Rafale & MMRCA News and Discussions-9 August, 2014

nits · Post by **nits** » 24 Feb 2015 14:07

Do we have any view what is the French Media saying about this deal...

Gyan · Post by **Gyan** » 24 Feb 2015 14:48

Each Rafale will cost around USD 300 to 350 million for 30 years as per Brazilian tender/bid information. I am estimating Su-30MKI at around USD 40+30=70 Million for 30 years. Hence One Rafale will cost more than four Su-30MKIs. In any case, if we order another batch of 40-50 Su-30MKIs then by 2020-24 we will start getting FGFA (if not before). So the comparison should be whether:-

We should give up first squadron of Rafale to get 2 squadrons of Su-30MKI + 2 Squadrons of LCA? While subsequently giving up 100 Rafales for 100 FGFAs.

Viv S · Post by **Viv S** » 24 Feb 2015 15:27

Mort Walker wrote:Let's say the deal is hypothetically signed by April 2015. When will the first Rafales arrive to India and when will production start?

If the contract is signed on April 2015,

- First Rafale will delivered before or on April 2018

- 18th Rafale will be delivered before or on April 2019.

- Deliveries from HAL will begin in 2020.

- Deliveries from HAL will conclude after 2026. (Could be later if there are delays).

rohitvats · Post by **rohitvats** » 24 Feb 2015 16:39

Gyan wrote:Each Rafale will cost around USD 300 to 350 million for 30 years as per Brazilian tender/bid information. I am estimating Su-30MKI at around USD 40+30=70 Million for 30 years. Hence One Rafale will cost more than four Su-30MKIs. In any case, if we order another batch of 40-50 Su-30MKIs then by 2020-24 we will start getting FGFA (if not before). So the comparison should be whether:-

We should give up first squadron of Rafale to get 2 squadrons of Su-30MKI + 2 Squadrons of LCA? While subsequently giving up 100 Rafales for 100 FGFAs.

You're comparing 2007 per unit figures of Su-30 MKI price/unit with that of Rafale. As of 2010 contract for 42 Su-30 MKI, the price/unit worked out for USD 102 million dollars.

Also, as per a Ajai Shukla report on serviceability of Su-30 MKI in IAF fleet, a fleet consumes 5% of it's worth per annum in terms of spare costs. The same report assumed 'present' worth per Su-30 MKI as INR 358 Crore; assuming an exchange rate of INR 60 to a dollar, that is ~USD 60 million.

So, a 5% consumption in spares per annum amounts to USD 3 million per annum; therefore, through a 30 year life-cycle, the consumption ONLY in terms of spares for a Su-30 MKI will be USD 90 million.

Report: (http://www.business-standard.com/articl ... 006_1.html)

The above exercise is for a Su-30 MKI bought earlier. Assuming Ajai is OK in his calculations, a similar exercise for Su-30 MKI purchased in 2015 will yield completely different numbers.

Current price (as per 2010 contract): ~ USD 100 million
Spare part consumption/annum @5% of a/c value: USD 5 million
Total consumption ONLY for spare parts over 30 year period: USD 150 million.

Total cost for Su-30 MKI: ~ USD 250 million (and this does not factor in FOL and other costs).

Austin · Post by **Austin** » 24 Feb 2015 17:13

^^ As per DM latest statement to the parliament http://www.janes.com/article/47533/indi ... fale-talks

"The Su-30MKI is an adequate aircraft for meeting the air force's needs," Parrikar said, adding that at INR3.58 billion (USD59.66 million) each, the unit cost of the Su-30MKIs being licence-built by Hindustan Aeronautics Limited (HAL) was less than half that of a Rafale.

There is no way a MKI will cost $100 million unless it built for Special Purpose i.e specially built for nuclear delivery and there were reports that Strategic command was buying these aircraft to be deputed by IAF

negi · Post by **negi** » 24 Feb 2015 17:21

Well cost wise Rafale will never match up to MKI because a huge part of the MKIs cost today gets circulated back into our economy for Rafale that will not happen unless we start replacing French stuff with desi stuff on the AC aside from licence production.

