IAF Rafale News and Discussions - 26 May 2015

member_27845 · Post by **member_27845** » 27 Jan 2016 08:42

There is no issue regarding political capital being invested in this deal , at any rate far less than that invested by MMS in the US nuke deal , and see where that stands ( at least wrt to the US ): Modi went to Paris once and in turn Hollande was chief guest here , more as solidarity with the French after Paris attacks.

It is wise to ditch this stupid deal and look at cost effective alternatives. Also remember that when NM went to Paris , it was announced that Rafale would be sold to us at the SAME PRICES as being procured by the French AF. So is the French AF buying the Rafale at these ridiculous prices ??

Now , if Dassault has upped the deal value multiple times , we have every right to walk away from the deal.

It makes absolutely no sense in any way. What are we getting in return - the numbers can be bolstered by LCA / MKIs. The only thing new is the AESA .

maitya · Post by **maitya** » 27 Jan 2016 09:06

VijayR wrote:There is no issue regarding political capital being invested in this deal ...
<snip>

It IS now all about political capital actually ... to make good of a promise made by the PM.

Otherwise, why exactly did MoD/GoI not open simultaneous negotiations with other MRCA contenders (let's not count the also-ran single-engined ones) IF it was serious about the price-to-capability ratio etc?

The original MRCA deal is cancelled ... if any medium multi-role capability is now going to be acquired by G-G route, why not go back to the other original contenders as well, and get a price (the only disclosed price was from EF and Rafale) and then do a quick price-to-capability ratio calc and then decide!!

Technically Rafale won, no doubt about it ... just how far behind wrt technical/operational capability were other contenders behind (not by very much as far as whatever little public insinuations are available but that itself can be way off the mark as well)? If not very much, what was the price quoted by them?

French needed to be compensated for their support during the post-pokharan days/years - but is this is the cost that justifies it? Maybe it is, atleast that's what Modi gov is indicating - if so, how does it matter if unit price etc $100mil or $250mil, as the deal is no longer predicated on price/capability ratio etc anyway?

PS: What is all this talk about F-35 price etc? If something is not going to be available how does it matter if people quote it at $1 or $100mil or whatever? Plus MiG-35 violates the very basic premise (of supplier diversification) of the MRCA competition etc - again if that makes it non-suitable category, why bother about what-it-may-have-costed type of analysis?

member_27845 · Post by **member_27845** » 27 Jan 2016 09:14

maitya wrote:
VijayR wrote:There is no issue regarding political capital being invested in this deal ...
<snip>

It IS now all about political capital actually ... to make good of a promise made by the PM.

I think the PM should worry about his political capital with the Indian public , rather than some vague assurance to the French. Any way , they are the ones who seem to have shifted the goal post , so it is perfectly fine to cancel the deal unless they agree to the original terms.

And what is this nonsense about India compensating the French for some alleged support after Pokhran - if we need to return the favour , do so in similar circumstances and in kind , not by paying through our nose

Philip · Post by **Philip** » 27 Jan 2016 09:32

http://archivev.asianage.com/columnists ... rafale-306

No happy landing with Rafale

Jan 26, 2016
Mohan Guruswamy

The IAF needs a permanent solution, not a high-cost fix like the Su-30MKI. The Rafale becomes another, yet more expensive, interim fix. The IAF must induct the Tejas light combat aircraft and push for newer and more powerful versions.
.
The Medium Multi-Role Combat Aircraft (MMRCA) requirement came to be like an unplanned child. In the early 2000s, the Indian Air Force decided that the logical answer to its problems of obsolescence, attrition and declining fleet strength was to induct additional numbers of the single engined Mirage-2000. This aircraft had an excellent safety and serviceability record and played a decisive role in the Kargil conflict. With a few changes and upgrades, Vayu Bhavan felt that it could become the future multi-role aircraft; not only bridging the gap between the heavy-weight Sukhoi Su-30 and the light-weight Tejas, but also compensating for the eventual de-induction of MiG-21s. However, there was a fly in the ointment.

French manufacturer Dassault Aviation was now producing a more advanced variant, the Mirage 2000-5. Dassault was also on the verge of closing down the entire Mirage-2000 production line, unless it had some orders. The joint secretaries in the ministry of defence however refused to treat the IAF proposal as merely a “repeat order on a past supplier” as envisaged in the “Fast Track Procedure” of Defence Procurement Procedure (DPP) 2006. They insisted that as the Mirage 2000-5 was an entirely “new” aircraft, the IAF should follow the standard process of drawing up an Air Staff Requirement (ASR) and then floating a request for proposal (RFP). The irony is that if the IAF was willing to settle for the older Mirage 2000 instead of the Mirage 2000-5, it could have got the fighters under existing rules. But that is like wanting to buy a discontinued motorcar model when the latest is already in the market.

