IAF Rafale News and Discussions - 26 May 2015

[srai]

Reminds me more and more of the original Mirage 2000 deal.. and not in a good way
http://indiatoday.intoday.in/story/fren ... 60805.html

Good find Karan! Glad India Today has uploaded its archives on the web. I remember scouring old bound magazine archives in libraries scanning for such articles a long time ago. I remember reading this and the other one you had posted on the LCA. There were a few more from what I remember.

[Hitesh]

I am so sick of hearing about the Rafale deal... will it come or will it not come yada yada yada. Just kill the stupid thing and tell the IAF to fricking move on.

[Viv S]

Ze evil French again...Must be a conspiracy. The negotiator psychopaths from Dassault and the generous Indian MoD. Nice pitch to fuel any kind of rumors.
I honestly don't know how it is going to end out but I have always a smile on those hasty conclusions based on contradicting reports. This is so classic: take the information that conform your belief and generalize...I guess the demonstration is now perfect.

Why give me a funny German accent? Surely a funny Indian accent is more apt? Like so - 'Je ebil Phrunch..'.

My view is that reality is more complex, especially in those kind of negotiations. It is not black and white.

An honest question: why would indian MoD give its green light if negotiations are in trouble ? I don't intend to refute the report but finding some possible explanations. I am certainly not going to take a side now.

What 'green light'? That comes after the negotiations conclude i.e when the contract is ready to be signed. As for why the MoD is engaging in negotiations - that would be because their boss' boss made a political commitment during his visit to Paris. They're required to follow through on it.. to a reasonable extent.

From my window, negotiatons are on to sort out some specific issues but I am not seeing a deadlock (yet). Indian MoD in endorsing the deal and French MoD says these due diligences do not worry him. From this information some Indian news paper say "a breakthrough could be imminent" and another report says there "still many hurdles to clear". Two ways at looking at the same event.

Only one way of looking at the price however. Even at $7 billion its overpriced. At $9 billion, its lunacy. That's why it never sold in Europe. Doesn't mean it can't in India though. The usual rules don't always apply here and short sighted politically motivated decisions are frequent. Applies to the current govt too as seen from the recent AH-64E contract.

[Philip]

That must be the "R" factor.That factor was v.much in evidence during the Sonia/Snake-Oil/AKA regime.When the M-2K upgrade was announced and the "R" co. was mentioned as a poss. partner in the local manufacturing phase. Someone has put a "hex" on the entire MMRCA episode. It is truly distressing.

With just two months away from Mr.Modi's visit to Russia,one would advise him to order a number of MKis,29/35s,whatever to bridge the gap,which would put even more pressure upon the French if they want to sell the Rafale.Christmas comes afterwards in Dec.,by which time the byzantine bargaining can be concluded and Santa Claus can climb down the chimney of the CoAS in Lutyens' Delhi with 36 Rafales as his gift!

[ramana]

Philip, Give it a rest. NaMo will do what is good.

And no more IAF bashing. They had their constraints.

[chaanakya]

NaMo is a man of his words, if nothing else. Whatever he promised he tried to deliver. That was the essence of his message at SAP centre. One should listen to it carefully to understand what he is trying to establish:- his credentials as a man who delivers on his words and promises. So if he has promised to buy 36 Rafale, that will come. Price Negotiations are very common thing and unless top leadership is corrupt no one would doubt the price once settled. And a deal is most probably tied up with something else which we would not know in near future. Afterall only a naive would believe that Russians did charitable work for us in developing Arihant. The payments had to be hidden away from prying eyes.

IAF has asked for Rafale and they will get it and I think deal will be finalised sooner than we believe.

[Viv S]

NaMo is a man of his words, if nothing else. Whatever he promised he tried to deliver. That was the essence of his message at SAP centre. One should listen to it carefully to understand what he is trying to establish:- his credentials as a man who delivers on his words and promises. So if he has promised to buy 36 Rafale, that will come. Price Negotiations are very common thing and unless top leadership is corrupt no one would doubt the price once settled. And a deal is most probably tied up with something else which we would not know in near future. Afterall only a naive would believe that Russians did charitable work for us in developing Arihant. The payments had to be hidden away from prying eyes.

The problem with this logic is that it gives the French carte blanche to raise their prices to the moon. If the one party is under a binding obligation to buy a product, then its nothing surprising if the supplier gouges it on the cost.

[JTull]

I think NaMo is focussed on national interest, and he'll do whatever it takes to do it. There is a long-term vision and there are short-term necessities to be met. Both require different strategy.

This is unlike UPA which had not vision and only short-term requirement was to keep the nose clean while gorging on the white stuff.

[chaanakya]

The problem with this logic is that it gives the French carte blanche to raise their prices to the moon. If the one party is under a binding obligation to buy a product, then its nothing surprising if the supplier gouges it on the cost.

Your contention would have been correct if price discovery had not taken place. I don't see such questions being raised when G2G orders under FMS is placed for American equipment. Do you think we are paying for the moon there?? This 36 R also comes under G2G and not for Dassault. So if some issues remain ( with prices bench-marked to tender rates and negotiations) NaMo and Hollande would have to sit together and sort it out. I see no wrong in it. We are not going back to F or G or E or M or S , as of now.

