IAF: Jaguar, Mirage 2000
SU-30K, MiG-27, MiG-21BiS
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India’s planned multi-billion dollar, 126+ plane jet fighter buy certainly captured the attention of global fighter manufacturers. Boeing’s Mark Kronenberg, who runs the company’s Asia/Pacific business, put it succinctly: “[India’s M-MRCA program is] the biggest fighter aircraft deal since the early 1990s.”
What began as a lightweight fighter competition to replace India’s shrinking MiG-21 interceptor fleet soon bifurcated into 2 categories now, and 2 expense tiers. What changed? In a word, lots. The participants changed, India’s view of its own needs changed, and costs changed dramatically. With the long-delayed release of the official RFP, the competition began at last – and like all Indian decisions, it takes a very long time.
DID offers an in-depth look at the Medium Multi-Role Combat Aircraft (MMRCA) competition’s changes, the RFP, and the competitors. After a decade-long slog, Dassault’s Rafale appears to be closing in on its 1st export order.
India’s MRCA: Changes
MiG-21 BIS
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The original intent of India’s fighter purchase was to replace hundreds of non-upgraded MiG-21s that India will be forced to retire, with a complementary force of 126 aircraft that would fit between India’s high end Su-30MKIs and its low-end Tejas LCA lightweight fighter. While plans to develop a “fifth generation fighter” in conjunction with Russia have received a lot of press, they are uncertain at best, address a different requirement, and offer no solution to the immediate problem of shrinking squadron numbers as existing aircraft are forced into retirement.
India is a large country, with coverage needs over a wide area (see map of airbases) and on several fronts. One of which is Pakistan, whose JF-17 joint fighter program with China has India’s attention. The IAF currently has 30-32 squadrons worth of serviceable aircraft, depending on which report one reads. This is well below their target of 39 1/2. The number of IAF squadrons still flying MiG-21s of one vintage or another has now dropped to 12, and overall squadron strength is projected to plunge to 27 during the 2012-2017 period.
Lightweight multi-role fighters that could make up for declining aircraft numbers with broader and better capabilities would appear to fit that need, and India’s initial shortlist followed that template. The Mirage 2000 and MiG-29 were already in service with India in this role, and the JAS-39 Gripen offered a 4th generation aircraft whose costs and profile place it firmly in the lightweight fighter category. These aircraft served as a hedge against the potential failure of the Tejas lightweight Combat Aircraft project, and also offered a more immediate solution to plussing up numbers as existing MiG-21s and MiG-23s/MiG-27s were forced into retirement.
Since those early days, sharply improved relations with the USA introduced a pair of American planes into the competition, and India’s view of its own needs is changing. Official sources told Jane’s in February 2006 that RFPs would be issued to France’s Dassault (Mirage 2000-5 and Rafale), BAE/Saab (JAS-39 Gripen), EADS/BAE (Eurofighter Typhoon), The American firms Lockheed (F-16 Block 70) and Boeing (F/A-18 E/F Super Hornet), and Russia’s Rosonboronexport (MiG-29OVT with thrust vectoring, aka. MiG-35).
That proved to be the case, creating a 2-tiered competition that includes both lightweight and medium fighters. This trend got a sharp boost in March 2006, when the Press Trust of India (PTI) reported a surprise pullout of the Mirage 2000, even though India already flies 40 Mirage 2000Ds, and its senior officials have touted standardization as a plus factor. Its place would be taken by the heavier, more advanced, and more expensive Rafale.
India’s changing requirements have also created delays to an already-slow process. For instance, both Jane’s Defence Weekly and Defense Industry Daily have covered India’s wish to ‘significantly’ augment their strike capability and range to deal with out-of-area contingencies. That delayed the MRCA RFP, until India’s view of its own needs solidified. Another contributor to these delays has been the need to refine and clarify the new industrial offset rules introduced in 2005, amidst lobbying by American defense firms.
MMRCA: Updates and Developments
Jan 12/15: India to Dassault: Take It or Leave It
Anticipating a need to finally have the MMRCA buttoned down before leaders meet in April, India’s Defense Ministry has been talking in the press about its willingness to walk away from the deal unless Dassault agrees to binding assumption of certain time and cost liabilities. Dassault can be forgiven for not wishing to assume these, given the changing and still somewhat squishy requirements the Ministry has developed. For its part, the MoD is using strong language, indicating that Dassault is “reneging” on RFP requirements.
2014
Dassault and HAL agree on workshare; Interim buy considered, but all Rafale deals are left for the next government; Reports of 100% cost escalation could make Rafale unaffordable.
Dassault: Power of One
Dec 1-2/14: Meeting of minds? French defense minister Le Drian met with his freshly appointed Indian counterpart Manohar Parrikar who said the pending Rafale deal would be “resolved in a fast-tracked manner”. That is noncommittal on the actual outcome, and even on the exact schedule. French media note that this probably means April 2015 at the earliest, as India’s new fiscal year begins, while Dassault CEO Eric Trappier recently expressed the expectation that negotiations would be wrapped up by March 2015. However, reports in the Indian media don’t show a lot of progress in reconciling Indian expectations that Dassault should guarantee Indian-made Rafales, a sticking point since early 2013.