The Mirage 2000 acquisition too has a bit of a history. When the original deal was signed, the “Intention to Proceed” contract was for an initial order of 40 aircraft for outright purchase in fly-away condition and an option to produce another 110 aircraft at Hindustan Aeronautics Limited’s (HAL) facility in Bengaluru with total technology transfer. If this plan were carried forward, the IAF would not have needed the MiG-29. But in 1984, the then defence minister, R. Venkatraman, visited Moscow and shortly after his return stated in Parliament that India was going to select a “futuristic aircraft to meet the challenge posed by the presence of the F-16 in a neighbouring country”. The inference was clearly with regard to the MiG-29. The other irony of this was that the justification for the Mirage 2000 acquisition was also because of the United States’ decision to give Pakistan the latest F-16 fighters.

How the Mirage 2000 came to be is also an interesting story. In the mid 1970s, North Atlantic Treaty Organisation (Nato) was finalising a future fighter. The competition was between the Dassault Mirage F-1 and the US’ General Dynamics F-16 Fighting Falcon. The F-16 got the order. Dassault then developed the more versatile Mirage 2000 to beat the F-16 at its own game. The first Mirage 2000 flew in 1982, and the first lot of IAF Mirage 2000s landed in Gwalior in 1984. Incidentally, Rajiv Gandhi, then a newly elected MP and Congress general secretary, saw it put through its paces at the Paris Airshow. He was very impressed. He sat in on the official meeting in the ministry of defence that decided to acquire Mirage 2000. Gandhi had just become a qualified Boeing 737 pilot and this was presumably considered expertise enough.

Nevertheless, the deal to make 110 more Mirage 2000s in Bengaluru made eminent sense, both for the IAF and the economy. But it was dropped no sooner than when the first lot of 40 fighters in a fly-away condition were delivered. Why this deal was terminated is a mystery. But one reason was certainly the price. The MiG-29 was available to India at `5 crore a unit, while Mirage 2000 came at double the price.

*(The IAF also conducted air combat exercises between the M2K and MIG-29 and found the latter better.AM Masand in Vayu))

The Indian Air Force will soon retire several squadrons of MiG-21 and MiG-27 jets at the end of their life cycle. Replacing these aged fighters will be the latest Su-30MKI, a 4+generation long endurance, air dominance fighter, now being assembled by HAL. The MiG-21 is a short endurance, lightweight and high-speed interceptor with limited ground attack capability. The Russians describe it as a frontal aviation aircraft. The Sukhoi being an air dominance fighter can perform both these roles, as well as undertake deep penetration strikes. The Su-30 is a Mercedes Benz SUV compared to the MIG-21’s Maruti 800.

Now let’s say the IAF wants to intercept a Pakistan Air Force or People’s Liberation Army Air Force JF-17. The IAF’s fighter of choice for this is likely to be a MiG-21bis rather than the Su-30MKI. While the Sukhoi can do the job effectively, sending a 4+generation aircraft weighing over 18 tonnes against a much older and cheaper JF-17 weighing less than 6.5 tonnes would not only be an overkill but also very cost ineffective.

The MiG-27 is a mid-sized, variable geometry, ground attack aircraft developed to support mechanised infantry and armoured columns. Its swing-wing configuration allows it to swiftly reach the target area and then swoop in at a much-reduced speed to effectively attack enemy ground forces. But what would be just another day in the office for the MiG-27 could prove expensive with the much bigger and heavier Su-30. Since ground attacks are often done by flying low and slow, a bigger aircraft is more vulnerable to ground fire. The IAF learned this in 1971 with the Su-7. Besides, risking a Su-30MKI costing about Rs 400 crore each against relatively low-cost ground targets doesn’t sound sensible.

What the IAF needs for its interceptor and ground attack roles are smaller fighters and attack helicopters. Clearly, the IAF needs a permanent solution, not a high-cost fix like the Su-30MKI. The Rafale too, then, becomes another, yet more expensive, interim fix. Hence, the IAF needs to shed its reluctance and urgently induct the Tejas light combat aircraft and push for newer and more powerful versions. At about Rs 200 crore each and with a huge local value addition component, the Tejas offers a huge cost-benefit advantage over Dassault Rafale multi-role fighter aircraft, as well as a huge economic multiplier. A few hundred Tejas jets of varying configurations can not only handle what the enemy can throw at us, but also contribute hugely to the national economy. After all, isn’t this is the underlying notion behind “Make in India”?

So why do we want to buy the Dassault Rafale? It is somewhat closer to the Su-30MKI in class but almost four times more expensive. It is eight times more expensive than Tejas. In 2007, the government assessed the MMRCA deal for 126 fighters to be about $12 billion. By 2014, the cost of 126 Rafale fighters had swelled to an estimated $22 billion. In 2015, when Prime Minister Narendra Modi visited France, the reworked deal of buying 36 fighters outright with the option for more was worked out to be $7.5 billion. Now, even French President Francois Hollande is mentioning a figure of $9 billion. Clearly, the costs are spinning out of control. It reminds me of a quip made by a Russian diplomat about the Su-30MKI, who said it was a very good fighter, but its wings were a bit heavy now. When I asked him what he meant, he cryptically remarked, the deal happened through four regime changes since 1994, meaning each regime change saddled it with more costs. It seems the Rafale’s wings too are getting heavier.