[Viv S]

Your contention would have been correct if price discovery had not taken place. I don't see such questions being raised when G2G orders under FMS is placed for American equipment. Do you think we are paying for the moon there?? This 36 R also comes under G2G and not for Dassault. So if some issues remain ( with prices bench-marked to tender rates and negotiations) NaMo and Hollande would have to sit together and sort it out. I see no wrong in it. We are not going back to F or G or E or M or S , as of now.

The FMS is a streamlined and relatively transparent process for govt-to-govt acquisitions*. The French deal on the other hand is proceeding on entirely ad hoc lines. I can give you an exact breakdown of most US aircraft acquisition programs. Are similar figures available for the Rafale to the public? Are they even available to the Indian MoD/IAF? You have no choice but to go by what the French govt tells you - the same govt that's a shareholder in Dassault & Thales. And almost every article that has come out over the last two month suggests an unacceptably steep price for the aircraft.

But that's still not the core problem here. The key to any successful negotiation is the ability and willingness to walk away. Doesn't matter if you dealing with the French, Americans or Russians. Doesn't matter if its fighter jets or a plot of real estate. No sensible party should enter any dealing without an exit strategy.

Lot of people interpret this as an issue of credibility for the PM. It shouldn't be. If the deal isn't upto scratch, Modi needs to be willing to junk it and not make it an ego issue. And so far there's nothing to suggest that this isn't the case. The MoD's negotiators don't seem to be folding. Yet.

(*When an FMS route is chosen for equipment that's not current under production for the US DoD eg. M777, questions should be raised.)

[chaanakya]

Don't worry, You forgot the fact that price discovery has already taken place in MMRCA. Now it is a question of finalising details under G2G. And the process is as transparent as it could be. Afterall what is the basis of prices told under FMS. What kind of discovery takes place. It is merely a captive purchase based on prices as told by USA not a competitive prices. Whereas Tender for MMRCA had 18 outright purchase which is now upped to 36 and prices were against other contenders including US whose offerings had failed technical tests.. And key to successful negotiation is to hammer out differences and come to a negotiated price which is acceptable to both the parties. "Ability to Walk away " is a negative approach to any deal negotiation as there could be many points where parties would like to find the middle ground.

[Viv S]

Don't worry, You forgot the fact that price discovery has already taken place in MMRCA. Now it is a question of finalising details under G2G. And the process is as transparent as it could be. Afterall what is the basis of prices told under FMS. What kind of discovery takes place. It is merely a captive purchase based on prices as told by USA not a competitive prices. Whereas Tender for MMRCA had 18 outright purchase which is now upped to 36 and prices were against other contenders including US whose offerings had failed technical tests.. And key to successful negotiation is to hammer out differences and come to a negotiated price which is acceptable to both the parties. "Ability to Walk away " is a negative approach to any deal negotiation as there could be many points where parties would like to find the middle ground.

FMS prices are fixed price offers (usually driven by massive domestic orders), no doubt about it. Difference is the US DoD and the OEM are independent parties, whereas the French state and its PSUs are closely intertwined. A GtG deal is not directly comparable in both cases.

In any event, what you're saying is one of two things -

1. Either, the costs relayed by the majority of media reports ($7-9bn) incl. Vishnu Som's piece, are exaggerations with the actual cost being far lower. (Austin has a similar stand.)

2. Or, the costs are steep but accurate, and similar to what the French MoD pays for the aircraft.

The MMRCA is not really relevant. Not only were the bids made by Dassault severely deficient but they were drafted around an entirely different set of requirements. The US types that failed the MMRCA trials didn't include the one that's comprehensively beating the Rafale in the current export market.

As far as negotiating tactics are concerned - fact remains that the 'middle ground', such as it is, will shift in the direction of the party with the stronger hand. This is a buyer's market, but by specifying that withdrawal is not an option, that strong hand is completely frittered away.

[member_20453]

For all the good work the Govt. is doing, going forward with the Rafale deal will be the biggest of its blunders. Paying 9 billion for an already cash strapped military is lunacy, for this kind of money we can easily order another 100 Super MKI. A better deal is to order a fresh batch of 50 Super MKI, order today and have them delivered by 2020 and pound for pound the Super MKI will be a better value for money than the Rafale.

[chaanakya]

No I am not saying either of that. Please read carefully. I never said media price or Som's price? Did I. It is tendered prices which forms the basis of negotiations and we don't know what is the final price. What could be the best mode of discovery than the already tendered prices at least better than "fixed prices". You are not the authority to say that bids made by dassault were deficient when their planes passed techs and went on to become L1. As abt failed US planes are not those which are on offer, I am sorry I dodn't get you. You mean we should ask US to offer what was not tested?? Why should we trust US for our mainstay fighter planes? they have lots of ifs and butts, I wouldn't even care to elaborate, so well known they are. France is a reliable partner is Western hemisphere next only to Russia and that is the most important thing beside the tech Cleared rafale.

[chaanakya]

For all the good work the Govt. is doing, going forward with the Rafale deal will be the biggest of its blunders. Paying 9 billion for an already cash strapped military is lunacy, for this kind of money we can easily order another 100 Super MKI. A better deal is to order a fresh batch of 50 Super MKI, order today and have them delivered by 2020 and pound for pound the Super MKI will be a better value for money than the Rafale.

has it occurred to you that rafale may be filling the gap between Light and Heavy combat A/cs. If we need more SU 30 MKI we would be ordering that separately. let them fulfill the existing orders first.