A subsequent statement by a spokesman of the Indian Ministry implied a desire to close the deal, and the number of aircraft at stake is maintained at the original 126 aircraft. French President Hollande commented that “you always have to be prudent with such contracts” until their signed.
During his visit Le Drian made friendly overtures to the “Make in India” policy, and the two countries have other deals under way, so there may be a common willingness to work together. However that cannot be achieved by simply asking Dassault to bear manufacturing risk it doesn’t control. And others such as Boeing have made similar broad statements. Being ready to “make in India” doesn’t mean you’d like HAL to be the local maker.
Meanwhile, as Airbus starts to exit Dassault Aviation’s capital, the French government signed an agreement with parent company Groupe Industriel Marcel Dassault (GIMD) that grants preemptive rights to the government in case of a future sale. Their goal is to guarantee that the aircraft manufacturer will stay under French control. But the sustainability of Rafale production in future years still relies on foreign sales.
Sources: Times of India: “France pushes for Rafale deal, but talks still stuck” | DNA: “Rafale issue will be resolved in fast-tracked manner” | Reuters: “La France et l’Inde vont faire aboutir le contrat Rafale” | Le Figaro: “Airbus Group amorce sa sortie de Dassault Aviation”.
Aug 8/14: Production Schedule. Defence Minister Shri Arun Jaitley confirms the Rafale’s intended production schedule, in a written reply to questions from India’s Lok Sabha upper chamber:
“The 18 direct fly away aircraft are expected to be delivered in three to four years from the signing of the contract. The remaining 108 license manufactured aircraft in India are expected to be delivered during the following seven years.”
Sources: Indian Government PIB, “Procurement of Rafale Fighter JET”
July 4/14: Order cut? French ministers continue to express confidence that 2 years of negotiations will produce a deal at some point, but Fabius notes that “there is a difference between [taking] some time and too long.” There are real obstacles. Government bureaucrats are expressing doubt that a deal can be signed before the current fiscal year end in March 2015, and some media outlets are reporting a potential order cut to 80 planes. Meanwhile, Saab remains in the wings with a proposal to become a major partner in India’s Tejas Mk.II.
The biggest problem with the deal appears to be life-cycle costs, something India hasn’t really dealt with before. A deal of this scale and complexity is a very tough place to start. The 2nd problem is that the Rafale’s absolute buy costs are also rising, in part due to India’s own conditions. That creates the 3rd problem, which is difficulty in making the 15% down payment within a budget that’s only expected to rise by government-calculated inflation figures.
French sources interviewed say they aren’t aware of any move to cut the order, but dna and the Deccan Herald are reporting that this has become an option. Once again: holding a military competition of this size, with no consideration for budget, was a foolish approach. Sources: India’s Business Standard, “Rafale contract elusive, Eurofighter and Saab remain hopeful” | Deccan Chronicle, “India may curtail Rafale demand” | Defense World, “Will Cost Escalation Down-Size Rafale Jet Contract?” | India’s Economic Times, “Confident of $12-billion Rafale deal with India, says French foreign minister Laurent Fabius” | Sunday Standard, “Stuck in Works, Rafale Deal Fails to Take Off”.
June 2/14: New Man. The BJP’s Shri Arun Jaitley takes over as Defence Minister, while also holding the ministries of finance and corporate affairs. He himself says that MoD will be a temporary assignment, leading many observers to wonder what’s going on. The answer may lie in the Ministry of Finance’s repeated sabotaging of military modernization project approvals. The Times of India writes:
“The finance ministry is often blamed for being a “big obstacle” for military modernisation plans. But with Arun Jaitley straddling both MoF and MoD as of now, there is “hope”…. Jaitley, on being asked by TOI if there was “a conflict of interest” in handling both the ministries, replied, “Well, I see it as supplementing of interest”
That may be necessary. A separate Times of India article offers a snapshot:
“The threat is greater along the country’s northern border with China developing its military capabilities rapidly. In India, the deal for 126 Medium Multi Role Combat Aircraft (MMRCA) is yet to be inked. Even if there is some rapid development, [delivery] won’t be till 2017-18…. India’s indigenous Light Combat Aircraft (LCA) Tejas is not yet ready. As a result, the IAF is now straddled with obsolete aircraft that can’t match China’s capabilities. The Chinese move to develop more airbases in the Tibet Autonomous Region (TAR) is intended to exert more pressure on India,” a senior officer said. Former IAF chief Air Chief Marshal NAK Browne, before his retirement, had openly admitted that the country is facing a shortage of fighter aircraft and needs to replenish its fleet. However, there is no immediate respite in sight. The Eastern Air Command (EAC), entrusted with air dominance over the country’s North East is badly affected…. The outdated Mig-21s are the mainstay of the EAC.”
