestone dates are like the bollywood dialog "Tareekh pe tarrek, Tareekh pe tareekh".

I agree they cannot be singularly blamed for all the delays but then, have any steps been taken not to repeat the mistakes that were made earlier? For god's sake, if a broshuritis requirement cannot be fulfilled in a given time frame, be honest, go back and tell the concerned force that it will be delivered only in tranches and this is where MoD needs to step in and drill some realism into the forces as well.

The leap of faith can be taken only after
1. Entire DPSU is restructured with realism and accountability drilled into the system
2. Service personnel are embedded into the programs and there is joint ownership with the civilian counterparts

I am definitely not the first one to point these out and one can go on, but if these two points are nailed, 90% of the problems that ail our defense programs will be gone. JMT.

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Re: Rafale & MMRCA News and Discussions

Postby NRao » 08 Aug 2014 18:39

Putting myself in the RM's shoe:

* IAF needs planes to replace old ones.

* The Indian MIC needs help in making it relevant in the future


The thought that they could kill both these birds with the MMRCA stone ............. IMHO ..................is over. It cannot be done at a reasonable cost.

Suggestion:

* get enough Rafale - made in France (*none* made in India) - to replace old planes.

* And, use the remaining funds to come up with a proper plan to ensure that the future is stable - for the MIC and the Services. This ToT will never make the MIC good, will make them dependent

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Re: Rafale & MMRCA News and Discussions

Postby Manish_Sharma » 08 Aug 2014 18:57

I don't thinks 20 billion dollars paid over next 15 years is such a big cost, while 50% of it is going to be invested back in Desh. In case fuel sipping engines of Rafale save atf bills of IAF then 'sone pe suhaagaa'. Otherwise who knows in case the deal gets shelved and MoD puts another order of fuel guzzling 40-60 mkis.

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Re: Rafale & MMRCA News and Discussions

Postby NRao » 08 Aug 2014 19:17

Assuming that a plane manufactured in a native country is about 50% of the cost, it means that the Rafale will be around $10 billion (or so).

The remaining $10 billion can be invested in building the MIC - in a proper way (R&D, DARPA style agencies, etc, etc, etc.... whatever is decided).

The $20 billion will go straight to the French. ToT will not help in any way to build the Indian MIC in the longer run. In 20 years Indian MIC will be where they are - looking for the next ToT.

So, the issue is not spending $20 billion, it is how is it spent. IMHO, $20 billion is there and they will spend it no matter what.

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Re: Rafale & MMRCA News and Discussions

Postby member_26622 » 09 Aug 2014 01:06

Dhananjay wrote:I don't thinks 20 billion dollars paid over next 15 years is such a big cost, while 50% of it is going to be invested back in Desh.


I believe 20 billion is upfront cost, lifetime cost will be 3x ~ 60 billion. Half of which French will take back - just like colonial masters did (check how French even to date forcefully get royalty from their 'free' african colonies).

Just sharing some reference points with everyone to understand how much is 20 billion $

- Equivalent to funding 'ALL' of DRDO for 10~15 years (budget @ 3~5% on 40 B base over last decade)
- FDI investment in India across all sectors comes to $ 20 billion per year
- 7% of our long term debt. China has 3x FOREX reserves for its foreign debt. Ours is not even 1x.
- About 10 % of our usable Forex reserves. Giving away 10% of hard earned wealth for 100 shiny jets is criminal

I find it gross that IAF/MOD is still entertaining a 20 Billion $ acquisition - that too buying a 4.5 gen plane at 5th gen price. It should be a straight 'No, thank you' to the French. They should try selling this stinky cheese to someone else.

Manish_Sharma
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Re: Rafale & MMRCA News and Discussions

Postby Manish_Sharma » 09 Aug 2014 04:59

NRao wrote:The $20 billion will go straight to the French. ToT will not help in any way to build the Indian MIC in the longer run. In 20 years Indian MIC will be where they are - looking for the next ToT.

ToT in this deal is the least discussed aspect of this deal. What were the techs which every participant had to agree to so their bids got accepted, we don't know. but these ToT requirements were drawn up by DRDO and IAF together and seem to be crucial.

I remember Maitya ji had pointed about need of next gen composites and GaN Foundaries etc. which no one will give us until we make a big deal with them.

I remember circa 2009-2010 Bharat had asked LM for assistance in Naval Tejas testing method and landing gear, to which they told us to 'eff off' and IIRC the eurofighter maker co. had agreed to help us. So even for such consultancy there are nations and companies which show us the finger.

I've a feeling that french aren't reacting at all to all these BK and other articles etc. they're maybe confident on what they've offered, maybe you're right they have proofed our nukes......

I'm positive that when such a big money is involved more than what meets the eye is exchanged. Let's see!

In case NaMo cancels or dilutes the deal that would mean something too.

Maybe the deal the ToT is for real in this case and not a farce deal of javelins 97% ToT that US is excited to sell like a coyote in heat.

NRao
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Re: Rafale & MMRCA News and Discussions

Postby NRao » 09 Aug 2014 06:28

ToT in this deal is the least discussed aspect of this deal. What were the techs which every participant had to agree to so their bids got accepted, we don't know. but these ToT requirements were drawn up by DRDO and IAF together and seem to be crucial


Crucial to what?

BTW, that is *exactly* what was said about the "ToT" for the MKI - I said it too then. Now I am finding that it is not so.

I do not know what exactly India is looking for in the ToT for the Rafale (and perhaps most of us are not educated on this topic too - which is fine), but I just hope it is not about standing up a MIC for building latest air crafts. For, I am sure it will help India move to a level above what they are doing today. But, not for a moment I think that India will even come close to being a leader in that area for the next 30 years - not possible at all.

On the Javelin front, sad to hear what that person complained about. 10 years ago it was sensors. Today is it is algorithms. Sensors I could understand, I am still trying to fathom algos - an area I would think Indians are very, very strong in. It should be in the DNA of Indians. Perplexing to say the least. And a real sad day.

However, the Javelin incidence should be an eye opener. Unless India *invests* in her future that 3% will *always* remain. It will never be given - cannot. I am not sure what Maitya was referring to, so I cannot comment. But let me say this: it is one thing to expect someone to give to complete a puzzle (ToT in that case is fine), but if ToT is expected to build a MIC - God bless and all the best. It is a perceptual cycle that you will never get out of.

I bet that France is providing a "Javelin" of another kind. And, so is Russia in the form of the FGFA. These natiuons may provide an extra screw or a bolt+nut, but not much else.

I still think it far better that India invests in her future and let France build the numbers for the IAF squadrons. Do *not* depend on anyone for making you. You have to make yourself.

NRao
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Re: Rafale & MMRCA News and Discussions

Postby NRao » 09 Aug 2014 06:50

I remember circa 2009-2010 Bharat had asked LM for assistance in Naval Tejas testing method and landing gear, to which they told us to 'eff off' and IIRC the eurofighter maker co. had agreed to help us. So even for such consultancy there are nations and companies which show us the finger.


Jan, 2011 : Concerns Emerge As Indian LCA-Naval Nears First Flight

The naval component of the LCA program — the primary air force variant achieved initial operational clearance earlier this month — receives technical consultancy services from EADS to aid in development. Lockheed Martin had the role, but was unable to obtain requisite approvals from the Pentagon to carry out the work. The consultancy arrangement is mainly focused on aiding LCA modifications in the area of the landing gear, sink rate parameters for carrier recovery and weight optimization.


Advaita helps.

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Re: Rafale & MMRCA News and Discussions

Postby Rahul M » 09 Aug 2014 09:31

please start a new thread with a link to this page in its first post.


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