[Austin]

FMS prices are just the price US Government quotes , there is nothing sacrosanct about the numbers there , if they quote say $90 million then we have to believe that number for the word , No difference between French or Russian quoting similar numbers , there is no way to verify even those quoted price.

Real price discovery comes when there is competition between all vendors and the buyer is allowed to pick based on what he wants or does not , that is what MMRCA managed to achieve

[Viv S]

No I am not saying either of that. Please read carefully. I never said media price or Som's price? Did I. It is tendered prices which forms the basis of negotiations and we don't know what is the final price. What could be the best mode of discovery than the already tendered prices at least better than "fixed prices". You are not the authority to say that bids made by dassault were deficient when their planes passed techs and went on to become L1.

That the previously tendered prices were both incomplete, was reported by multiple sources and cited as one of the main reasons why the MoD was looking to scrap the whole program. Plus they were intended for a licensed production format not for off-the-shelf purchases without ToT.

"An inexperienced MoD, working off incomplete and sketchy details provided by Dassault, had incorrectly adjudged the Rafale cheaper. Now, after three years of obtaining clear figures from the French, we find India would be paying significantly more than had been initially calculated," says an official in the CNC. - Link

None of the parties that contested the MMRCA were asked to bid for an off-the-shelf purchase. What is the basis for assuming that the EF offer, for example, wouldn't have been far cheaper if they had the option of delivering it directly? Fact remains, there is no technical or financial reason for proceeding with exclusive negotiations with France. The actual drivers of the deal relate purely to convenience and politics.

As abt failed US planes are not those which are on offer, I am sorry I dodn't get you. You mean we should ask US to offer what was not tested?? Why should we trust US for our mainstay fighter planes? they have lots of ifs and butts, I wouldn't even care to elaborate, so well known they are. France is a reliable partner is Western hemisphere next only to Russia and that is the most important thing beside the tech Cleared rafale.

Which brings us back to square one. Is paying over $200 mil each for a 4.5 gen fighter aircraft an acceptable step, to further our ties with France? Has value for money stopped mattering to us. Especially in light of the conventional balance in the region tipping sharply in China's favour.

[We'd hardly face any greater ifs-and-buts with a US fighter jet than we would with an attack helicopter... like the one we just signed an (avoidable) contract for.]

[member_20453]

For all the good work the Govt. is doing, going forward with the Rafale deal will be the biggest of its blunders. Paying 9 billion for an already cash strapped military is lunacy, for this kind of money we can easily order another 100 Super MKI. A better deal is to order a fresh batch of 50 Super MKI, order today and have them delivered by 2020 and pound for pound the Super MKI will be a better value for money than the Rafale.

has it occurred to you that rafale may be filling the gap between Light and Heavy combat A/cs. If we need more SU 30 MKI we would be ordering that separately. let them fulfill the existing orders first.

Has it occurred to you that 36 aircraft aren't filling any significant gaps, looking at the French Rafale availability rate of 55%, we can with best efforts have around the same or may be a bit more up to 70% availability, at that rate only between 18-26 Rafale are available at any given moment. Now what gaps are such dismal numbers filling that acquiring 50-70 more Super MKI can't fill without breaking the bank, order more MKI now and we can have 50-60 more by 2020, the same can't be had with the Rafale. The MKI can go further out and deploy just as many types of weapons. Best part is with significant efforts, by this year end MKI fleet will have over 75% availability and by end of next year over 80%-90%. Rafale can't match that kind of availability hence such a small fleet is insignificant in the grand scheme of things.

Rafale will end up being a cost center. The aircraft during MLU will cost another 6 billion to upgrade. Spending 14-15 billion for 36 aircraft over a lifetime is stupidity of the highest order.

[chaanakya]

MoD wasn't even looking for scrapping the MMRCA as you seem to imply , quoting dubious and unnamed sources and reports. As a matter of fact IAF is still very keen to lay its hands on Rafale, hence the statement that there is no plan B MoD can hardly ignore it. As for off the Shelf purchase, you conveniently overlook the fact that MMRCA included 18 off the shelf planes. so you are patently wrong when you say that "None of the parties that contested the MMRCA were asked to bid for an off-the-shelf purchase."

And yes politics is important part of any deal. US should better learn it before it hopes for big ticket deals rather than be satisfied with tidbits like transport planes or helis. Their unreliability is legendary.

You are comparing apples and oranges while talking of helicopters and planes.

[Viv S]

FMS prices are just the price US Government quotes , there is nothing sacrosanct about the numbers there , if they quote say $90 million then we have to believe that number for the word , No difference between French or Russian quoting similar numbers , there is no way to verify even those quoted price.

Real price discovery comes when there is competition between all vendors and the buyer is allowed to pick based on what he wants or does not , that is what MMRCA managed to achieve

The advantage of an FMS deal is the ability to piggyback on large US orders. In the French or Russian contexts, there isn't a very substantial difference between negotiating with the company or negotiating with the state.

The MMRCA was a complete failure because price discovery took place only at the penultimate stage. In the current deal, even that is lacking since prices have been solicited from one vendor.