If a unified minister can get the Project 75i submarine RFP out, finalize the Black Shark heavyweight torpedo buy, and make a decision about India’s M-MRCA program, he could do a tremendous amount of good for India’s defenses in a very short time. Sources: Indian Gov’t, “Arun Jaitley takes over as Defence Minister” | India’s Economic times, “BJP men, others fail to find logic in alloting defence to Arun Jaitley” | Times of India, “Modi govt must act fast to save India’s depleting submarine fleet” and “IAF’s fighter fleet needs immediate replenishment”.
June 1/14: Rafales in India. A set of 4 French Rafale fighters arrive in India for the Garuda-5 exercises. The exercises will take place at the Jodphur Air Base from June 2/14, and will involve IAF Su-30MKI, MiG-27 and MiG-21bis planes, with the Defence Minister and other high level attendees present. If reports of massive cost increases are true (q.v. Jan 26/14), the time pressures India is under could make these exercises undeservedly important to the new government’s M-MRCA decision. Sources: Zee News, “French airforce contingent arrives in India for ‘Garuda-5′”.
March 2/14: Workshare deal. Dassault and HAL have reportedly established an initial workshare agreement for Indian Rafales. Dassault will provide the first 18 planes from its own factories in fly-away condition. After that, HAL will be responsible for directing 70% of the work in India, while Dassault remains responsible for 30%.
Negotiations have included industrial coordination, as well as straight workshare. For instance, RBE2-AA AESA radar production will be outsourced to state-owned Bharat-Electronics Ltd (BEL) in Bangalore, while the corresponding radome will be manufactured by HAL. One step toward the agreement involved HAL setting up a new facility close to the one that BEL has in Bangalore, so that issues with radome or radar production won’t create compatibility problems that leave India’s Rafales unable to meet acceptance tests.
Per February revelations, the purchase contract will have to be finalized by whichever government wins India’s coming election. Sources: Indian Express, “India seals Rafale jet deal with French firm” | NDTV, “A big step in India’s Rafale jet deal with France”.
Workshare deal
Feb 6/14: Budgets. Defense minister AK Antony tells reporters that India’s Ministry of Defence has exhausted its capital budget, and won’t be able to sign any MMRCA contracts until the next fiscal year. In other words, until several months after the coming election. That effectively prevents any prospect of lock-in by signing an initial contract for 18 Rafales direct from France (q.v. Jan 9/14). Sources: The Times of India, “‘There is no money left': Govt delays Rafale fighter jet deal” | Bloomberg, “India’s $11 Billion Rafale Jet Deal Delayed Amid Budget Crunch” | Reuters, “India delays Rafale deal after exhausting capital budget”.
Jan 26/14: Budget blowout. In a Sept 4/12 article, Abhijit Iyer-Mitra boldly said that: “…any intelligent person who bothered studying the publicly available costs would have fixed the [Rafale’s] price at $27 billion as far back as 2009.” We said that time would tell. Which makes this dna India report so interesting:
“In January 2012, when Rafale was declared the winner, its price was quoted between $60-65 million (Rs373-Rs400 crore). A top defence ministry official said the price of a fighter jet made by Dassault could now cost $120 million (Rs746 crore). The second bidder, Eurofighter, had quoted $80-85 million (Rs497-Rs528 crore)…. [Under current prices, a 126-plane Rafale deal] would cost India nothing less than $28-30 billion (Rs1.75 lakh crore-Rs1.86 lakh crore),” said an Indian Air Force (IAF) official, who is privy to discussions of the cost negotiation committee.”
Sources: dna India, “dna exclusive: 100% price escalation on Rafale fighter aircraft to Rs 1.75 lakh crore likely to dent IAF’s strike capability”.
Unaffordable?
Jan 21/14: Budget crunch. India’s Air Force is directly criticizing the Russo-Indian FGFA joint stealth fighter program, according to the minutes of a Dec 24/13 meeting chaired by secretary of defence production Gokul Chandra Pati:
“Business Standard has reviewed the minutes of that meeting. The IAF’s three top objections to the FGFA were: (a) The Russians are reluctant to share critical design information with India; (b) The fighter’s current AL-41F1 engines are inadequate, being mere upgrades of the Sukhoi-30MKI’s AL-31 engines; and (c) It is too expensive. With India paying $6 billion to co-develop the FGFA, “a large percentage of IAF’s capital budget will be locked up.”
On January 15, the IAF renewed the attack in New Delhi, at a MoD meeting to review progress on the FGFA. The IAF’s deputy chief of air staff (DCAS), its top procurement official, declared the FGFA’s engine was unreliable, its radar inadequate, its stealth features badly engineered, India’s work share too low, and that the fighter’s price would be exorbitant by the time it enters service.
Top MoD sources suspect the IAF is undermining the FGFA to free up finances for buying 126 Rafale medium multi-role combat aircraft (MMRCA) for an estimated $18 billion, an acquisition that has run into financial headwinds because of budgetary constraints….”
Perhaps if India hadn’t structured its MMRCA competition to completely ignore the costs of the competing aircraft, this wouldn’t be happening. But they did, and it is. Sources: India’s Business Standard, “Russia can’t deliver on Fifth Generation Fighter Aircraft: IAF”.