MMRCA deal is too late to now even make much of a difference, IAF would be better of with accepting more MKIs and wait for Tejas MKII-III instead.

brar_w · Post by **brar_w** » 24 Feb 2015 18:08

Gyan wrote:Each Rafale will cost around USD 300 to 350 million for 30 years as per Brazilian tender/bid information. I am estimating Su-30MKI at around USD 40+30=70 Million for 30 years. Hence One Rafale will cost more than four Su-30MKIs. In any case, if we order another batch of 40-50 Su-30MKIs then by 2020-24 we will start getting FGFA (if not before). So the comparison should be whether:-

We should give up first squadron of Rafale to get 2 squadrons of Su-30MKI + 2 Squadrons of LCA? While subsequently giving up 100 Rafales for 100 FGFAs.

A standard rule for western fighters is the 1/3-2/3 breakup of costs. Approximately 1/3 of the cost should be acquisition cost with 2/3 being the operation cost primarily driven by fuel-cost (or salaries ins one expensive economies). That basic principle has driven acquisition decisions in the US and to some extent in Europe for the last few decades and is the main reason why LCC is tracked right from the concept definition phase of any new clean sheet or upgrade project. As long as there is a need for a pilot in the seat these rough estimates will continue to remain relevant.

Philip · Post by **Philip** » 24 Feb 2015 18:29

Repeated again:
126 Rafales or for the same price,126+ MKIs plus 250+ LCAs! A total of 376 aircraft ,given 18-20 aircraft/sqd.,at least 18sqds. The way to go to meet the 42+ sqd. requirement.That too all "made in India".

GeorgeWelch · Post by **GeorgeWelch** » 25 Feb 2015 00:11

Livefist ‏@livefist 1h1 hour ago

MoD sources: French Defence Minister delegation informed that a decision on Rafale will be taken by end of March at the latest. #MMRCA 1/3

Sources: French Defence Minister was assured that due process was being followed, negotiations committee report would be final word. 2/3

Sources: Asked if a conclusion was likely before PM Modi's Paris visit in April, Indian side reiterated March final decision window.

arthuro · Post by **arthuro** » 25 Feb 2015 00:16

Rafale Deal on Track, PM Modi to Take Final CallNEW DELHI: French Defence Minister Jean-Yves Le Drain and his Indian counterpart Manohar Parrikar appear to have sorted out one of the key issues holding up the estimated $15 billion deal to buy 126 Rafale fighter jets for the Indian Air Force. A final decision is expected to be taken before Prime Minister Narendra Modi before his visit to France in April.
[...]
Senior Defence Ministry Officials told NDTV the first issue - that of guaranteeing the quality of aircraft produced in India - has been settled. India has given Dassault the option of physically inspecting the jets and guaranteeing the quality. Alternatively, Dassault is free to take a counter-guarantee from HAL on the process and quality of inputs.
The second issue - the man hours and the cost -- is now between the two companies to sort out. It will be reflected in the report of the crucial Cost Negotiating Committee, which will be submitted to the ministry shortly.

arthuro · Post by **arthuro** » 25 Feb 2015 00:47

Livefist : Sources: Crucial issue of liability for 108 aircraft, choice: joint liability with HAL or Dassault gets supervisory access to HAL line.

arthuro · Post by **arthuro** » 25 Feb 2015 00:50

Rafale in Qatar: signing in March?The presence of the aircraft carrier Charles de Gaulle in the Persian Gulf is not without commercial ulterior motive . The Emir of Qatar could be invited on board to see closely the Rafale [1] ... Qatar could even announce its decision to acquire in turn the Rafale around 20 March. This would be 24 aircraft, plus 12 option. Then the boat will leave for India [...]

eklavya · Post by **eklavya** » 25 Feb 2015 03:06

arthuro wrote:Livefist : Sources: Crucial issue of liability for 108 aircraft, choice: joint liability with HAL or Dassault gets supervisory access to HAL line.