[chaanakya]

Has it occurred to you that 36 aircraft aren't filling any significant gaps, looking at the French Rafale availability rate of 55%, we can with best efforts have around the same or may be a bit more up to 70% availability, at that rate only between 18-26 Rafale are available at any given moment. Now what gaps are such dismal numbers filling that acquiring 50-70 more Super MKI can't fill without breaking the bank, order more MKI now and we can have 50-60 more by 2020, the same can't be had with the Rafale. The MKI can go further out and deploy just as many types of weapons. Best part is with significant efforts, by this year end MKI fleet will have over 75% availability and by end of next year over 80%-90%. Rafale can't match that kind of availability hence such a small fleet is insignificant in the grand scheme of things.

Rafale will end up being a cost center. The aircraft during MLU will cost another 6 billion to upgrade. Spending 14-15 billion for 36 aircraft over a lifetime is stupidity of the highest order.

No that did not occur to me. I thought Modi and his team would have best interest in mind. But then they would have told you the whole plan.... you know... Grand Scheme of things.... It is called having alternatives, a reliable one. How many Mirage 2K did we operate and what roles did they play? BTW you are assuming that it is 36 and we will stop at that.

[Viv S]

MoD wasn't even looking for scrapping the MMRCA as you seem to imply , quoting dubious and unnamed sources and reports. As a matter of fact IAF is still very keen to lay its hands on Rafale, hence the statement that there is no plan B MoD can hardly ignore it. As for off the Shelf purchase, you conveniently overlook the fact that MMRCA included 18 off the shelf planes. so you are patently wrong when you say that "None of the parties that contested the MMRCA were asked to bid for an off-the-shelf purchase."

The 'dubious reports' are backed up by the the Defence Minister's public statements at the time. “The Su-30MKI is an adequate aircraft for meeting the air force’s needs,” - Manohar Parrikar.

And IAF's 'no plan B' remarks were to prevent the MMRCA negotiations from failing. Which then failed.

As for the second part, the off-the-shelf component of the MMRCA contract was NOT budgeted separately, so I'm afraid you're wrong when you suggest that an extrapolation can be made for the current deal.

And the basic question still remains - how is it wise to pay $7-9 bn for two squadrons of a 4.5 gen fighter?

And yes politics is important part of any deal. US should better learn it before it hopes for big ticket deals rather than be satisfied with tidbits like transport planes or helis. Their unreliability is legendary.

You are comparing apples and oranges while talking of helicopters and planes.

Kindly elaborate. What makes a fighter jet susceptible to 'ifs-and-buts', and an attack helicopter immune to the same?

BTW I doubt the US is too displeased with its 'tidbits' (40% of all Indian defence imports between 2011-2014).

How America Replaced Russia As India’s Largest Arms Supplier - Swarajya Magazine

[Austin]

The advantage of an FMS deal is the ability to piggyback on large US orders. In the French or Russian contexts, there isn't a very substantial difference between negotiating with the company or negotiating with the state.

The MMRCA was a complete failure because price discovery took place only at the penultimate stage. In the current deal, even that is lacking since prices have been solicited from one vendor.

US companies operate on basis of Fat Profit since its all are privately owned and the initial cost of R&D/Development is also very high in US.

So the whole notion that some how FMS would deliver things cheap because US has a bigger order is just a false notion , They might well make much bigger profit for large orders , After all Bottom Line is what drives all Corporate Players , Larger the profit better it is for them.

The real price discovery among others comes with competition that MMRCA brought on the table and if Rafale wins on basis of real competition that IAF carried with other 4-5 players then its good for them.

[member_20453]

No that did not occur to me. I thought Modi and his team would have best interest in mind. But then they would have told you the whole plan.... you know... Grand Scheme of things.... It is called having alternatives, a reliable one. How many Mirage 2K did we operate and what roles did they play? BTW you are assuming that it is 36 and we will stop at that.[/quote]

How reliable is this alternative really, at the first sign of little pressure the Mistral had to be cancelled, France is still a US puppet which have no strategic power, its a bull dog with its balls squarely in US hands. The whole MRCA farce was partly due to French lies on the cost, TOT and pretty much everything they promised. The Scorpene deal also shows exactly how problematic executing deals with the French is, one can expect significant cost rises, cock and bull stories & excuses when it comes to TOT etc etc.

In such a case tis better to buy American or Russian than French. No one here is saying the Rafale is a bad aircraft but in the end having the Rafale at such preposterous costs is not worth it. As for buying more than 36, let's wait till this 36 aircraft deal is signed let alone more, where will the money come from for more.

[brar_w]

US companies operate on basis of Fat Profit since its all are privately owned and the initial cost of R&D/Development is also very high in US.

That is clearly not true when comparing with most western counterparts on comparable programs be it in commercial aviation or military and aerospace. They are largely comparable. For some things R&D is cheaper in the US given the larger R&D investment of the pentagon as systems leaverage other mature programs and need not design every thing from scratch.

The problem comes when you start looking at individual programs that are not at all comparable such as fighter jets where the US is doing something totally different form other western countries. There is no direct comparable program in Europe to the F-22 and F-35 efforts. Its hard to pin point what an F-22 that went into production in 1997 for example "SHOULD" cost given the capabilities it offered. There is simply nothing available for an apple's to apple's comparison. Similarly we have little to compare to the F-35, there is nothing out there in the medium class stealth fighter category, but even if one were to step back and compare it to much mature and older programs it starts to get competitive towards the end of this decade and would in fact be more cost-effective towards the start of the next decade.