Jan 13/14: Negotiations. India Today reports that a team of French officials from Dassault, Thales and Snecma is in Bangalore talking to HAL at the IAF’s request, in an attempt to resolve the workshare and responsibilities issues that are holding up the deal. As one source put it:
“The difficult part of the negotiations over the transfer of technology and the mandatory [industrial package] spin offs have already been finalised but there is uncertainty about who will provide what”.
Given India’s proposed deal that would give HAL control over the project, but financially penalize Dassault for any failures (q.v. April 5/13), that isn’t exactly surprising. Sources: India Today, “Dassault seeks to end Rafale log jam with IAF”.
Jan 9/14: Interim buy? AIN reports that India may opt for an interim buy of the 18 Rafales that are supposed to be manufactured in France anyway. Negotiations would still need to take place over the remaining 108 aircraft that would be built in India, and there would be long delays before India’s Rafale fleet would grow, but a deal would do 3 things. First, it would allow IAF pilots to begin training. Second, it would reassure foreign firms after a string of confidence-shaking disbarments and cancellations without evidence to back them up. Third, it would lock-in the Rafale as India’s chosen aircraft. With budgets under pressure and so many projects competing for dollars, an MMRCA program that has ballooned to 180% of its original cost projections may need that lock-in to avoid a years-long re-compete. The flip side is that it would weaken India’s negotiating position with Dassault over that follow-on contract.
India will have to move quickly, because a government code of conduct prevents any contracts being awarded within 45 days of an election, which is expected in March. Sources: AIN, “India May Close Interim MMRCA Deal Soon – Plus MRTT”.
2013
Rafale w. Damocles
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Dec 26/13: Sub-contractors. Dassault Aviation is reportedly conducting gap analysis of state-owned HAL’s fighter plane production capabilities. There may be quite a few, given HAL’s recent performance on a number of other projects. HAL officials say that they have a structure in place to do something meaningful with the recommendations:
“HAL has created a dedicated full time MMRCA Project Group in May 2012 and it is operational since then. Action groups have been created at all HAL divisions taking part in the MMRCA programme. All groups are working in a coordinated manner to interact with the Original Equipment Manufacturers.”
We’ll see. Sources: India’s Economic Times, “Dassault carrying out gap analysis of HAL’s capabilities”.
Dec 18/13: Brazil. Brazilian President Lula may have greatly favored the Rafale, but the Ministerio da Defesa eventually picks Saab’s Gripen-NG as their preferred bidder, and expects to buy 36 planes for $4.5 billion. The news doesn’t shake India’s resolve, but it does enhance the government’s leverage in negotiations. If Dassault’s Indian opportunity collapses now, the Rafale would become very difficult to export anywhere. Read “F-X2: Brazil Picks Saab’s JAS-39 Gripen-NG over Rafale, Super Hornet” for full coverage.
Dec 10/13: Sub-contractors. PTI reports that Dassault Aviation and India’s NYSE-listed Reliance Industries are planning to set up a Bangalore facility to produce Rafale wings for India’s future order, and reportedly have the approvals they need to do so.
The facility would reportedly cost about INR 10 billion ($248 million) to build, but the ultra-modern facility would leave Reliance in a strong position to leverage additional civil and defense-related aerospace work. That would be a new sector for Reliance, but Dassault is impressed with them, and reportedly wanted to use Reliance as the Rafale’s main Indian manufacturing contractor.
India’s government insisted on the state-owned HAL instead, but Dassault may still see a larger opportunity. If Reliance can produce quality assemblies at a cost savings, outsourcing some production for future orders could help Dassault lower their cost per jet, while meeting India’s targets for industrial offsets. Sources: FirstPost.Business, “Reliance, Dassault may join hands to make wings for Rafale fighter jets”.
Sept 13/13: Weapons. Russia’s Tactical Missile Corporation (TRV) told journalists at MAKS 2013 that they’re negotiating with Dassault Aviation for the possible use of their missiles on India’s Rafales.
India bought MBDA’s MICA air-to-air missiles for its Mirage 2000s, but Rafale-compatible weapons don’t otherwise feature prominently in India’s existing stocks. Unless the partnership develops a Universal Weapon Interface for TRV’s products, and probably modifies a number of the missiles themselves, that kind of integration and testing is expensive. Less expensive than buying new weapons? And what’s the capability payoff? That’s what negotiations, and business analysis, need to determine. Sources: TRV Products page, via WayBack 2013 | AIN, “Russian Missiles for India’s Rafales?”.
June 20/13: Negotiations. IANS reports that India’s Minister of State for Defence Jitendra Singh told an audience at the 50th Paris Air Show that the Rafale deal:
“…is not stuck anywhere. It is the biggest deal of its kind in the world and, of course, a very complex one too. They are talking to HAL and the private sector companies in India as well; so it is progressing…”
Caveat: India has a different definition of “progressing” than most countries. Then again, in his first Le Bourget press conference as Dassault CEO, Eric Trappier had made a similar-sounding statement a week earlier.