The writer, a policy analyst studying economic and security issues, held senior positions in government and industry. He also specialises in the Chinese economy.

maitya · Post by **maitya** » 27 Jan 2016 09:59

VijayR wrote:
maitya wrote: It IS now all about political capital actually ... to make good of a promise made by the PM.

I think the PM should worry about his political capital with the Indian public , rather than some vague assurance to the French. Any way , they are the ones who seem to have shifted the goal post , so it is perfectly fine to cancel the deal unless they agree to the original terms.

And what is this nonsense about India compensating the French for some alleged support after Pokhran - if we need to return the favour , do so in similar circumstances and in kind , not by paying through our nose

In an ideal world (or like the ones you get to see in the hermit kingdom) what you say about PM's political capital etc is fine ... but then, unfortunately for a "normal" country with "normal" number of international interfacing with other countries, quite a lot of political capital is actually routinely spent wrt various such commitments to other countries.

And no assurance from a PM is ever vague (exceptions, of course, are there - right in our neighborhood, towards the west).

And also do know that "compensation", government/corporate/personal level are always predicated on "areas" to which the receiving party (in this case the French) attaches importance to. So no "similar circumstances" etc will never happen and if compensations etc needs to be there, then it needs to be on "dis-similar circumstances" (such as this - as the French has linked pure commercial-terms wrt these remuneration. As has the GOTUS in nuclear commerce areas etc).

PS: Post MRCA-cancellation and G-G deal discussion, there's been no goalpost shifting on the shifting on the French side - and all such goal-post shifting has happened actually on our side (from pure-buy to buy-with-30%-offset to buy-with-50%-offset to buy-but-with-certain-IAF-mandated-mods etc etc etc - each of which will lead to inevitable price escalations).

The French side goal-post shifting happened during the MRCA-negotiations - when they were a bit insecure that there was a real danger of their commercial highway-robbery being exposed if HAL somehow gets to manufacture 108 Rafales and if they are forced to actually disclose a lot of manufacturing IP for it.
That's why those negotiations were on a never-ending spiral - as they realized this danger after successfully keeping the EF out of the race by quoting a ridiculously low price. In short, they gamed the system quite well actually.

member_29294 · Post by **member_29294** » 27 Jan 2016 10:04

Karan M wrote: Sukhoi cannot replace Rafale: Arup Raha, IAF chief
http://articles.economictimes.indiatime ... -arup-raha
No Plan B on MMRCA: IAF Chief
http://www.spsshownews.com/news/?id=172 ... -IAF-Chief

IAF Chief should resign immediately if this deal does not go through, given his remarks. Making such statements while negotiations are ongoing is well, I don't even want to say it.

This attitude of the IAF is a main contributing factor to why France does not want to reduce prices and they have only themselves to blame. France knows there is no 'Plan B' and that 'Rafale cannot be replaced' thanks to the endless wisdom of the IAF and our own Air Chief, so they are under absolutely no pressure to lower their ridiculous prices. MoD should just walk if France cannot accept $7 billion, and then shake things up with the IAF. Early retirement for the officers who are seen to be towing the lines of foreign companies and not the interests of India.

Viv S · Post by **Viv S** » 27 Jan 2016 10:24

maitya wrote:PS: What is all this talk about F-35 price etc? If something is not going to be available how does it matter if people quote it at $1 or $100mil or whatever?

Its very much available. They've made presentations about the B & C variants, in response to an Indian Navy RFI. The US position was spelled out by Ashton Carter quite unambiguously - "there is nothing on our side, no principle which bars that on our side, Indian participation in the Joint Strike Fighter". And that was in 2011. Since then, ties with the US have further strengthened while Ashton Carter, the architect of the DTTI, has ascended to the position of US Defense Secretary. No reason to assume its off-the-table if formally requested by India.

nits · Post by **nits** » 27 Jan 2016 10:40

Please educate me on this...

As of now price is not finalized; with past experience it will take at least 6 more months to close the contract
Now after 6 months; first aircraft will arive after 3 years in Fly away condition
Purpose of Rafale is to fill depleting IAF Fleet
But after 3.5 years; we will have big # of LCA already in service; what's the use of spendibg 60K crore on this logic then ?

member_27845 · Post by **member_27845** » 27 Jan 2016 10:44

This $11 billion is a huge red herring to get us to accept $7 billion which will be presented as a fait accompli
At a $100 mil a pop , the deal value should be approx $3.6 bil , so the French coming down to $7 bil is now seen as a big climbdown

This is a mega scam in the making - sorry , cant explain it any other way

I hope there is a legal route in India to scuttle the deal

Karan M · Post by **Karan M** » 27 Jan 2016 10:46

^^ We dont know what all the price includes as versus the media chaps bleating about it.

Do remember they have overt bias. One of the chaps quoted is a Gripen supporter and cares two hoots about it replacing/supplanting local programs. Similarly, many other journos are suspect.

The rough rule of thumb is lifecycle costs are 2.5-3x the actual airframe price. Now, this is primarily restricted to spares (and not manpower and fuel) as I remember. Given a third of the lifecyle spares, effectively, your 4.5Bn fighters become 9Bn$. Add jigs, maintenance repair overhaul facilities for the aircraft, another Bn$. That's $10Bn.