Should be and. Joint liability and supervisory access.

Karan M · Post by **Karan M** » 25 Feb 2015 03:25

^^ the caterwauling on the pak and prc fora is now going to reach epic proportions.

JTull · Post by **JTull** » 25 Feb 2015 03:37

Karan M wrote:^^ the caterwauling on the pak and prc fora is now going to reach epic proportions.

Give it another month or so and it would truly be epic.

Cosmo_R · Post by **Cosmo_R** » 25 Feb 2015 06:19

Yeah but now the cost issue. $12bn vs $20bn.

ldev · Post by **ldev** » 25 Feb 2015 06:21

pandyan wrote:now even americans want rafale to win the contract? what is going on?

Maybe they want the Russians to get fewer SU-30 orders!! After all from a US perspective, France is by far the lesser of 2 evils.

Cosmo_R · Post by **Cosmo_R** » 25 Feb 2015 06:24

ldev wrote:

Maybe, they want the Russians to get fewer SU-30 orders!!

Exactly! Destroy Russian revenues. First oil and then arms exports.

Cain Marko · Post by **Cain Marko** » 25 Feb 2015 07:06

Actually the only reason to go for the Rafale, and it is a damn good reason , is that it is the most independent choice and the IAF feels very strongly about not being held hostage to Russian SCM quirks or US whims.

I think this is the reason they went with European vendors in the first place. I suspect that this is one reason why they are vehement against the LCA+MKI combination, which operationally is more than adequate. One thing that Matheswaran subtly hinted at was IAF suspicion of US engines on the LCA. Since both Tejas and Jags are with US engines, it puts a large chunk of the fleet in US basket, they simply are too cautious about these risks.Similarly, they won't go close to anything Russian with a ten foot pole for the MRCA

Of course this independence comes at a high price, but it is perhaps worth it , at least until a Kaveri spinoff is ready.

JMT

Cain Marko · Post by **Cain Marko** » 25 Feb 2015 07:37

Cosmo_R wrote:
ldev wrote:

Maybe, they want the Russians to get fewer SU-30 orders!!
Exactly! Destroy Russian revenues. First oil and then arms exports.

Not happening, expect India to pump some money into vanilla PAKFA and likely FGFA. That graphic on t he fgfa thread seems @ pretty accurate.

Prem · Post by **Prem** » 25 Feb 2015 07:47

India will end up getting both Rafale and Fifth generation plane. $$Axe will fall on other/local projects.

ldev · Post by **ldev** » 25 Feb 2015 07:50

Cain Marko wrote:
Cosmo_R wrote: Exactly! Destroy Russian revenues. First oil and then arms exports.
Not happening, expect India to pump some money into vanilla PAKFA and likely FGFA. That graphic on t he fgfa thread seems @ pretty accurate.

At this stage of the game, its not about the revenues, but about scoring political points i.e. the US would want to drive home the point that Russia is increasingly isolated....Russia winning an additional 50-100 SU-30 does not fit into that narrative. Notwithstanding that, I still believe that the best option for 1)increasing IAF squadron numbers quickly 2) getting technology which is not going to fall into Chinese hands, would have been the US F-15 to be bought outright. And lets not kid ourselves, a country which imports both the aircraft and its ammunition is always susceptible to external pressure, whatever be the country of origin. To truly be a strong country, every major weapon system has to be designed and manufactured within the country.

Cain Marko · Post by **Cain Marko** » 25 Feb 2015 08:02

In an ideal world yes, but considering the broken system that is in place, we make do with what is possible And go for the lesser of two dangers. Note bow the IAF will not even consider the JSF or anything US for its fighterb fleet. in any case, why eagles? Seriously? For mrca? Maybe the silent type eh? I thought the shornet was the most suitable amongst all US birds, especially the international version. Considering the engine commonality with the lca.