April 5/13: Negotiations. Dassault remain publicly confident that a deal will be done, but a reports that the deal will be delayed until July at least sheds some light on the key points beyond cost. Business Standard:
“Some of the issues between the two sides include Dassault’s demand for two separate contracts to be signed for the deal which includes one for the 18 aircraft to be built by the firm in France and the other for the 108 aircraft which are be integrated in India by the HAL. The Defence Ministry is not in agreement…. [and] earlier also rejected Dassault’s demand for making it the lead integrator… in India…. Dassault has also signed an MoU with the Reliance Industries Limited and wants to give a bigger role to it in the production phase in India is areas such as supply chain and project management.”
That’s a very sensible approach if you have serious concerns about your local partner’s ability to deliver (q.v. Feb 7/13). Dassault has publicly said that HAL’s role is clearly understood, but then they’d have to say that. Their concerns seem very justified given HAL’s significant problems with the indigenous Tejas LCA fighter, and with timely completion of contracts involving BAE’s Hawk trainers and Sukhoi’s SU-30MKI fighters. Business Standard | Livemint | OneIndia | Reuters.
Feb 7/13: Negotiations. While a French Rafale-B performs at Aero India 2013, negotiations grind on. India’s defence minister, A K Anotony, describes negotiations as a 6-7 layer process, which then has to be sent to the Ministry of Finance. There will be no deal during Aero India, as the contract simply isn’t ready. Antony adds that coming defense budget cuts won’t delay the Rafale deal, but an election looms in 2014.
India’s Financial Express cites anonymous “highly placed sources” who say that remaining friction involves industrial issues. The Dassault team that visited the HAL facility in Nashik were said to have been disappointed by the infrastructure in place, and concerned that HAL will have trouble absorbing the required technology. They’re also reportedly wrestling with India’s insistence on giving HAL ‘lead integrator’ responsibility for decisions about workshare with other companies, while sticking Dassault with overall responsibility for the project. The French are trying to use the RFP as a starting point for discussions, while India insists that the RFP’s terms are the final word. Economic Times | Financial Express.
Jan 28/13: PDL NG pod. France’s DGA commits a EUR 55 million risk reduction contract for Thales to develop the next-generation PDL NG surveillance and targeting pod, as the successor to the Damocles pod. Deliveries are expected to take place beginning in about 5 years, from 2018-2022, and the project as a whole will cost about EUR 450 million for development plus 45 pods.
The DGA touts this as a boost to the export attractiveness of French fighter jets, which is true. Targeting pods have become such an important ancillary that the Rafale can’t really remain competitive without one that meets modern high-end standards. The bad news is that the Rafale will receive a pod in 2018 that’s roughly equal to Sniper-SE and LITENING-SE pods being delivered right now, while its competitors keep improving with new sensors and modules. India, whose Mirage 2000s are getting life extensions, is an important target for the PDL-NG, because they could use the pods across 2 fighter fleets. On the other hand, India uses LITENING pods on many of its fighters, and could simply decide that Rafale integration with the LITENING pod was its best option on technical and fleet support grounds. French cooperation integrating a non-French pod would be the sticking point, and it would probably need to be addressed up front in the main contract. French DGA | Les Echos | Usine Nouvelle.
2012
Rafales
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Sept 4/12: No documents? A columnist for Delhi’s Daily Pioneer alleges that Dassault did not meet the deadline for submitting final documents to India. Abhijit Iyer-Mitra adds that beyond issues of technology transfer, there was a lowballing strategy at work:
“The deciding factor that won the Rafale the competition was its lower cost. Even a cursory glance at the Rafale’s costing for the French Senate done in 2009 indicated a unit price 2.25 times of what the French quoted us, not factoring in inflation… What can one expect from here? Four things: First, Dassault’s final submission will take much longer to materialise – possibly another year or so. Second, a stream of news reports that we’ve already heard a thousand times before will come out telling us how unprepared our institutions are to receive this technology. Third, when that document from Dassault does indeed materialise, expect a minimum 170 per cent jump in costs attributed to “time delay”, “unforeseen problems” and “supply chain variables”. Let’s not forget that, when this competition started out in 2007 the deal was meant to cost us $10.6 billion. Now the figure has already doubled to $20 billion, while any intelligent person who bothered studying the publicly available costs would have fixed the price at $27 billion as far back as 2009… At some point, one needs to introspect very deeply.”
That’s a clear set of markers, so in time we’ll see whether or not he’s right. He certainly has sharp disagreements with IDSA, an independent think tank whose briefing concluded that Rafale is too important to the IAF, and must have a contract soon. That seems to mark a shift in their position from June 2012.
The larger question is whether India could absorb a significant price hike beyond $20 billion, or if that would force the IAF to abandon their previous “price is no barrier” attitude and redo the competition. Daily Pioneer | IDSA.
Aug 21-23/12: Re-open MMRCA? Deputy Director of Russia’s Federal Service for Military Technical Cooperation, Vyacheskav Dzirkaln, tells Interfax-AVN News that Rafale negotiations were having problems over issues of financial terms and technology transfer. He adds that Russia is prepared to bid again, as:
“I wouldn’t say that the MMRCA tender is a closed issue. We have information that the tender is still up in the air,”
The Russians have been wrong about M-MRCA developments before, but this statement gets additional credence from an unusual source: Germany. The deputy chief of the Bundestag’s foreign and defence affairs committee, Andreas Schockenhoff, told the Times of India that “There have been discussions between German and Indian officials and I can say that this is not a closed book yet.”