Then add a comprehensive weapons package, and add another $2Bn.

Point is the cost is then fairly in line with common sense standards and what we would have to pay one way or the other.

Instead, we have a lot of FUD about the costs and people screaming.

The next tranche of Rafales will be cheaper because at least a portion of the basic infra....

member_29294 · Post by **member_29294** » 27 Jan 2016 11:28

Karan M wrote:^^ We dont know what all the price includes as versus the media chaps bleating about it.

We have direct quotes from the IAF Chief himself talking about how India 'Cannot replace Rafale' and that 'There is no Plan B'. Even if we consider the pricing negotiations as presstitue nonsense, why on Earth would he make those statements from his position if negotiations are still ongoing? He is directly compromising MoD position. Everything about this deal is shady, and not to standards of the military which reminds me of the corrupt deals in the past. If negotiations break down again, MoD ought to just walk.

Karan M · Post by **Karan M** » 27 Jan 2016 12:07

Agree his statements were not ideal ( to put it mildly) but i was merely mentioning that we need to take public media statements about price with a bag of salt.

habal · Post by **habal** » 27 Jan 2016 12:13

can anybody again tell me why we invited this d!ckwad to India ?
Modi as usual .. eager to please.
what kind of 'strategic relationship' are you going to form with a country whose premier is 'ughhh' to hug you.

member_29172 · Post by **member_29172** » 27 Jan 2016 12:19

who cares, knowing the french atleast he didn't smooch Modi. I don't get the concept of celebrating Republic day and Independence day by calling in other country's heads of state. Both the events celebrate the freedom and creation of India as a political entity in modern form. Why not keep the PM and President as the chief guests and display the show to the country?

This moronic drive to internationalize everything doesn't make sense. If you want to hug and kiss other heads of states, you can do that when you visit them there. This is an Indian event for the people of India. And the selection of guests doesn't make sense either.. obomber who came last year went out with his moronic accept terrorists/fags/criminals lecturing while blacks were rioting in Missouri, and now this...

habal · Post by **habal** » 27 Jan 2016 12:30

right from time of Jassu besides fax machine, BJP leaders have some kind of strategic disconnect. White skin ke saamne bas mom ho jaate hain. They expect the best from international leaders, it's like they do not know it's a snake-pit or are they pretending not to know. Such naivety not good for pragmatic relations. Tomorrow if unkil applies sanctions because 2 baptist pastors got killed in dantewada .. this buffoon will be at the forefront of that just like he proven in Syria, Libya, Ukraine etc.

jo kaam nikalwana hain nikalo aur raste se side karo ..

member_29294 · Post by **member_29294** » 27 Jan 2016 12:35

Let's keep this discussion about RAFALE, this stuff belongs elsewhere.

Y. Kanan · Post by **Y. Kanan** » 27 Jan 2016 13:00

Paul wrote:^Er..you have to train 6 more pilots you know. Replacementand ground crew follow as well.

No you don't; if we bought 5-6 SU-30's in place of each Rafale (completely reasonable at these prices), the "extra" planes could simply be kept in storage and/or cannibalized for spares. Our pilots would never want for a servicable aircraft to fly.

Karan M · Post by **Karan M** » 27 Jan 2016 13:49

If you think that you'll get 5-6 Su-35s for the price of one Rafale, based on media reports, there is nothing left but

Karan M · Post by **Karan M** » 27 Jan 2016 13:50

Habal, i couldn't give a fig if Modi hugs Hollande and how and whatever, as long as India gets a good deal on Rafale.

Singha · Post by **Singha** » 27 Jan 2016 13:54

we can probably get a unarmed flyaway cost plane 1.5:1 in Su30:rafale
but for su30 we already have all the logistical tail, training, repair, weapons in place and more can be incrementally scaled up with too much capex. the rafale will prove very costly in that aspect...that too for just 36. for instance if you need a simulator you need 1, regardless of 12, 24 or 36.

anything related to su30 now gets cheaply amortized across 272 already confirmed.

Singha · Post by **Singha** » 27 Jan 2016 13:58

i think he is a serial kisser and not a warm hugger

monsieur kerry, who towers above him in height fell his victim as well
http://www.telegraph.co.uk/news/worldne ... x-pas.html

shiv · Post by **shiv** » 27 Jan 2016 17:24

OK for variety (as in "goat for choice") let me say "I think we are going to get a really good deal on Rafale and have a capable force mulitplier for decades even as our military aircraft industry progresses from first steps to running.

SaiK · Post by **SaiK** » 27 Jan 2016 19:55

http://www.dailyo.in/politics/modi-rafa ... /8663.html

okay.. at these prices, I want about 2000 rafales right away for desh!

it is a DEAL!

Will · Post by **Will** » 27 Jan 2016 20:03

Khalsa wrote:lol I love this
Just love this incremental approach.

All right I knew it was gonna another announcement at the R-Day.
Oh well lets wait another 3 months then (they said 1, I say 3).

And then price will be fixed...