For older generation aviation programs the US has produced some extremely price-competitive aircraft when you factor in procurement and O&S cost. The only reason NATO nations can afford modern fighter fleets is because they have a low-cost F-16 that has been upgraded routinely. Here it was cheaper to any western equivalent and offered other attributes that helped defense budgets through a high MA rate and low operational cost to achieve that high MA rate. Another older program launched in the 90's is the Super Hornet that has consistently come in lower each batch to any of the Euro Canards (including the Gripen that uses one of its engines and is much lighter and smaller) coming anywhere from $50-60 Million in procurement year dollars to something like $70 million per jet (APUC including everything) taking the price to 2000+ dollars.

Other programs have obviously cost more but they were supposed to given what they were looking achieve as far as capability is concerned (such as F22 that IOC'd a decade ago) and did not have comparable programs in other nations at that time.

So the whole notion that some how FMS would deliver things cheap because US has a bigger order is just a false notion , They might well make much bigger profit for large orders , After all Bottom Line is what drives all Corporate Players , Larger the profit better it is for them.

Profits on the hardware for the FMS deal are capped by the Pentagon profit margin since its the Pentagon that places the order and that itself audits each and every program through both the PEO and the independent GAO. The industry profit-margins in general are significantly lower (by something like 30-40%) compared to other industries operating in the US and are constantly monitored by the Pentagon in order to both retain capacity to execute large scale high-tech military development and industrial projects, and to keep a healthy supply base and workforce that is a strategic asset to the nation. In fact the last two Secretary's of defense have failed to get significant involvement of the Silicon valley into competing for systems for the pentagon largely because the profit margins offered to defense and aerospace giants are not attractive enough.

The training services are mostly provided for by the Pentagon and the contracts for them are distributed to a mix of military and industry suppliers that chip in. The only way for the OEM's to charge a higher profit for a military hardware (or a lower one for that matter has has been done in the past by offering systems to protect strategic production lines for example) is to go through a completely commercial route. Even the long term support contracts are largely similar other than any special end user needs that may need to be accommodated. The only thing different for an FMS deal is the 2.5% administrative charge that is added on top of the contract, plus any commercial deal with the vendor to build capacity and capability to operate the purchased hardware such as building infrastructure etc.

Every time you need to provide and meet offset requirements you incur extra cost which must be accounted for and that gets reflected as an add on. Usually the extra cost is well worth it for the customer since local industry gets a boost in investment that would have otherwise required funding form other sources. Same will apply to Dassault, even if this is a G2G deal (largely similar to an FMS) the cost of the deal or just the hardware portion alone would reflect the 50% investment by Dassault and partners into offsets.

[Viv S]

US companies operate on basis of Fat Profit since its all are privately owned and the initial cost of R&D/Development is also very high in US.

So the whole notion that some how FMS would deliver things cheap because US has a bigger order is just a false notion , They might well make much bigger profit for large orders , After all Bottom Line is what drives all Corporate Players , Larger the profit better it is for them.

Yes, that's how capitalism works. Except that US DoD usually negotiates with two or more OEMs before awarding a contract. That negotiation is what an export customer piggybacks on, by paying their middle man a 3% commission.

And the part about lowering costs through improved scale isn't a 'false notion', its plain proven economics. That's how the F-16 outsold the Mirage 2000, how the AH-1 & AH-64 outsold the Tiger & A129, and how the F-35 is massively outselling the Rafale & EF.

The real price discovery among others comes with competition that MMRCA brought on the table and if Rafale wins on basis of real competition that IAF carried with other 4-5 players then its good for them.

Prices were solicited from only two players for licensed production. As for the current deal i.e. off-the-shelf delivery, only one vendor has been approached. Zero competition.

Which is the only reason why the Rafale with a unit cost ranging upwards of $200 mil (!) has a genuine shot of making it to IAF service.

[member_20453]

If G2G was the way forward, NaMo should have re-opened the competition vs EF for the G2G deal, we would have better terms & prices. During the whole MRCA farce we also found out Rafale wasn't L-1 either. Allowing EF back in the race would have forced the competing parties to play ball and the better deal would win.

[Karan M]

>>>If G2G was the way forward, NaMo should have re-opened the competition vs EF for the G2G deal,

wasnt worth it per reports since EF was far more expensive than the Rafale.

[chaanakya]

How reliable is this alternative really, at the first sign of little pressure the Mistral had to be cancelled, France is still a US puppet which have no strategic power, its a bull dog with its balls squarely in US hands. The whole MRCA farce was partly due to French lies on the cost, TOT and pretty much everything they promised. The Scorpene deal also shows exactly how problematic executing deals with the French is, one can expect significant cost rises, cock and bull stories & excuses when it comes to TOT etc etc.

In such a case tis better to buy American or Russian than French. No one here is saying the Rafale is a bad aircraft but in the end having the Rafale at such preposterous costs is not worth it. As for buying more than 36, let's wait till this 36 aircraft deal is signed let alone more, where will the money come from for more.

Apparently US pressure is not working on France in case of Rafale where they are also a competitor. Actually I like french story better than USA's white lies since Tarapur days. You still hadn't answered how many Mirage we operated?? As for the cost of Rafale, I am sure it would be worth it considering all things said/unsaid together.And for money, don't worry. It is not going to go out in one tranche. we will manage.