By the way the idea of convincing folks that the Russians are isolated or a pariah of sorts is a non sstarter, not when the biggest economy in the world is trading Willy nilly with the them

ldev · Post by **ldev** » 25 Feb 2015 08:13

Primarily because about a 100 of the F15E variant will provide clear air superiority vis a vis China AND will be able to deliver significant payload for air-to-ground missions. Plus Boeing's track record for delivery is A+, the IAF's shortage of frontline aircraft will be plugged quickly. Once the shortfall in aircraft is plugged, technology transfer/buildup is a separate issue. It will provide breathing room both for the LCA and the FGFA to be fine tuned for ultimate induction into the IAF. The f414 for the LCA will and should be part of that technology buildup.

NRao · Post by **NRao** » 25 Feb 2015 08:16

The Rafale is not going anywhere.

It is not going to be replaced. It cannot be.

They will barter the good old fashioned way and get what each of the four entities want.

RoyG · Post by **RoyG** » 25 Feb 2015 08:58

I said this deal is simply too big for Dassault to lose. They will probably get it. They may thrown in a few goodies that will be kept secret for some time.

Su-30mki+Rafale will be quite formidable.

Mig 27+jags will be slowly phased out.

LCA will be inducted in greater numbers.

Overall, not bad.

Bhaskar_T · Post by **Bhaskar_T** » 25 Feb 2015 09:13

Posting the latest development with a link for records. Interestingly TOI doesn't mentions this at all and instead are running 'BJP Election funding of 100-200 Crores - doubtful'. Sorry for off-topic but couldn't resist when media ignores 15-20 Billion dollar plus defence requirement critical news.

Cost is back to 15 Billion dollars.

http://www.ndtv.com/india-news/rafale-d ... all-742124

NEW DELHI: French Defence Minister Jean-Yves Le Drain and his Indian counterpart Manohar Parrikar appear to have sorted out one of the key issues holding up the estimated $15 billion deal to buy 126 Rafale fighter jets for the Indian Air Force. A final decision is expected to be taken before Prime Minister Narendra Modi before his visit to France in April.

The deal, billed by some as one of biggest defence procurement by any country in a long time, has been on hold for almost a year over the issue of producing the planes here.

Of the 126 jets, 18 are to be purchased ready-made from France. The rest are to be manufactured by the Bengaluru-based Defence Public Sector Unit Hindustan Aeronautics Limited as part of the government's initiative for defence manufacturing in India.

The French defence manufacturing giant Dassault was hesitant to guarantee the quality of the jets produced in India, since it does not control the process. More importantly, Dassault estimates that the jets can be produced faster, with fewer man hours, than calculated by HAL, which can keep the cost down.

HAL has countered that Indian labour isn't as productive as in France and also, the level of automation here is less.

Senior Defence Ministry Officials told NDTV the first issue - that of guaranteeing the quality of aircraft produced in India - has been settled. India has given Dassault the option of physically inspecting the jets and guaranteeing the quality. Alternatively, Dassault is free to take a counter-guarantee from HAL on the process and quality of inputs.

The second issue - the man hours and the cost -- is now between the two companies to sort out. It will be reflected in the report of the crucial Cost Negotiating Committee, which will be submitted to the ministry shortly.

Mr Parrikar recently said he would not want to comment on the progress of the deal since it could influence the report.

India had decided to buy the Medium Multi-Role Combat Aircraft in 2012 over rival offers from the United States, Europe and Russia. The deal was initially worth $12 billion but is now estimated to have jumped to around $15 billion.

