Rafale MMRCA Deal: Last Minute Glitches?

By on Friday, August 31st, 2012

Media reports recently surfaced stating that the Indian Air Force’s (IAF’s) Medium Multi-Role Combat Aircraft (MMRCA) deal, which had zeroed in on the French Dassault Rafale as the fighter of choice leading to commencement of exclusive negotiations with Dassault for finalizing the contract, is far from final.

These reports have been attributed to parties that do have a poker in the fire: Germany, which backed the Eurofighter Typhoon; and, Russia whose MiG-35 was also in the competition. German sources claim that there have been discussions between German and Indian officials on the issue and a re-worked offer for the Eurofighter Typhoon may be in the process of being finalized. For their part, Russian sources have claimed that there is strong likelihood of the tender for the MMRCA being re-floated by the Indian Government.1

Possible European Compulsions
The majority of European economies continue to be in trouble, with Spain following Greece into financial grief. Italy meanwhile remains on the brink of collapse. The healthier economies of the Eurozone, France and Germany, are hard pressed to support the weaker economies recover their health. While these two economies are healthier, they are by no means anywhere near the robustness of their heyday. In this context, the $10 billion MMRCA contract is indeed a juicy prize. As noted in an earlier commentary about the Rafale on this website, the final contract value with all options exercised could go up to $ 20 billion. European defence industries facing a slowdown in domestic orders due to economic and financial woes could be expected to do their utmost to win this Indian contract by any means possible as it could be the lifeline that ensures their survival.

IAF’s MMRCA Selection Process
The IAF put the six contenders through a very rigorous evaluation process and assessing them against over 600 specific parameters. It is reasonably certain that the IAF’s final selection of the Rafale and Typhoon from among the MiG-35, Gripen, F-16IN “Viper”, F-18E/F “Super Hornet”, Typhoon and Rafale is technically very sound and that the aircraft that best meets the IAF’s current and future operational requirements has been selected. Earlier disappointment expressed by the United States on the rejection of their F-16 and F-18 fighters from the competition was dealt with firmly by the Indian Government. This was despite US attempts to link the selection of an American aircraft with a possible wider strategic partnership and transfer of other advanced technology to India.

Thus far, the Government of India (GoI) and IAF have been very firm on carrying out a transparent and technically correct selection of the aircraft best suited to the MMRCA requirement, which is exactly as it should be. IAF faces a multitude of challenges in the current security scenario and requires the induction of capabilities suited to effectively meeting these challenges. The Rafale deal is especially important as it is IAF’s best bet to stem and even reverse the recent and continuous fall in the combat aircraft squadrons fielded; these have reportedly fallen from a high of 39.5 Squadrons to about 32 Squadrons at present.3

Urgency of Induction
Delays in the Rafale program are not in the IAF’s or the nation’s interest. Hence, it is hoped that the Ministry of Defence (MoD), IAF and GoI will continue to maintain that the negotiations are on track, and attempt to close the deal at an early date to facilitate early induction of the new aircraft.

The French are likely to negotiate hard to maximize their benefits. While, based upon information available in the public domain, it is not possible to comment on the veracity of the recent German and Russian statements on the subject, there should be similar pressure on the French negotiators to successfully close the deal given the European economic situation. In addition, the fact that the Rafale has yet to find a non-French customer should be leveraged by Indian negotiators to push for an early closure on favorable terms. The payoffs to the French of a hotly contested and purely technical merits-based selection of the Rafale over other comparable aircraft could be a useful point in negotiations as this selection, followed by a sale to India, could open the floodgates for Rafale exports to other countries, giving France considerable medium and long term benefits.

Importance of an Early Closure of the Deal
It is imperative that the IAF, MoD, and GoI stand united in staying clear of the canards being spread by interested parties to sabotage the Rafale deal for their own financial benefit. Today the Rafale is important for IAF and the nation and anything that delays the induction of the MMRCA would go against the National Interest. IAF’s falling squadron strength must be arrested at the earliest and with the LCA still at Initial Operational Clearance (IOC) stage and yet to achieve Final Operational Clearance (FOC), the Rafale is the best bet for this.

In any event, even with the LCA at FOC capability would not have capabilities offered by the Rafale. By design, LCA was to form the light and lower end of the IAF fighter mix, with MMRCA filling the Medium slot, and the Su-30MKI filling the heavy slot. One illustrative parameter of comparison in this regard is that while Rafale will field an Active Electronically Scanned Antenna (AESA) Radar, the LCA will in all likelihood come at least initially with a mechanically scanned radar which too is not ready as of now. So the Rafale is very important for IAF at the current time and all attention must be focused on an early finalization of the commercial contract.

It should be kept in mind that building of the first aircraft against the India order would commence only after the contract is inked and delays in the latter would delay the delivery of the first aircraft accordingly.

Also delayed at the same time would be the establishment of the assembly line in India for building the license production batch of aircraft. Indian negotiators must push for manufacture of all components and sub-components of the Rafale in India. This is important because the import of any sub-components or components would not only entail delay but also introduce possible political and sanction pressure points etc. The current time is the most suited for India since power in the current global economic situation lies with the buyer. Economies of scale and higher cost of making small batches of such components or sub-components could be an argument for opting for import of these. Here, it should be kept in mind that non-availability of an aircraft for a mission carries a far higher cost that those imposed by lack of economies of scale. IAF must have full control over its technology. This can be achieved only through complete manufacture of its equipment within India.

Conclusion
The IAF today faces a depleted number of fighter squadrons. Its plans to stem the fall in numbers hinge to a large extent on the timely induction of Rafale even as the LCA slowly progresses towards FOC. The GoI, MoD and IAF must press ahead towards an early closure of the contract so that aircraft are inducted at an early date.

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