Time to focus on our next phoren fighter.
FGFA

Let the MKI days begin again

First it was two more days, then it became 4 weeks, now its again become 6 weeks

. Wanna bet its going to go into the next fiscal if it ever does happen?

brar_w · Post by **brar_w** » 27 Jan 2016 20:12

The rough rule of thumb is lifecycle costs are 2.5-3x the actual airframe price. Now, this is primarily restricted to spares (and not manpower and fuel) as I remember. Given a third of the lifecyle spares, effectively, your 4.5Bn fighters become 9Bn$. Add jigs, maintenance repair overhaul facilities for the aircraft, another Bn$. That's $10Bn.

Two Points ...

- While everyone does their LCC a bit differently based on their own standard/best practices, or political mandate in some cases most if not all western LCC methodologies do involve at least unit-level manpower cost and that is reflected in the rough ratio of procurement to O&S cost. In the US cost analysis, rules mandate that any depot level cost including co-manning of the depots with industry be also included. In the US for example the O&S cost for the F35A estimates over 8000 hours (flown @ 250 hours per year) is $253 Million per aircraft and includes manpower, maintenance, spares, fuel and upgrades/continuous improvements etc.This is roughly 2-2.5 times the procurement cost paid at the time of receiving the aircraft (minus any long lead items contract that gets adjusted).

Some of the congressionally mandated inclusions in the O&S budget estimates in the US (most western countries should have a fairly similar practice as these best-practices in acquisition and cost-analysis travel fast) -

The Unit-Level Manpower element includes the costs of all operator, maintenance, and other support manpower at operating units (or at maintenance and support units that are organizationally related and adjacent to the operating units). Unit-Level Manpower includes active and reserve military, government civilian, and contractor manpower costs.

The scope of unit-level manpower consists of the lowest-level operating unit capable of independent system operations, and associated augmenting maintenance and support units (if any) integral to system operations. For systems owned by deploying units, the scope of unit-level manpower includes the operator, maintenance, and other support personnel who are consistently deployed with the systems to their deployment locations. For example, for an Air Force aircraft, the scope of unit-level manpower includes the aircraft operating squadron and associated maintenance and support units in the same wing.

If on takes just the 3rd category that includes spares and other consumables required for maintainace, then it makes up of a third of the overall O&S cost. Modern aircraft have fairly reliable components and standards are generally high and requirements are geared towards preventing catastrophic component failure that leads to complete component replacement. I would be surprised if the cost per hour analysis of the Rafale's spare cost is anything above $5000 (per hour). In fact it could be substantially less.

Therefore, it really depends upon what the MMRCA defined as LCC, and even if the definitions were slightly or drastically different, cost of spare parts should not make up a very large % of the total O&S costs and in $$ amounts should not contribute to a multiple of the procurement cost. Western cost estimates, or even cost structures (R&D vs Proucurement vs O&S) will not apply that well to Indian cost structures, since in the case of western cost estimates, the $18,000, $25,000 and even 30-40,000 per hour cost estimates includes a huge manpower component (in $ amount) that is unique to these economies (salaries and contractor costs, plus benefits).

- What has been written so far is that the spares contract would cover 5 or 10 years. I doubt they would want to sign a 30 year spares PBL deal, and I doubt even Dassult would be willing to take that big leap unless they really bake in a high margin.

Its usually better to negotiate a PBL every 5 or 10 years for both parties. Its tough to predict things like cost of raw-materials, and other inflationary trends that far out into the future unless the OEM hedges risk through a comfortable profit margin.

brar_w · Post by **brar_w** » 27 Jan 2016 22:40

India's Rafale deal remains at an impasse

An accord India and France signed on 25 January in New Delhi for 36 Dassault Rafale fighters for the Indian Air Force (IAF) although initially declared an inter-governmental agreement (IGA) is now being described by Indian officials as a memorandum of understanding (MoU), preparatory to a more binding IGA. "What was signed was an MoU and when the financial part of it [the deal] is settled, then obviously the IGA in its entirety will be concluded," S Jaishankar, the most senior civil servant in India's foreign ministry, has told reporters.

His clarification followed Indian prime minister Narendra Modi's statement that an IGA for the Rafales "has been completed, and now only a few financial issues remain" at a joint press conference with French president François Hollande in Delhi.

The French president, whose three-day Delhi visit concluded on 26 January, said the deal was a "decisive step" forward and all outstanding financial matters would be resolved in a "couple of days".

Indian Ministry of Defence (MoD) officials said that an MoU was simply an expression of intent to buy the Rafales, whereas an IGA is a more explicit document outlining the proposed deal but without providing contractual and price details. An IGA, however, cannot be signed unless the contract price has broadly been agreed upon, officials told IHS Jane's .

The Rafale deal, worth around USD9 billion, was to have been the centrepiece of Hollande's visit to India, where he was the chief guest at the annual showcase Republic Day military parade in Delhi on 26 January. A French military contingent also joined the parade on Delhi's main boulevard in the first such participation by any foreign country.
Official sources said ongoing Rafale price consultations were constrained by India's Contract Negotiation Committee (CNC) insisting that the fighters cost less than the previous Congress Party-led federal coalition would have paid for them.

