India on Friday signed the Euro 7.8 billion (Rs 580,000 crore) deal for 36 Rafale jets with French Defence Minister Jean Yves Le Drian in New Delhi. The new jets which come equipped with latest missiles and weapon system, will give Indian Air Force a cutting edge over arch rival Pakistan.
The deal for the aircraft, the first fighter jet deal in 20 years, was signed by the Defence Minister Manohar Parrikar and Drian.
Also present were the chief executive officers (CEOs) of top French companies, including Dassault Aviation, the makers of Rafale.
The deal comes with a saving of nearly 750 million Euros than the one struck during the previous UPA government, which was scrapped by the Narendra Modi government, besides a 50 per cent offset clause.
Here are some insights into how the Rafale deal unfolded -
Rationale behind the Rafale Deal
• Rafale was not the only contender in Indian Air Force’s bid to revamp its fighter fleet. Several international aviation manufacturers expressed interest upon knowing that the Indian government had a massive plan to revamp its Indian Airforce fleet by introducing MMRCAs.
• Six world-renowned aircraft manufacturers entered the fray and competed hard to bag the contract of 126 fighter jets, which was touted to be the largest-ever defence procurement deal of India.
• The Initial bidders were Lockheed Martin’s F-16s, Boeing’s F/A-18s, Eurofighter Typhoon, Russia’s MiG-35, Sweden’s Saab’s Gripen and Rafale.
• The IAF tested all aircraft and after careful analysis on the bids, two of them — Eurofighter and Rafale — were shortlisted. Dassault finally was awarded the contract to provide 126 fighter jets, as it was the lowest bidder and the aircraft was easy on maintenance.
Rationale behind Actual Procurement Process
• Indian Air Force sought additional fighter jets in 2001 as their fleet largely consists of heavy and light-weight combat aircraft. So the Defence Ministry considered bringing in intermediate medium-weight fighter jets. Though the idea has been around since 2001, the actual process began in 2007.
• The Defence Acquisition Council, headed by then Defence Minister A.K. Antony, approved the Request for Proposal to buy 126 aircraft in August 2007. This kick-started the bidding process.
How many Rafale's is Indian procuring:
• Deal was initially estimated to be worth $10.2 billion (Rs.54, 000 crore).
• The plan included acquiring 126 aircraft, 18 of them in fly-away condition and the rest to be made in India at the Hindustan Aeronautics facility under transfer of technology. So Rafale won the contract.
The Indian side and Dassault started negotiations in 2012. While it is usual for such negotiations to stretch to several months, the Rafale negotiations has been on for almost four years now. The agreement was signed only in January this year. Though the initial plan was to buy 126 jets, India brought it down to 36 fighters so as to have it in ready condition.
Benefits of the Deals:
• Rafale jets are currently operational in only the French, Egyptian and Qatari Airforce. Therefore, Dassault hopes to meet its revenue targets by exporting Rafale jets.
• India was the first country that agreed to buy Rafale, after it was in operation in the Libyan airstrikes. If India inducts these jets in its military fold, other nations could well be potential buyers for the Rafales.
• India chose Dassault over its traditional partner Russia’s MiG. It also overlooked U.S.'s Lockheed, at a time when India and U.S. were aiming for improve military ties.
• Procurement of combat aircraft is long overdue for the Indian Air Force. This deal is India’s biggest-ever procurement. If all goes well with the Rafale deal in terms of transparency and quality norms, it would well set an example for the future of other major defence procurements.