And I am happy that you acknowledged that Rafale is not bad. We suspected it all along after having tested it side by side with what others including Ruski and Unkil had on offer ( not something which would be developed and offered).

Still I would not go for more than 36 and will see what happens to other initiatives PAK-FA AMCA FGFA...... Indigenous (even collaborative) is better than outright purchase. meanwhile we should be asking for LCA MK-XX in huge numbers and develop our own engines and critical components. that is the way to go.

[chaanakya]

If G2G was the way forward, NaMo should have re-opened the competition vs EF for the G2G deal, we would have better terms & prices. During the whole MRCA farce we also found out Rafale wasn't L-1 either. Allowing EF back in the race would have forced the competing parties to play ball and the better deal would win.

Yes, that could have been ideal if we had to deal with one country and make political and economic commitment. EF is good and it was shortlisted but perhaps not on price and political front.
Actually we should see fighter deal as F2F deal.

[chaanakya]

The 'dubious reports' are backed up by the the Defence Minister's public statements at the time. “The Su-30MKI is an adequate aircraft for meeting the air force’s needs,” - Manohar Parrikar.

And IAF's 'no plan B' remarks were to prevent the MMRCA negotiations from failing. Which then failed.

As for the second part, the off-the-shelf component of the MMRCA contract was NOT budgeted separately, so I'm afraid you're wrong when you suggest that an extrapolation can be made for the current deal.

And the basic question still remains - how is it wise to pay $7-9 bn for two squadrons of a 4.5 gen fighter?

And yes politics is important part of any deal. US should better learn it before it hopes for big ticket deals rather than be satisfied with tidbits like transport planes or helis. Their unreliability is legendary.

You are comparing apples and oranges while talking of helicopters and planes.

Kindly elaborate. What makes a fighter jet susceptible to 'ifs-and-buts', and an attack helicopter immune to the same?

BTW I doubt the US is too displeased with its 'tidbits' (40% of all Indian defence imports between 2011-2014).

How America Replaced Russia As India’s Largest Arms Supplier - Swarajya Magazine

Bhai, you have to understand Parikkar. he is a politician also. And SU30MKI is not being considered. That we can order anytime we feel like. How can he diss the A/cs we operate. And just because a report quotes him on SU 30 MKI , it does not gain credibility.The question is did he diss Rafale or did he say that price is way too high for us? If not the article would be lifafabazi.

No Plan B remark got rafale for IAF and I think it was quite effective even though many of us ( incl I) did not fell happy. It forced the issue with MoD. I think there was a compromise of sort. You get 36 rafale in fly away condition and order LCAs without your middle finger of FOC.

Apparently , off the self part pricing can not be higher than the total deal or has to remain within reasonable limit. that's how it would work. MoD people in the Team knows what they are doing.

Are you sure that it is 9 bn or so?? I have not seen any official release on that. What if it is the entire LCC of rafale till EOL. I don't even know what is the price negotiating teams have arrived at before commenting on whether it is worth it. It also depends if we can afford it. I am sure we can.

Well if you are comparing helis and fighter planes than what argument we can have than simply to say that US is unreliable in this field. We will tread ever with caution.

Actually India has not made many defense purchases of late else this 40% would have come down drastically. All big ticket items have gone to elsewhere. Most of them are "force augmentation components" and not the "force" itself. US should be happy that they are able to open Indian defence market despite their proclivities to pay zaziya to pakistan some $30bn as per reports here. Russia is in large part to be blamed for this. had they not had issues with supplies and maintenance, pricing spares and what not this might not have happened. But than I understand that we have been sourcing several components from western countries even when we were getting their planes, ships and tanks.

I think US should offer planes to India free of cost as part of their counter balancing the supplies to their eternal friend.

[member_20453]

>>>If G2G was the way forward, NaMo should have re-opened the competition vs EF for the G2G deal,

wasnt worth it per reports since EF was far more expensive than the Rafale.

Perhaps, but in a competitive deal, the EF consortium would have easily put enough price and terms pressure. Keep in mind even during MRCA they did offer a large discount when the Rafale was turning out to be far more expensive than they claimed.

[member_25400]

. Afterall what is the basis of prices told under FMS. It is merely a captive purchase based on prices as told by USA not a competitive prices. .

Chaanakya, US FMS process and details are available on the web. For example: http://lmdefense.com/foreign-military-sales/fms-vs-dcs/

FMS is govt to govt and hence the US Govt purchases on behalf of India and adds 3.5% administrative fee. Contract is also negotiated between US govt and OEM; since US Govt typically purchases stuff from the OEM, price discovery has already happened. The exception is when US government purchases are done with and plants are shut down (M777). US Govt won't negotiate offset etc; this must be separately negotiated by company and foreign govt.

FMS process is transparent. The production may typically happen in the US (similar to other US contracts); one may think that this is expensive, but fact of the matter is that production in India is often *more* expensive than production abroad, where a sophisticated manufacturing base and supply chain exists, and the company is able to piggyback larger volumes.

The same is certainly the case in Rafale, where ultimately HAL estimated that the effort to make one plane would be 3 times the effort by Rafale in France. Since France is not a very large exporter, and french govt and oem are not independent parties, the process is not clean and transparent there. The issue reported was that rafale wanted to use the price discovered on basis of HAL costs for the new 36, even though these will be built completely in France and thus presumably cheaper (also not providing and manufacturing work to India).. The original intent of MMRCA was that the overall price for 126 including 18 outside India was supposed to work out cheaper; it didn't happen that way.