Under the earlier procurement offer, India was to have acquired 18 Rafales off the shelf and licence-built the remaining 108 to meet the IAF's Medium Multi Role Combat Aircraft (MMRCA) requirement. This acquisition was estimated at around USD22 billion, or about USD174-180 million per aircraft.

But after more than three years of negotiations, beginning in early 2012, the two sides were unable to agree on the price or the transfer of technology to state-run Hindustan Aeronautics Limited (HAL) in Bangalore for the licensed-production programme.

Modi's government, which assumed office in May 2014, then scrapped the deal and in April 2015 instead opted to buy 36 Rafales in a flyaway condition for the same price that Dassault gave the French Air Force.

However, official sources said that during negotiations for the 36 Rafales, which began around mid-2015, it emerged that each fighter would cost about USD205-225 million.

"This price was not politically acceptable to Modi's government, as it would find it difficult in parliament to justify paying so much more for the Rafales than what the Congress Party would have," said a senior IAF officer.

For Dassault, meanwhile, it would be difficult, if not impossible, to bring prices down to suit Indian demands, resulting in an impasse that has led to just an MoU for the fighters being signed, the officer added.

The requirements on Dassault to invest 50% of the overall contract value in offsets in India and to establish the infrastructure to base the fighters at two locations - including hangars and maintenance, repair, and overhaul (MRO) facilities - were other factors delaying the deal.

Indian defence minister Manohar Parrikar recently declared that offsets were responsible for increasing defence contract costs by an average of 18%. However, he has previously said Dassault would have to meet the 50% offset obligation.

The CNC's insistence that Dassault must ensure a 90% serviceability rate for the 36 Rafales for their first two years of squadron service at no extra cost is an additionally contentious issue that needs resolution, official sources have said. Dassault is reportedly willing to meet these demands, but at a price, which only adds to the overall cost.

"By including all these additional demands the MoD has unnecessarily complicated what was a relatively straightforward cash-and-carry procurement," said Amit Cowshish, a former MoD financial advisor for acquisitions. Both sides now need to compromise for the deal to go through, he added.

In another inexplicable twist to the deal, Air Marshal S B P Sinha, who as the IAF's deputy chief headed the Rafale CNC and was associated with the MMRCA programme for over five years, was shifted to another post on 1 January. Air Marshal R K S Bhaduria, who succeeded him as the deputy chief on that day, also replaced him as the Rafale CNC head at a critical time in the negotiations. The IAF was unavailable for comment on this switch.

Senior IAF officials, however, remain confident that the deal will be signed before the end of financial year 2015-16 in March.
Party politics appears to be influencing the Modi government's purchase of the 36 Rafales.

MoD officials have said the government, under attack for delayed military modernisation, is anxious to prove that its decision to scrap the Congress Party's inconclusive Rafale deal was not only judicious but also economical and operationally timely.

The IAF, meanwhile, is anxious to begin inducting the Rafales, with deliveries scheduled to begin within 36 months of the contract being signed, to boost its flagging fighter squadrons, which have declined to 35 from a sanctioned strength of 42.

A parliamentary committee recently warned that this figure will drop further to 25 squadrons by 2022 after the IAF's obsolescent MiG-21 and MiG-27 fighters are retired

SaiK · Post by **SaiK** » 27 Jan 2016 22:46

What is the manpower cost alone for this deal? I am saying get them outsourced to India from France after a deep-dive training for few. I hope this is not in $billions.

If I were to be Dassault, I'd have established parts manufacturing shops in desh on #makeInIndia investments. I would also ensure, MMRCA need of about 220 a/cs delivered in 10 years. There is a huge strong rope that France is holding up and not giving away to capitalism.

brar_w · Post by **brar_w** » 27 Jan 2016 22:48

Manpower cost is incurred by the operator unless a lot many costly services are outsourced to the OEM/S.

If I were to be Dassault, I'd have established parts manufacturing shops in desh on #makeInIndia investments. I would also ensure, MMRCA need of about 220 a/cs delivered in 10 years. There is a huge strong rope that France is holding up and not giving away to capitalism.

What benefit would that give Dasault? It would further erode French defense industrial base therefore bother their prime customer (French Government), and would be cost-prohibitive for an order of just 36 aircraft once you factor in capital cost required to create a brand new industrial base, including training a domestic work-force.

I would also ensure, MMRCA need of about 220 a/cs delivered in 10 years. There is a huge strong rope that France is holding up and not giving away to capitalism.

The MMRCA with its associated local-production and even transfer of technology is dead, replaced by a G2G deal for 36 aircraft + Options. What you suggest, would effectively take the deal back to square one and that would mean re-starting the MMRCA negotiations that proved to be troublesome in the past.

SaiK · Post by **SaiK** » 27 Jan 2016 22:54

It is better to retain the niche areas of operations in France and leave the nuts and bolts to operator country (India in specific here on a deal). The benefit of huge sales at the right price is something we have to consider. The Mirages were costly.. they enjoyed unique advantage on certain qualities, but when other fighter jets took-over that niche market was killed (by american F-series, Now the JSFs).

