Let me give a scenario:
Tejas developmental cost is 10000 crore. The fixed cost of production is 10000 crore. The marginal cost of production is Rs 100 crore per plane from production till handing over. Now, let us take 2 scenario: 1) order of 50planes 2) Order of 500planes.
In 1st case, the cost of each plane comes out to be 500 crore but total cost is 25000 crore while in second case, the cost of each plane comes out as 140 crore but the total cost is 70000 crore.
Now, question:
How is 70000 crore less than 25000 crore? The per plane cost may be low but the overall cost is still high.
You answered your question yourself the per unit cost has decreased that's what is desired finally.
70000 is not less than 25000 but like you said you got more number of planes.
Have you ever done budgeting or procurement? When we are planning to buy a product we go for the best price based on the numbers we want.
In your scenario the development cost got distributed and that is the motive behind buying in huge numbers.
Same principle is applied with the mass production concept you order large the cost further decreases.
If you order say 50 Planes your scenario one the vendor is gonna charge you more for each assembly or part whereas if you have 500 planes on order you have the advantage on your side to bring them the cost of each part.
Try ordering in large quantities or visit a manufacturing plant you will understand.
When the whole point is to develop the best possible technology at minimal cost and then manufacture the best possible plane, what is the point of prematurely making large number of planes even before the technology is fully developed?
Technology is a ever growing process that is why Block wise manufacturing came into existence. One will never be satisfied with what is in hand a always be demanding more hence never ordering.
best possible plane cannot be created in one go even your TDP will not be enough one needs to take feedback from user and over years it helps in improving the aircraft. You cannot have a plane out being used by user and just keep working in your lab to improve it. That's not the way to do manufacturing or even development.
No one is asking for large numbers.
The current order is sufficient for Tejas though even I agree the cost is more than expected say 50 crores more per aircraft.
Instead of 70000 crore being spent for lower quality MK1, isnt it wise to just spend 25000 crore and then further develop technology be feedback into Mk2?
Then what will be the cost of MK2 and also remember time is money? It is not wise and no one is saying order 500 (70000 as per your assumption cost of 500) 40 MK1 is enough MK1A should be increased by 50 and even further till MK2 is ready. You cannot let assembly line stay ideal at any time you loose skill and flow during that time.
Since developmental cost and fixed cost is already acccounted, the MK2 will have only small upgradation cost.
You are wrong here my friend. You might have good knowledge of defense but production I not sure of. Being worked in the aero domain I can assure you no change is a small change and when you talk about cost its hefty.
Just to explain while designing one of the components of an aircraft we changed the clip stabilizer other than the normally used stabilizer that change costed the client a lot more than estimated. why?
Assume the clip stabilizer (old) had the order strength of 1000 and costed 10 per piece.
Now we added another clip stabilizer(New) whose order size was 400.
Now when the vendor was asked for quote the new quotation was
12 per piece for clip stabilizer(old) and 15 per piece for clip stabilizer(new).
rest of the maths can be done by you.
So, by spending the remaining 45000 crore later, it is possible to get higher quality plane in the future.
Mk1A is currently more expensive than Su try buying an aircraft buying more expensive than Rafale.
So let me ask you quality at what price and trust me by them when we are still at 4th Gen aircraft world will be looking at 7th gen aircrafts. You need to draw a line somewhere.
Merely the fact that current 50 planes appear to be costing 500 crore a piece is not a valid excuse to increase production. The overall cost is what matters most.
You are being theoretical here think practically account for all factors hope you will get the answer yourself.