Thus others on the board are correct, Rafale price is anything but transparent. The only major contract signed by France was many years ago, (with exception of new foreign sales to Qatar, who was watching MMRCA outcome for many years and is a rich country).

To give an idea of volumes, the low rate initial production of F-35 so far is comparable to the entire production run of Rafale (and most other planes); F-35 is expected to decrease in costs with volume introduction...

[vina]

Cross Posting..

.

Guys. In case folks are not able to read between the lines, let me put this out here in open, especially the "sensitive" one.

1. The Rafale requirement is NOT tactical. The Rafale is meant primarily for nuke strike role with air dropped /cruise missile equipped nukes.

2. That is the Air Force trying to remain relevant/retain a nuke strike role. Sorry, that is so mid 20th century and is not required anymore.

3. The nukes are going to be on IN subs and there will be land based component. That is the crux of it. The land based thing is probably going to be with the Army if the Prithvi stuff is any experiene.

4. The IAF is Nook Nood (or will be soon) after the Mirage 2K. That is the cold fact. And it doesn't like it.

Now remove the IAF's long-schlong measuring contests with the Navy and Army and recognise that the the IAF really has NO strategic strike role (oops, that must hurt for every airforce anywhere always pride itself as the long arm that can strike deep and hard into the enemy and historically had the strategic role, but that is what technology has done) and evaluate the IAF's role in the cold reality of it being a tactical force that will be focused on air dominance/ superiority and tactical strike and battlefield close air support (there too, it is getting squeezed by the army's air wings), then somethings stand out VERY clearly.

a. The Rafale is NOT needed. It is too expensive and really doesn't bring much to the table in a purely tactical role
b. The SU-30 and the LCA together serve our tactical strike needs (both longer range and short range) much better
c. Same is true with air superiority and battle field CAS, where the Rafale will be too few in numbers and also doesnt bring anything to the table the other two don't do to justify that acquisition.

Yes, Karnad and others are right. The Rafale /MMRCA is NOT needed. What you need are updated SU-30s and rolling out 250 LCAs in Mk1, MK1A (the MK1 will get upgraded into MK1A eventually) and Mk2.

The IAF frat boys who want long-schlong contests with the Army and Navy can go jump.

Yeah. If the HAL manages to take 200Kg off the landing gear, thanks to the design spiral which I wrote about earlier, the overall weight reduction will be much higher than 200Kg. For e.g., the 200Kg of the landing gear is behind the CG, so depending on the lever arm's length from the CG, you probably are looking at taking around 50 to 100kg off the ballast in the nose! . So your weight reduction is actually 250Kg. Now, that will probably go through another round of optimisation (your empty weight is no 250kg less) and you probably shave off another 20kg off the landing and 10kg of ballast (say), and you get something like 300Kg off! And if you put in OBOGs and take out heavy oxygen air tanks or whatever they are using the MK1, you probably are looking at more gains in the empty weight . Sure take off the remaining ballast and put in the AESA and you are done.

[Austin]

You buy from DCS or FMS or Dassault or Sukhoi , Large production numbers translate to larger profit for these companies not lower cost.

Companies are there to make profit and not reduce its margin , They invest a lot into R&D , Manufacturing and building Supply Chains etc and initially no compaies makes profit depending on how much they have invested into.

They will just translate the large production number into higher profit and skim the cream.

IF larger production number translated to lower cost then F-16 after thousands of production numbers would be available at much lower cost like $30 million and not $60 and C-17 wouldnt cost us $4-5 billion for the large orders churned out earlier.

Its just marketing talk and fallacy that companies specially those private ones who love to loose their profit in order to lower cost , does not happen in real world

[member_22539]

^Then why are Khanate products cheaper than equivalent european ones?

Profit can come out of margins or volume, everyone knows that. Are you saying that MIC don't care to reduce margins if volumes makes up for that and allows them to win contracts?

[member_22539]

Tyagi’s kin took €1.05 million: ED

http://www.thehindu.com/news/national/a ... 712885.ece

One wonders how much the MMRCA was supposed to bring in. With leaders like these, is the IAF truly blameless?

Disclaimer: I am very much aware of the forest of heroes in the IAF and in no way disrespect it.

[Viv S]

Bhai, you have to understand Parikkar. he is a politician also. And SU30MKI is not being considered. That we can order anytime we feel like. How can he diss the A/cs we operate. And just because a report quotes him on SU 30 MKI , it does not gain credibility.The question is did he diss Rafale or did he say that price is way too high for us? If not the article would be lifafabazi.

His comments about the Su-30MKI were not in isolation. He was recommending it as an 'adequate' replacement for the Rafale during his meeting with the press.

Others present at that same press conference said the same thing -

Parikkar recently hinted that the deal for Rafale medium multi-role combat aircraft (MMRCA), under negotiation with Dassault since 2012, might be scrapped. He further said that additional Sukhoi-30 MKI fighters, built by Hindustan Aeronautics (HAL) at its Nashik plant, could substitute for them. - Link

Indian Defence Minister Manohar Parrikar reiterated on 12 January that upgrading Sukhoi Su-30MKI fighters with electronic warfare (EW) suites would make the platform a viable alternative to buying 126 Dassault Rafale for the stalled Medium Multirole Combat Aircraft (MMRCA) requirement.