They have to become pound-wise and penny foolish strategically speaking.. I am pretty positive India will bump up the numbers if their price is not exorbitant.

brar_w · Post by **brar_w** » 27 Jan 2016 22:58

We'll, they did try that with the MMRCA. It was to be a pretty big sized carrot with a winner takes all competition, valued as the largest in India's defense procurement history. Even the current establishment, with its fast track mentality gave up on that and moved to a G2G deal that retains the manufacturing and supply base in France. I think the Modi shift away from the MMRCA is as good a hint that we are going to get, that the MMRCA program had essentially hit an insurmountable roadblock and the quick nature of the switch (on Modi's first visit with the French leader) suggests that the previous government had most likely also realized this and were merely passing the buck on to the new government.

It is better to retain the niche areas of operations in France and leave the nuts and bolts to operator country (India in specific here on a deal).

Which in this case would be supply side to be negotiated in bulk with Dassault as the main party, and perhaps the depot level work staying with the Indian side perhaps with contract support from Dassault. That's how I see it. However, when you move over industrial capacity or even worst duplicate it, you incur a huge capital expenditure, and learning curve costs that require a huge order to justify or bring about a financial benefit. They also have a licencing component, as Dassualt would naturally put a value to such a thing.

SaiK · Post by **SaiK** » 27 Jan 2016 23:10

I agree on the capital expense for establishing production setup. But I think, in that case there is a justification angle when it comes to questions on costs. It is a good fighter jet platform, and no doubt about that.. but, I am hurting to see this at Ferrari costs when it is just a Bimmer 5 series.

When we do it, those costs can be budgeted differently.

brar_w · Post by **brar_w** » 27 Jan 2016 23:18

The problem is that no one will make a new production line for parts, or move over their own production line without the added expenditure of licenced production or even TOT in certain cases. Secondly, the size of the order must be substantial enough to create a cost saving for India, and provide a financial incentive to Dassault and the strategic nature of the deal (keeping france in the fighter business by eating up 5-10 years worth of production for example) important enough to France to sacrifice completely, or in part their defense industrial base. If they weren't able to offer an agreeable cost with a 120 odd aircraft deal, why would they do it for 36?

The reason the rafale costs as much as it does is because of low production volume that trickles down to the component level and includes weapon costs. On top of that the capability also comes at a price. Things like an AESA radar, digital EW suite etc all add capability which adds cost especially since they also are being produced at low volumes. Even Lockheed has realized this and are switching over to a more basic version of the F-16 to provide to the export market.

member_29294 · Post by **member_29294** » 27 Jan 2016 23:59

India's Rafale deal remains at an impasse

The IAF, meanwhile, is anxious to begin inducting the Rafales, with deliveries scheduled to begin within 36 months of the contract being signed, to boost its flagging fighter squadrons, which have declined to 35 from a sanctioned strength of 42.

This myth needs to end. IAF doesn't care about overall squadron numbers. Otherwise they wouldn't waste all their budget on 36 fighters that won't arrive for another 36 months after a deal is signed.

I hope this deal is stalled as long as possible and additional Su-30MKI and Tejas are inducted in the meantime. Also rooting for FGFA deal to be signed soon and an AMCA TD flying at Aero India 2017.

RoyG · Post by **RoyG** » 28 Jan 2016 00:04

Just dump all the funds on LCA MKII, Su-30MKI, engine development, sensors, weapons, etc. This deal needs to be killed. Seems like we're going through with Jaitapur project, more scorpenes, etc. That should be enough.

Karan M · Post by **Karan M** » 28 Jan 2016 01:07

Brar, Janes estimated data of Rafale at $16,500 per hour of which 20-25% would be fuel.

Its not cheap by any means.

brar_w · Post by **brar_w** » 28 Jan 2016 03:02

Brar, Janes estimated data of Rafale at $16,500 per hour of which 20-25% would be fuel

The Janes study is quite basic and I hope SAAB didn't pay them a lot of money for it

. It itself states :

IHS Jane’s has been unable accurately to determine the constituent costs of fuel, spare parts, repairs and personnel that constituted each of the aircraftsstated CPFH. However, based on a 2005 USAF study of F-16s, IHS Jane’s believes the CPFH is composed of approximately...

I have used more recent (2013) F-16 CPFH data.

Janes looked at a broad set of metrics and focused on operational capability standardized for the sake of the comparison and much like the US O&S graphic I have posted above (O&S definitions have a lot of similarity in most air-forces looking to project costs to support planning policy). Its exactly the way I have calculated. For example, in case of the F-16, the operational cost is around a fourth of all O&S cost (22%), however not 100% of that is fuel. Similarly, their cost of maintenance is similar 20-25% and includes not only spares but also manpower consumed by maintenance.

Nearly 40% of the total O&S cost (the single largest line item) is unit-level manpower which is dependent largely on pay and benefits of a particular air-force but also slightly on how much manpower a system requires. The F-35 for example, despite being a larger, more complex system, and consuming more O&S resources compared to the F-16, requires less unit-level manpower to keep flying for 250 hours a year [ was a design goal]. It wouldnt be surprising that the Rafale, being more automated and an overall more modern design is also less manpower intensive compared to the F-16 but that does not matter a whole lot since unit-level manpower cost is according to Indian pay and benefit scales and is no-where comparable to the $$ amounts consumed in western defense budgets.

