The UPA did not reveal the price quoted by Dassault Aviation in 2011 due to which the French warplane maker made it as L-1 or lowest bidder in January 2012. The deal was subsequently logjammed for over two years because the Ministry of Defence (MoD) and Dassault Aviation could not decide on who would take responsibility for the 108 Rafales that would be manufactured under licence in India-HAL or Dassault.
The mammoth price tag possibly also induced a certain amount of purchase anxiety. When the Cabinet Committee on Security (CCS) had approved the deal in 2007, the MoD envisaged an outgo of $10 billion (Rs 39,000 crore) for the 126 aircraft. This figure was clearly unrealistic as the contract progressed.
Defence analyst Nitin Gokhale's book Securing India the Modi Way mentions that the MoD had, in 2011, benchmarked the total cost of acquisition at Rs 163,403 crore (approximately 23 billion the MoD's entire defence budget for that year).
Going by this figure, the 126 Rafales would have a flyaway cost of Rs 1,296 crore per aircraft. But this total cost of acquisition, as Gokhale adds, was different from the total cost of deliverables in the 126 MMRCA contract, which was benchmarked by the MoD at Rs 69,456 crore, excluding the offset loading cost, estimated to be anywhere between Rs 2,530 crore and Rs 5,060 crore.
The HAL-MoD-Dassault impasse continued even as the NDA assumed office in 2014. In 2015, the government decided to scrap the deal and go for a fresh government-to-government or G2G deal, opting for a smaller number of aircraft because of budgetary reasons. We asked the IAF what was the minimum number of Rafales they needed to meet their combat requirement; 36 is the number they came back to us with, says a senior government official. The Modi government went in for a G2G deal as an emergency procurement. G2G deals are inherently favoured for a variety of reasons because they shorten procurement cycles and cement strategic partnerships. The NDA-1 government signed the massive Su-30MKI deal to import and licence-produce 140 Su-30MKIs from Russia for Rs 22,000 crore in 2000. The UPA signed G2G deals worth over $10 billion with the US for maritime patrol aircraft and heavy lift aircraft between 2006 and 2012.
Off-the-record briefings by the MoD soon after the contract for 36 Rafales was inked in 2016 indicated that a price of 7.8 billion (Rs 59,000 crore) was agreed upon for the 36 aircraft5 billion for the aircraft and 2.85 billion for its weapons and certain India-specific enhancements.