Mort Walker · Post by **Mort Walker** » 25 Feb 2015 09:19

Bhaskar_T wrote:

NEW DELHI: French Defence Minister Jean-Yves Le Drain and his Indian counterpart Manohar Parrikar appear to have sorted out one of the key issues holding up the estimated $15 billion deal to buy 126 Rafale fighter jets for the Indian Air Force. A final decision is expected to be taken before Prime Minister Narendra Modi before his visit to France in April.

The deal, billed by some as one of biggest defence procurement by any country in a long time, has been on hold for almost a year over the issue of producing the planes here.

Of the 126 jets, 18 are to be purchased ready-made from France. The rest are to be manufactured by the Bengaluru-based Defence Public Sector Unit Hindustan Aeronautics Limited as part of the government's initiative for defence manufacturing in India.

The French defence manufacturing giant Dassault was hesitant to guarantee the quality of the jets produced in India, since it does not control the process. More importantly, Dassault estimates that the jets can be produced faster, with fewer man hours, than calculated by HAL, which can keep the cost down.

HAL has countered that Indian labour isn't as productive as in France and also, the level of automation here is less.

Senior Defence Ministry Officials told NDTV the first issue - that of guaranteeing the quality of aircraft produced in India - has been settled. India has given Dassault the option of physically inspecting the jets and guaranteeing the quality. Alternatively, Dassault is free to take a counter-guarantee from HAL on the process and quality of inputs.

The second issue - the man hours and the cost -- is now between the two companies to sort out. It will be reflected in the report of the crucial Cost Negotiating Committee, which will be submitted to the ministry shortly.

Mr Parrikar recently said he would not want to comment on the progress of the deal since it could influence the report.

India had decided to buy the Medium Multi-Role Combat Aircraft in 2012 over rival offers from the United States, Europe and Russia. The deal was initially worth $12 billion but is now estimated to have jumped to around $15 billion.

Don't take offense. Indian labor is not as productive for a couple of big reasons. Expensive energy. Electricity for commercial/industrial use is very expensive in India and labor laws and rules need overhaul for a vibrant manufacturing industry. This raises the cost of labor per hour. Although HAL has expertise, overall within India skilled labor for advanced manufacturing is limited.

Sumeet · Post by **Sumeet** » 25 Feb 2015 09:21

Bhaskar you just beat me to posting this news.

Bhaskar_T wrote:Posting the latest development with a link for records. Interestingly TOI doesn't mentions this at all and instead are running 'BJP Election funding of 100-200 Crores - doubtful'. Sorry for off-topic but couldn't resist when media ignores 15-20 Billion dollar plus defence requirement critical news.

Cost is back to 15 Billion dollars.

http://www.ndtv.com/india-news/rafale-d ... all-742124

Senior Defence Ministry Officials told NDTV the first issue - that of guaranteeing the quality of aircraft produced in India - has been settled. India has given Dassault the option of physically inspecting the jets and guaranteeing the quality. Alternatively, Dassault is free to take a counter-guarantee from HAL on the process and quality of inputs.

The alternate option seems unclear to me. What does counter-guarantee means ?

eklavya · Post by **eklavya** » 25 Feb 2015 09:46

EUR/USD has moved from ca 1.35 to ca 1.14 over the last 6 months. Assuming the Rafale is quoted in EUR, in USD terms it should be ca 15% cheaper compared with 6 months ago.

EUR/INR has moved from ca 85 to ca 70 over the last 12 months.

Let's see if the weaker EUR is good for Euro-area exports!

Viv S · Post by **Viv S** » 25 Feb 2015 09:50

Hmm... according to today's edition of The Hindu, the deal is still in stasis.

Deadlock over Rafale persists

DINAKAR PERI

Visiting French Defence Minister Jean-Yves Le Drian held talks with his Indian counterpart Manohar Parrikar here on Tuesday in a bid to break the deadlock over negotiations for 126 Rafale fighter aircraft worth over $20 billion.

Though specific details were not forthcoming, Defence Ministry officials indicated that the issue came up for discussion and both sides decided to continue negotiations.