"The Su-30 choice is always there. Upgrade the Su-30 to make it more capable by equipping it with state-of-the-art EW systems" Parrikar told the Headlines Today television news channel. - Link

No Plan B remark got rafale for IAF and I think it was quite effective even though many of us ( incl I) did not fell happy. It forced the issue with MoD. I think there was a compromise of sort. You get 36 rafale in fly away condition and order LCAs without your middle finger of FOC.

Apparently , off the self part pricing can not be higher than the total deal or has to remain within reasonable limit. that's how it would work. MoD people in the Team knows what they are doing.

Like I said, the 'no plan B' remarks were made when the MoD was strongly considering a cancellation. I strongly suspect the 'compromise' solution was driven by the PMO, not by the MoD or IAF.
And unfortunately the end result, if it goes through, will be to saddle the service with the logistical burden of an extra type but without the numbers to make an appreciable difference.

Also, all public information on the matter suggests that the French quoted a single price for the entire MMRCA package. Of course if they had said that "these first 18 are for $X each and the next 36 for $Y/unit and the final 72 for $Z/unit, with ToT & licensing expenses quoted separately", then yes we might have been able to use the first figure as a benchmark for the current acquisition.

Unfortunately, that is not a viable option - not least because the maintenance/support/training costs are spread across the fleet in the first case. Plus there's no local production element in the present one.

Are you sure that it is 9 bn or so?? I have not seen any official release on that. What if it is the entire LCC of rafale till EOL. I don't even know what is the price negotiating teams have arrived at before commenting on whether it is worth it. It also depends if we can afford it. I am sure we can.

I'm not sure its $9bn exactly. But practically all reports put the price in excess of $7bn ($200M+), which is still very steep.

There's no way this figure refers to the LCC - even a modest CPFH ($20K/hr) would put the cost of operations over its lifetime (7000 hrs) at $150M! Which means the cost of acquisition is just $50M. Which you'd agree is absurdly low.

With regard to affordability - the term doesn't, or at least shouldn't refer to just the ability to come up the funds. If it doesn't deliver adequate value-for-money, a deal needs to jettisoned. Keep in mind the Chinese are spending $150bn on their military, and their defence industry is rapidly making its way up the value chain.

Well if you are comparing helis and fighter planes than what argument we can have than simply to say that US is unreliable in this field. We will tread ever with caution.

Attack helicopters and fighter jets.

The AH-64 is a lethal radar-equipped, full FBW aircraft, that has far more in common with a fighter jet than it does with a transporter like the Chinook. It'll provide better direct support to IA operations than any fixed-wing aircraft. Even at air-to-air combat it'll arguably be more lethal than say.. the MiG-27.

Now if you believe that the GoI's decision to sign the Apache contract was a mistake, then that's fine. (I hold that opinion, though not because of its origins.) But there's absolutely no reason why such an aircraft should be on-the-table while a fighter jet remains strictly off-the-table.

Actually India has not made many defense purchases of late else this 40% would have come down drastically. All big ticket items have gone to elsewhere. Most of them are "force augmentation components" and not the "force" itself. US should be happy that they are able to open Indian defence market despite their proclivities to pay zaziya to pakistan some $30bn as per reports here. Russia is in large part to be blamed for this. had they not had issues with supplies and maintenance, pricing spares and what not this might not have happened. But than I understand that we have been sourcing several components from western countries even when we were getting their planes, ships and tanks.

I think US should offer planes to India free of cost as part of their counter balancing the supplies to their eternal friend.

Between this helicopter deal, the upcoming S70 & M777 purchases and follow-on options to previously signed contracts, the US will probably retain its position as our largest arms supplier (the French will likely score big with the A330).

To the other part - our country isn't for rent. When the US completes its withdrawal from the Af-Pak, their rent payments go with them, which is why the Paks have begun running to Russia & China looking for a replacement benefactor.

[Karan M]

Tyagi’s kin took €1.05 million: ED

http://www.thehindu.com/news/national/a ... 712885.ece

One wonders how much the MMRCA was supposed to bring in. With leaders like these, is the IAF truly blameless?

Disclaimer: I am very much aware of the forest of heroes in the IAF and in no way disrespect it.

Not to forget:
Another interesting factoid. The gents involved in this august venture included Gurmeet Kanwal, father of journalist Rahul Kanwal.
http://www.dnaindia.com/india/report-dn ... ts-1799803

IIRC he had the distinction of working for the Israelis as a consultant after the LRSAM was chosen to supplant the Akash as well.

[Viv S]

Guys. In case folks are not able to read between the lines, let me put this out here in open, especially the "sensitive" one.

1. The Rafale requirement is NOT tactical. The Rafale is meant primarily for nuke strike role with air dropped /cruise missile equipped nukes.

2. That is the Air Force trying to remain relevant/retain a nuke strike role. Sorry, that is so mid 20th century and is not required anymore.

Even if the Air Force wanted to retain its nuclear strike role, there's no reason why the Su-30MKI can't be equipped with cruise missile with a nuclear payload. Air-launched BrahMos or Nirbhay. Or a powered variant of the glide bombs currently in development.