On the other hand, French media are getting reassuring noises from Dassault, and say that the deal will be done as a series of agreements to produce specific items in India, with the scope growing over time. L’Usine Nouvelle cites complex electronics, and especially Thales RBE2-AA AESA radar, as being difficult to transfer. India’s failure with its Tejas fighter’s multi-mode radar, which was a generation behind AESA, does lend credence to that view. The Hindu | IBN Live | Times of India | L’Usine Nouvelle [in French].
July 11/12: Rafale go-ahead. Indian defense minister Antony effectively ends contention over the Rafale’s selection as L1, the lowest evaluated bid. Replying to the Feb 27/12 letter from Rajya Sabha member MV Mysura Reddy:
“The issues raised by you were examined by independent monitors who have concluded that the approach and methodology adopted by the Contract Negotiations Committee (CNC) in the evaluation of the commercial proposals thus far, have been reasonable and appropriate and within the terms of the Request for Proposals (RFR) and Defence Procurement Procedure, 2006.”
India’s history shows that this is a big moment for the M-MRCA program, preventing its derailment and allowing negotiations toward a contract to continue. Hindustan Times.
June 11/12: The quantity trap. India’s IDSA is the bearer of some unpleasant news, given the M-MRCA competition’s deliberate decision to exclude costs from its shortlist:
“…actual fighter aircraft strength has fallen to close to 32 squadrons. These reduced numbers are of major concern to the IAF… This [M-MRCA] programme for 126 aircraft, despite licensed production of all but 18 aircraft, is still likely to cost between US $10 and 20 billion. While it was presumed a few years ago that funds for defence would not be a constraint in the future, a slowing economy has led to these funds being curtailed… The writing on the wall is clear: resource constraints are looming for the armed forces.”
IDSA recommends more indigenous production instead, without acknowledging that technology limitations and failures to deliver were the impetus behind M-MRCA in the first place. Having designed a competition slanted toward the 2 most expensive fighters, the IAF has few ways out of its self-created box. India could cut the M-MRCA buy, and use the funds to buy more of HAL’s Tejas lightweight fighters. The problem is that Tejas is experiencing production rate issues, and isn’t fully fielded yet. India could re-do the M-MRCA competition with cost as a factor this time, adding years to the process. Or it could go ahead with the full M-MRCA buy, and forego a number of other defense projects to pay for it.
March 22/12: Allegations. Indian Defence minister A.K. Antony orders the Ministry to probe all of the allegations made by Rajya Sabha (Parliamentary upper house) member M.V. Mysoora Reddy. The Telgu Dessam party representative filed an official complaint on Feb 27/12, over alleged irregularities in the evaluation process that designated France’s Rafale as the L-1 lowest cost option for India. The probe is expected to delay the process by a couple of months, if nothing surfaces. If the claims get any traction, India’s procurement process could come to a complete halt.
Telgu Dessam is a small regional party that represents the large south-eastern province of Andhra Pradesh. They’re not part of the governing Congress coalition, or the BJP-led opposition. Instead, they’re part of a loose “Third Front” of hard-line Marxist and regional parties. See Deccan Chronicle | MSN India.
Jan 31/12: India’s pick. The rumors turn out to be true, even after the complex life-cycle cost and industrial calculations. Some reports place its cost as $5 million lower per plane. Next steps include the negotiation of a contract, in parallel with parliamentary approval and budgeting.
Until a contract is actually signed, however, India’s procurement history reminds us that even a “close” deal is just 1 step above a vague intention. Even the French government sees a deal as an 80% probability within 6-9 months, and that may be optimistic. The budgeting is likely to be even trickier. The IAF’s exclusion of cost considerations in picking its finalists means that the only question now is: how far over the stated budget will a full Rafale buy go? Some reports place the deal’s cost at around $15 billion – an increase of up to 50% from previous estimates.
Unless the number of planes in the contract is reduced accordingly, or the Euro plunges very sharply during negotiations, those extra monies have to be committed. India’s armed forces and politicians would have to either draw on growth in the overall defense budget, or sideline other defense programs to pay for M-MRCA. If economic downturns or squeezed defense budgets make those outlays a big enough issue, early enough in the process, it could re-open the competition completely. British PM David Cameron has expressed an intent to change India’s mind, and both Saab and Boeing are still positioned within India, in order to be ready for a renewed opportunity. An Indian Express report even adds that:
“…government sources told Reuters about the $15 billion deal that France’s Rafale jet was the likely winner, adding that the defence ministry was now considering buying another 80 or so jets and could invite bidders excluded from the current process to take part.”
See: Dassault | President Sarkozy [in French] | Deccan Herald | Economic Times of India, see also their timeline | Indian Express | Rediff (thanks for using our descriptions, sans attribution) | Times of India || Aviation Week | BBC | UK’s The Guardian | Reuters report and expert roundup.