This is the Minister’s second visit in less than two months. Ministry sources added that his visit is also intended to prepare the ground for the visit of Prime Minister Narendra Modi to France in April though they ruled out any connection between the deal and the visit.

At the Aero India show last week, Mr. Parrikar had refused to speak on the deal but said he would ask the Contract Negotiation Committee to submit its report by March to take an early decision.

Dassault Rafale was shortlisted as part of the Medium Multi Role Combat Aircraft (MMRCA) contest in 2012 after thorough evaluation but price negotiations have since been stuck.

The deal stipulates that of the 126 aircraft, 18 aircraft will come in fly away condition from the manufacturer while the remaining aircraft would be built by Hindustan Aeronautics Limited in India under Transfer of Technology.

eklavya · Post by **eklavya** » 25 Feb 2015 09:53

^^^^^
Plenty of howzatt will continue till the ink on the contract is dry ...

rkhanna · Post by **rkhanna** » 25 Feb 2015 10:00

What does counter-guarantee means ?

That HAL will take responsibilities for any Deviation from SOP and bare cost of rectification.

Viv S · Post by **Viv S** » 25 Feb 2015 10:22

eklavya wrote:EUR/USD has moved from ca 1.35 to ca 1.14 over the last 6 months. Assuming the Rafale is quoted in EUR, in USD terms it should be ca 15% cheaper compared with 6 months ago.

EUR/INR has moved from ca 85 to ca 70 over the last 12 months.

Yes but that was mostly due to a spike in Euro value in late 2013. If you compare it to the the exchange rate when the Rafale was shortlisted as L1 (Feb 2012), the Euro is still slightly stronger today vis a vis the Rupee.

(All the same, it should make European defence exports more competitive vis a vis the US.)

varunalh · Post by **varunalh** » 25 Feb 2015 10:38

How true is this report of deal for 24 A/C inked?? http://timesofindia.indiatimes.com/indi ... 364875.cms
Tarmak just posted this link on FB.

eklavya · Post by **eklavya** » 25 Feb 2015 10:39

^^^^
Since Jan 2012, INR vs USD has moved from ca. 50 to ca. 62. So, goods quoted in EUR have gained a significant advantage over goods quoted in USD.

Viv S · Post by **Viv S** » 25 Feb 2015 10:56

varunalh wrote:How true is this report http://timesofindia.indiatimes.com/indi ... 364875.cms ??
Tarmak just posted this link on FB.

Total BS. Someone misread the news about Dassault's Egyptian contract.

eklavya wrote:^^^^
Since Jan 2012, INR vs USD has moved from ca. 50 to ca. 62. So, goods quoted in EUR have gained a significant advantage over goods quoted in USD.

See last line of post.

Kartik · Post by **Kartik** » 25 Feb 2015 10:59

Mort Walker wrote: Don't take offense. Indian labor is not as productive for a couple of big reasons. Expensive energy. Electricity for commercial/industrial use is very expensive in India and labor laws and rules need overhaul for a vibrant manufacturing industry. This raises the cost of labor per hour. Although HAL has expertise, overall within India skilled labor for advanced manufacturing is limited.

Well, whether we like it or not, the fact is that labour is less productive in India than in the developed nations. And HAL is quite notorious for having a very lax culture of work. That is something that afflicts all PSUs.

Mort Walker · Post by **Mort Walker** » 25 Feb 2015 11:22

^^^Work culture at many PSUs is not good, but let's assume HAL has great work culture and workers work hard. HAL is still hindered by limited skilled labor pool, bad labor laws/rules, high energy prices and lack of automation. This makes HAL less efficient than Dassault.

nash · Post by **nash** » 25 Feb 2015 13:31

If we consider euro currency factor in this deal , then due to ECB bond buying of 1 trillion and weak euro economy might helpful in this deal.

Also in coming Qtrs if GoI see signs of economic recovery then this deal is coming soon without hurting the funding of domestic RnD.