Indian MMRCA Deal: Rafale Much Cheaper Than Typhoon; Govt Rules Out Review

By on Monday, February 13th, 2012

NEW DELHI: It was the “substantially higher cost” of acquiring and operating the Eurofighter Typhoon that led to its ejection from the almost $20 billion MMRCA (medium multi-role combat aircraft) project to supply 126 fighters to IAF.

“The French Rafale jet, the eventual winner, beat the Typhoon hollow both in terms of life cycle costs and direct acquisition costs. The entire MMRCA project cost would have gone up by around Rs 25,000 crore if Typhoon had been selected over Rafale,” a top defence ministry source said on Thursday.

Given all this, MoD has ruled out the possibility of “any comeback” by Typhoon despite carping by the four nations (UK, Germany, Spain and Italy) backing it, and will begin “exclusive and extensive negotiations” with Rafale-manufacturer Dassault Aviation next week. “The actual contract for the complex project should be ready for inking by September-October,” said a source.

British PM David Cameron may have vowed to “encourage” India to reconsider its decision to go in for Rafale, instead of the EADS-manufactured Typhoon, in the largest “open-tender” military aviation deal going around the globe. But that is highly unlikely to happen.

“The fact is that the cost deferential between Typhoon and Rafale was very high… it would cost India around 22% to 25% more if the former had been selected. No government can agree to so much extra,” the source said.

Both Rafale and Typhoon had been found “compliant” on all the 643-660 technical parameters laid down to meet specific operational requirements of India, after gruelling field trials by IAF test pilots spread over two years.

The other four jets — the American F/A-18 ‘Super Hornet’ and F-16 ‘Super Viper’, the Russian MiG-35 and Swedish Gripen – were weeded out from the hotly-contested race last year since they did not meet all the “test points”.

“We went by the book, first in the extensive technical evaluation and now in the meticulous commercial evaluation, without any external factors coming into play,” said the source.

For one, the “life cycle cost” of operating the Typhoon over a 40-year period, with 6,000 hours of flying, was found to be “higher” than Rafale after extensive calculations of flight costs, spares, maintenance and the like. “The life cycle costs were actually the tool to determine who was L-1 (lowest bidder),” he said.

For another, the difference in the ‘direct acquisition cost’, which will actually be used to ink the contract, was even bigger. “The Typhoon’s commercial bid was way too high. Rafale was the clear L-1 in both life cycle as well as direct acquisition costs,” he added.

Dassault will now have to submit a detailed project report on the transfer of technology (ToT) to Hindustan Aeronautics Ltd (HAL). While the first 18 jets will come in “fly-away condition” from France from mid-2015 onwards, the rest 108 fighters will subsequently be manufactured under licence by HAL over six years.

“We will negotiate each and every element in the complex project with the French. Payments, as also the 50% offsets specified in the contract, will be spread over 11 to 13 years,” he said.

The first jet built in HAL is expected to roll out by 2017-2018. Thereafter, HAL will deliver six jets per year, which will go up to 20 per year later. “HAL will achieve 85% technology absorption by the end. Incidentally, Typhoon’s cost of ToT was also very high,” he said.

This “mother” of all defence deals will later become the “granny”, as reported by TOI earlier, since India will in all probability go in for another 63 fighters after the first 126 jets.

IAF is looking at these 126 new jets, apart from the ongoing progressive induction of 272 Sukhoi-30MKIs contracted from Russia for around $12 billion, to stem its fast-eroding combat edge against Pakistan and China. IAF has already identified Ambala and Jodhpur airbases in the western sector, followed by Hashimara in the eastern sector, to house the first MMRCA squadrons.

India is now finalizing details of the stealth Indo-Russian FGFA (fifth-generation fighter aircraft) to be built in the coming decades. IAF hopes to begin inducting the first lot of the 250 to 300 FGFA from 2020 onwards, which rough calculations show will eventually cost India around $35 billion.

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