Rafale is L1
2011
Navalized Typhoon
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Nov 4/11: Final bids opened. India opens the final bids, which are reportedly within the range of $80-110 million per aircraft. At $80 million each, 126 fighters may come in just under budget. At $110 million each, the cost rises well over budget to $13 billion. Indian officials have said that they are prepared to raise their budget if needed. The realities of Indian procurement will create difficulties, however, unless the move has very strong and high level political support.
Indian media report that the Dassault’s base bid was slightly lower, but the final “L-1″ bid costing will also include life-cycle costs over 6,000 flight hours, costs of technology transfer, and other factors. It will take a few weeks to even arrive at a verifiable cost model to determine each bidder’s L-1, and begin establish which is really the lowest price. Some reports suggest that an answer could be forthcoming by the end of the year, but based on past performance, early 2012 is a more realistic expectation.
Meanwhile, the USA and Lockheed Martin are still pushing the F-35 from outside the MMRCA process, and Sweden’s Saab waits with its capable and less-expensive JAS-39IN Gripen. If the finalists’ cost figures create a crisis, they are prepared. Economic Times of India | The Hindu | Indian Express | Live Mint | Times of India | Zee News || India’s Business Standard op-ed re: F-35.
Oct 9/11: Despite reports that India would announce a winner on Oct 7/11, Air Chief Marshal Norman Anil Kumar Browne says that all India is doing is approving the finalists’ industrial offset offers, and giving each firm the chance to make its final bid.
Final decisions will apparently be made in mid-November 2011, according to a final cost based on life-cycle cost, purchase cost, and technology transfer value for each competitor. DNA | domain-b | India’s Financial Express | Indian Express | Times of India || Russia’s RIA Novosti.
July 11/11: Boeing and Lockheed Martin representatives attend a government-to-government debriefing between Indian and US officials. They later pronounce themselves satisfied by the explanations received. Flight International.
June 21/11: Saab says it hasn’t given up on a sale to India. CEO Haakan Buskhe:
“We are monitoring the situation, and we have not packed up our things and left… We have an extremely good aircraft and we have not given up.”
That may not be a bad idea. Barring an extremely good deal, it is difficult to see how India can afford 126 Rafales or Eurofighters for the price they want to pay. If negotiations with the shortlisted firms fail, identified deficiencies with the F-16 and F/A-18, and negative experiences with the MiG-29, would leave the JAS-39NG in good position.
June 3/11: CEIP post-mortem. Ashley Tellis of the liberal-realist Carnegie Endowment for International Peace, whose “Dogfight” report took an in-depth look at the competition before the shortlist was released, concludes that key technical weaknesses were the reason that the American fighters lost. That conclusion is offered despite his own earlier recommendation that India pick an American aircraft, and follows a 3-week trip to India that included meetings with top Indian government, military and industry officials. His overall conclusion:
“…the deeper problem with the current two-step approach is… that it potentially permits a costly misallocation of defence resources that could over time subvert India’s larger national security. Simply put, a procurement process that does not include shadow prices in the first step of its evaluation is fundamentally flawed… There is no such thing as ‘best’ technology in the abstract, especially where defence procurement is concerned. The pre-eminence of any war-fighting technology in the real world can be judged only against the constraints of price – and, particularly in regards to India, against additional variables of consequence… what economists call, ‘constrained maximization.’
…The current Indian procedure of attempting to first select technology without reference to any other constraints leads inexorably, using an infamous American example, to purchasing a USD640 airplane toilet seat. By pristine technical standards alone, it is certain that the more expensive toilet seat outperforms its USD64 counterpart under the widest range of conditions, but the critical question is whether the differential in marginal price is worth the commensurate difference in performance.”
According to Tellis’ sources in the IAF, India’s priorities revolved around dogfighting abilities and aerodynamic performance. That killed the F-16IN, whose conformal fuel tanks enable longer-range strike, but slow its turn rate and impair handling performance. The F-16 also raised concerns regarding its growth potential, and assurance against obsolescence within 15 years. The same aerodynamic focus reportedly killed the F/A-18 E/F Super Hornet, whose acceleration issues are known, and whose maneuverability would never be competitive with the Rafale, Eurofighter, Gripen, or MiG-35. One odd wrinkle is that the IAF accepted the Dassault & Eurofighter’s promises of AESA radars, which remains in development, but turned down similar promises from Boeing re: a 20% thrust boost from the Super Hornet’s developmental F414 EPE engine. CEIP release, incl. full FORCE magazine article [PDF] | Flight International.
April 28/11: One day after American fighters are not included in India’s M-MRCA competition shortlist, American ambassador Timothy Roemer resigns his post. India’s Business Standard | domain-B | Los Angeles Times | Times of India | Wall Street Journal’s India RealTime.
