MMRCA : Jet set no ??
When India selected Rafale fighter jets for its Air Force in January 2012, French president Nicolas Sarkozy was thrilled. He had personally lobbied for the medium multi-role combat aircraft and had visited India to pitch for it. For Dassault Aviation, the selection of Rafale was a major victory over five other aircraft makers. Rafale is expected to be the mainstay of India's fighter aircraft fleet for the next 40 years and will replace its MiG fleet. But controversies, differences over cost and the industrial role of state-run Hindustan Aeronautics Ltd have led to a deadlock.
The French aircraft was selected for final negotiations after extensive field trials. However, there is no clarity on when the deal will be signed. A senior defence ministry official told THE WEEK that the main problem was the acquisition process and life-cycle cost of the aircraft. "The cost negotiation is a complicated process, mainly because of numerous negotiations for sub-contracts with a number of Indian firms that are suppliers to HAL, which is the primary licensed production agency for Rafale planes."
As per the deal, Dassault Aviation will supply 18 Rafales in fly-away condition and HAL will then build the remaining 108. Indian firms will manufacture and supply the parts required by HAL to assemble the jet. Dassault's concern was that under India's Request for Proposal (the tender document), the jet was to be assembled at HAL, with Dassault responsible for timely delivery. It is, however, ready to take responsibility for only the first 18.
The defence ministry said Dassault would have to partner with HAL in the execution of the entire project as specified in the original tender. The first jet built at HAL is expected to be rolled out by 2017-2018. Thereafter, HAL will deliver six jets per year, which will go up to 20 per year later. During the cost negotiation, officials said Dassault had also expressed concerns about HAL's capacity to handle such a big contract. The company wanted to rope in private Indian firms like Reliance Industries Ltd, with which Dassault has a joint venture. The defence ministry said it had no issues with Dassault's partnership with Reliance for building components, but insisted "the integration must be done at HAL."
The deal, worth more than $15 billion, was also delayed because two MPs—Yashwant Sinha and M.V. Mysoora Reddy—had written to Defence Minister A.K. Antony against the selection of the French company. While Sinha alleged that the life-cycle cost of the aircraft was too high, Reddy questioned the selection of an aircraft that was never sold outside France. Antony sent both letters to his bureaucrats, who went through all the documents related to the deal. Incidentally, the infamous British middleman Christian Michel's name also surfaced in connection with the deal. The Italian investigations into the AgustaWestland case had found that Michel had allegedly got 30 million of the 51 million euros paid as bribe in Agusta's VVIP helicopter contract. Though he has not been feautured in the Rafale deal, it was found that he had earlier worked as a middlemen for Dassault, too. Joint secretary (air acquisitions) in the defence ministry, Arun Kumar Bal, was sent to Italy to gather further evidence. Bal heads the contract negotiation committee in the Rafale deal.
The deal is crucial, as the Air Force is short of fighter jets. It currently has only 30 to 32 serviceable squadrons. This is well below the IAF's target of 39.5. For Dassault, the deal is crucial for its survival, as the French government has warned that the production of the jet might be stopped if foreign buyers were not found. The French government has already announced a cutback in its orders for Rafale jets from 11 per year to 26 over the next six years. This could jeopardise the entire programme unless Dassault signs the contract.