First of all, it is obvious that torpedoing of the Qatari Mirage deal was a mistake and a very blatant one at that. The only thing left is the blame. If one is making the case that the responsibility lies with the MoD and not with the IAF, then lets also grant that the MMRCA decision should come from the MoD as well and any IAF 'lobbying' in the matter needs to be disregarded (since the responsibility for a screw-up will be apportioned to the MoD in the latter case as well).
With regard to the MMRCA being an 'absolute necessity' as many on the thread are stating, lets be clear, this is a first and foremost a matter of simple economics. (An aspect the IAF appears utterly oblivious to.)
The PLAAF is inducting at least 1 regiment each of J-10s and J-11/16s annually with deliveries of the JH-7B starting next year. That's at least 50 fighter inducted annually, rising to 70 fighters per year by 2016. Jane's 'high end'
estimates put it at 80/yr.
We're currently inducting 15 MKIs annually ending around 2018. Rafale production will average 14 units/yr (2018-26). And Tejas' production rate will determined by how myopic the MoD/IAF are.
The J-10 & J-11's cost is little harder to pin down. The J-10A was reportedly priced at $42 mil for export customers (flyway presumably). The J-10B/C would likely cost about $50 mil. Factor in the fixed 'setup' costs, and the Rafale comes out to cost about two and half times higher than the J-10.
Does it offer two and a half times greater the combat capability? Keep in mind that the J-10B already fields an AESA, a comprehensive EW suite, high composite content, reduced RCS on an airframe offering more than decent aerodynamic performance. And that it will be replaced by a newer J-10C variant by the time the Rafale nears delivery (and that's without going into the J-31).
Faced with a foe that has budget at least 3 times greater, if cost effectiveness is not the single most important concern for the IAF, then the result of an air war against the PLAAF is predictable. Assuming that our military budget is fixed, the Rafale deal far from bridging the gap with China, will actually make it a lot worse.
Given that the blame for the ignominy of a defeat will inevitably be laid at the govt's door for not allocating 'adequate' resources for defence, the onus is on the MoD to buy smart, even if it means unapologetically overruling the IAF.