April 27/11: Shortlist – Rafale vs. Eurofighter. With existing bids set to expire on April 28/11, India’s MoD reportedly sent letters to Eurofighter GmbH and Dassault, extending the validity of their bids. The net effect of this is that bids from the other 4 contenders will expire on the 28th, removing Lockheed Martin’s F-16IN Block 70, Boeing’s F/A-18E/F, Russia’s MiG-35, and Saab’s JAS-39NG from the competition.
The elimination of both American competitors is something of a surprise. The F-16 was widely seen as having little chance, but the F/A-18 E/F Super Hornet was another matter. Absent any statement or confirmation from India, analysts are left guessing as to the reasons for India’s choice. A US defense industry association’s magazine wonders if US military technology export restrictions played a role. Others are asking questions about the strength of the US-India relationship under Obama. Carnegie Endowment scholar Ashley Tellis, who has covered the competition via an in-depth report, said that:
“As best I can tell, the downselect was made entirely on the basis of the technical evaluations – the cost of the aircraft or the strategic considerations did not enter into the picture.”
If so, it is true that the Eurofighter and Rafale offer better aerodynamic performance than either American offering. Still, this is India, and no deal has been signed yet. Remaining steps include fresh commercial bids that will remain valid for the next 2 years, finalized industrial offset proposals, and discussions with a cost negotiation committee for the winning company. Despite hopes of a deal by March 2012, September 2012 is seen by some as a more likely time frame for a contract. Eurofighter GmbH | Saab | IBN Live (incl. video) | IBN Live re: procedure (incl. video) | India’s Business Standard | India’s Economic Times | The Hindu | Livemint | StratPost | Zee News || Agence France Presse | Aviation Week | NDIA’s National Defense magazine re: ITAR | Fort Worth Star-Telegram’s Sky Talk. | Russia’s RIA Novosti.
2 finalists
April 5/11: CNN-IBN has an interesting quote with respecdt to the M-MRCA competition:
“Air Marshal PK Barbora, Ex Vice Chief of Air Staff said, “The Air Force is not looking at price. That’s not our area of concern. What we want is QRs are focussed on technical aspects, latest technology.”
That’s an… interesting attitude, since price affects whether or not India can actually field the number of planes the IAF says it needs.
April 2/11: Another government deadline blown. For the second time in row, the Indian government is looking to extend the M-MRCA competition and lock in bid prices. At present, the current set of bids will expire on April 30/11, and some estimates place the cost of the extention at up to $1 billion.
The more significant worry is that this deal will become like many other Indian deals, and wind up being completely un-executable as endless allegations and investigations prevent any buy whatsoever. That sounds difficult to believe for a critical military asset like fighters, but this is exactly what has happened to India’s equally important artillery forces. StratPost Magazine explains the industrial angle | India’s Financial Express | Kolkata Telegraph.
March 23/11: Shoot the messenger? Dassault Aviation country manager P.V. Rao reports IAF Wing Commander A.K. Thakur to the Defence Ministry for demanding an INR 20,000 bribe in exchange for a favourable spot at Aero India 2011. In response, he’s barred from any dealings with the IAF, until his exact role is investigated. The Times of India claims that:
“The air force is irked by the fact that Rao kept it in the dark about its officer asking for bribe and instead got a senior IAS officer to expose the corruption. A senior officer claimed Rao deliberately didn’t follow known procedures, which was to inform IAF senior officers. It’s also possible that IAF establishment didn’t inspire Rao’s confidence.”
An IAF Court of Inquiry has been initiated in Bangalore under a Group Captain, and its official job is to try to establish who esle might have been involved, if any other companies were targeted, and what they did about it. IBN | Times of India.
March 19/11: An Agence France Presse report says that the IAF could issue its shortlist as soon as April 2011:
“Boeing, which is offering its F/A-18IN Super Hornet, expects the delay-plagued project to take a decisive step forward as soon as next month, when a shortlist of contenders could be drawn up. “Indian military officials have been quoted recently saying they want to make an initial downselect decision possibly as soon as next month,” said Boeing spokeswoman Mary Ann Brett.”
Note the duelling statements between the IAF and MoD on this very issue, q.v. Feb 10/11 entry.
March 2/11: A British NAO report is very critical of the UK MoD’s management of the Eurofighter Typhoon program, including delivered capabilities, support arrangements, and readiness. The report could complicate the aircraft’s chances in India. See also The Register
Feb 21/11: Navalized Eurofighter? Aero India 2011 sees Eurofighter and BAE unveil an interesting wrinkle: an initial design for a navalized Eurofighter than can operate from aircraft carriers, based on an internally-funded set of studies and simulations. In a direct nod to potential Indian sales, they tout the plane as being able to take off from “ski jump” carriers without catapults – a design that describes all of India’s current and planned carriers, as well as the initial design for Britain’s own Queen Elizabeth Class.
Eurofighter GmbH descirbes the goal as 95% commonality with land-based aircraft, and required changes as “limited… include a new, stronger landing gear, a modified arrestor hook and localised strengthening on some fuselage sections near the landing gear, as well as updates the EJ200 engines,” which could include thrust-vectoring in flight.
India is currently planning to use MiG-29Ks as its naval fighters, but it’s currently the type’s only customer, and participation in a naval option could make Typhoon