The cost of spares however is only a sub-set of of maintenance costs and even if we assume that all of the maintain account (see category 3 in the graphic) is consumed by spare-procurement we get around $5000 per hour for F-16 spare consumption. If we are to add 50% of the sustainment and support cost (which has a very large organizational and contractor manpower component) we still only get to 6000-7000K or 25-30% of the overall O&S cost.

Given the Rafale is larger, and has two engines we can add a 25-30% margin to this and we get around $6500-$7000. However in the F-16's case the O&S category of maintenance includes all depot level, and intermediate level maintenance including labor both employed and contracted so not 100% of this $5000 (aprox) for the F-16 is used in spare parts, and it won't be the case for the Rafale either. From a spare consumption point of view, Its pretty safe to assume that both the Rafale and the F-16 are at or below the $5000 per hour cost since for both France and the US manpower cost that includes air-force personal and contractors is not small specially after factoring in the benefits.

The biggest O&S line item for all western forces, that makes up the $16K, 18K, 25K or 50K cost estimates for various systems is manpower costs. The actual parts make up a much smaller share. This is by design. Paying manpower salary, and benefits is expensive so they want high component reliability and system reliability in general and are willing to a higher acquisition price for it. Depending upon your readiness levels desired, and annual flying hours manpower costs throughout the unit and depot level can be substantial as they include pretty much everything that you can expect to pay someone for such a role in a western economy.

F-16 C (USAF cost breakdown) -

Unit Level Manpower - 40%
Unit Operations - 22%
Maintenance (this includes spares) - 22%
Sustainment - 8%
System Improvement and Upgrades -8%

If you take out the manpower cost from each of the 5 elements mentioned above (there is some manpower cost within each category, but the first one is naturally nearly 100% manpower), your fuel cost which falls under the unit-operations category becomes the single largest cost in that CPFH calculation assuming peacetime utilization.

Even these %ages are operator specific and enterprise dependent. For example, USAF's F-16 enterprise includes bases and service or contractor support and services at all the worldwide bases where the F-16 operates, so overall cost is high. The US congress, also mandates a very thorough manpower numbers and includes stuff in its O&S materials such as cost of training pilots and crew, cost of training munitions such as all the weapons launches in peacetime throughout the life of the aircraft, all the enterprise related range activity etc etc.

Even if we go with the fairly unreliable, data in the Jane's study, and assume that $10,000 of the $18000 number for the rafale is the cost of spares (that number is extremely unrealistic since for france the major cost would be manpower, then fuel and depot capacity and then spares and usable items) then for the 6000 hour analysis, the cost comes to around $60 Million per aircraft or approximately 2/3 the cost of procurement for 6000 hours, or around 90% of the procurement cost based on an 8000 hour air-frame usage. In reality however it is quite likely that spare consumption per hour is likely to be 50-60% of that $10,000 we have assumed.

Vipul · Post by **Vipul** » 28 Jan 2016 03:12

UAE negotiating $15 Billion deal for Rafale.

The UAE source stated that the expected cost of each aircraft is expected to be around $250 million for a total cost of $15 billion.

Once again if we are not getting any other strategic items from France under the Rafale Deal then India should junk this and go for additional SU30/35's and put the more then left over $$$ into establishing a couple of lines for manufacturing the LCA's in big numbers.

shiv · Post by **shiv** » 28 Jan 2016 04:41

Question: What is the basis for the assumption that the Rafale itself will not bring us some strategic benefits?

If you look at the tech of Tejas and Rafale - the Rafale scores on some French tech that Tejas currently cannot match (and its an unfair comparison). The aviation grade Aluminium in Tejas comes from France among other places. There are aspects to composites tech where France is ahead. So it's not simply about he performance and weapons carrying ability but value that can be bargained for in terms of human skill and automation. All this can be dismissed as "high hopes" - but dismissing it as high hopes only serves the argument that the Rafale is useless and expensive and the IAF and negotiators are all stupid. And of course all of us are adept at listing out a long list of "stupidities" shown by IAF, GoI and India over the decades. That sort of stuff is OK when we say it but we hate it when the media does that.

brar_w · Post by **brar_w** » 28 Jan 2016 05:02

The biggest thing with a lot of the comments here is that folks simply divide the total cost by the total amount and then start to throw non apples to apples figures like Su-35 for $15 Million, Su-30 for $60 Million etc. What is being negotiated here is an extremely small amount of a fairly expensive 4+ generation fighter, with OEM support, and a PBL'esque system of spares for at least 5 years, with possible coverage through 10 years, or approximately a 1/3 of the life of the aircraft. What this deal also covers is between 30% (less likely) and 50% (more likely) offset and a weapons package from a supplier that is known to offer some of the most expensive weapons in their class. All in, expensive YES, it was always going to be so..but it is wrong to say a rafale costs 250 Million, or $300 Million..there is a lot more in that, then just a rafale.

shiv · Post by **shiv** » 28 Jan 2016 05:04

^^
Brar +1