IAF: Jaguar, Mirage 2000
SU-30K, MiG-27, MiG-21BiS
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“It’s the biggest fighter aircraft deal since the early 1990s,” said Boeing’s Mark Kronenberg, who runs the company’s Asia/Pacific business. India’s planned multi-billion dollar, 126+ plane jet fighter buy became a contest between Dassault, Saab, MiG, American competitors and EADS’ Eurofighter.
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 is changing, and the nature of the order may change as well. With the long-delayed release of the official $10 billion 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; and also offers an updated timeline regarding competitive moves since this article was first published in March 2006.
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 in “Order of Battle”) 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 have 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: The RFP, Please…
IAF MiG-29, top view
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India’s defense procurement process is definitely a game for the patient, and this competition has been no exception. The Medium Multi-Role Combat Aircraft (MMRCA) RFP caps a process that began in 2001, when the IAF sent out its request for information (RFI) for 126 jets. After delays lasting almost 2 years beyond the planned December 2005 issue date, India’s Ministry of Defence finally announced a formal Request for Proposal on Aug 28/07.
The RFP announcement estimated the program at 126 Medium Multi-Role Combat Aircraft (MMRCA), at a cost of Rs. 42,000 crores (about $10.24 billion as of the RFP date, or about $81.3 million per fighter). The 211-page document includes clauses for initial purchase, transfer of technology, licensed production, and life-time maintenance support for the aircraft. Under the terms of purchase, the first 18 aircraft will come in a ‘fly away’ condition, while the remaining 108 will be manufactured under Transfer of Technology. Some reports add an option for an additional 63-64 aircraft on the same terms, bringing the potential total to 190 aircraft.
Selection involves an exhaustive evaluation process as detailed in the Defence Procurement Procedures (DPP) 2006. The vendors had 6 months to submit their proposals. First, submitted proposals will be technically evaluated by a professional team to check for compliance with IAF’s operational requirements and other RFP conditions. Then extensive field trials will evaluate aircraft performance. Finally, the short listed vendors’ commercial proposals are examined and compared. The defence ministry’s Contract Negotiation Committee (CNC) would then hold discussions with the vendors before identifying their preferred manufacturer. Their report goes to the defence minister, who must forward it to the finance minister. After the file returns to the defence ministry, it goes for final approval to the cabinet committee on security (CCS).
This is not a speedy process. The selection process alone is likely to take at least 2 1/2 years, to be followed by lengthy price negotiations, and probably including delays along the way. Most observers believe that delivery of any aircraft is unlikely before 2013.
The vendor who finally wins will be required to undertake 50% offset obligations in India. That’s a boost from the usual 30%, which is required for Indian defense purchases over $70 million. The additional 20% was added because India is looking for a large boost to its aerospace and defense electronics industries, and understands that the size of their purchase gives them additional leverage. The Indian MoD’s RFP release adds that “Foreign vendors would be provided great flexibility in effecting tie up with Indian partners for this purpose.” It also says that:
“The aircraft are likely to be in service for over 40 years. Great care has been taken to ensure that only determinable factors, which do not lend themselves to any subjectivity, are included in the commercial selection model. The selection would be transparent and fair…
It may be recalled that the Defence Minister Shri A K Antony while chairing the Defence Acquisition Council Meeting on June 29, 2007 had outlined three guiding principles for this procurement scheme. First, the operational requirements of IAF should be fully met. Second, the selection process should be competitive, fair and transparent, so that best value for money is realized. Lastly, Indian defence industries should get an opportunity to grow to global scales.”
Once again, process speed is not a key criterion. Part of the reason for that is India’s past history of procedural problems. American competitions are increasingly finding themselves paralyzed by quasi-legal challenges of evaluation methods, and even of their chosen criteria. Witness the hold-ups created for the CSAR-X helicopter competition, Joint Cargo Aircraft, ITES-2 I.T. contract, etc. Indian competitions have featured these sorts of post-contract obstacles even more consistently, with long bureaucratic delays and corruption charges thrown into the mix for good measure.
Time will tell if the objectives of the MoD’s RFP are met, or if a process of waiting almost 6 years for an RFP, and then years more for a winner, is only the beginning of the process.
Even as India’s existing fighter fleet continues to wear out, and China and Pakistan’s fleets continue to grow.
The Competitors: Analysis
AESA usage concept
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Recent changes in India’s needs and the contest participants are changing the relative rankings of the contenders. Geopolitical considerations are also intruding, as most of these choices have the potential to improve relations with an important potential ally. Standardization arguments will also carry weight. As of January 2006, India’s Air Force operated 26 different aircraft types, and the IAF is not eager to add to its support headaches.
The listed competitors group into two very different categories with their own strengths and weaknesses: lightweight fighters in the $25-50 million flyaway cost range (F-16 Falcon, JAS-39 Gripen); and larger dual-engine mid-range fighters in the $65-120 million flyaway range (Eurofighter, F/A-18 Super Hornet, Rafale). Russia’s MiG-35 sat somewhere in the middle, as a bulked-up next-generation version of a twin-engine MiG-29 design that was generally seen as an F-16 competitor.
All MMRCA contenders to date appear to be proposing Active Electronically-Scanned Array (AESA) radars in their fighters. They offer a number of benefits over conventional mechanically-scanned radars, including durability, maintenance, the ability to track both air and ground targets via continuous scans instead of rapid switching, and potential electronic attack uses. A narrower field of view with less sidelobe “leakage” is both an asset and a drawback, depending on the situation.
Shortlisted
Rafale w. Scalp
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The shortlisted fighters have a long shared history. Dassault’s Rafale was developed when France parted ways with its erstwhile European partners, who went on to develop the Eurofighter. Both types have been fielded without full capabilities, and both have had trouble landing export orders. The EADS/ BAE/ Finmeccanica consortium is looking for Eurofighter’s 2nd major export sale, after Saudi Arabia. Dassault is still looking for its 1st export win.
Rafale (Dassault, France). Initial reports indicated that the Rafale did not meet India’s technical evaluation criteria, because critical information was not included. Dassault persisted, and their fighter is now back in the race.
The Rafale offers good aerodynamic performance, has exceptional ordnance capacity for its size, and can extend its range further via conformal fuel tanks. Dassault claims Mach 1+ “supercruise” capability without afterburners, but observers are skeptical, and it has been challenging to demonstrate this with the Snecma R88-2 engine. The Rafale also offers some equipment, maintenance and spares commonalities with existing Mirage 2000 fleet, which will increase as India’s Mirage 2000s are modernized with new electronics and weapons. France’s reliability as a weapons supplier, good history of product support, and long-standing relations with India, offer additional plusses. The Rafale-M’s demonstrated carrier capability might be attractive, too, but that requires catapult launch capabilities, which India’s Vikramaditya carrier will not possess.
India’s slow procurement system has had the side-effect of mitigating most of the Rafale’s weaknesses. Rafales have now operated over Libya with the Damocles surveillance and advanced targeting pod, as well as the new Reco NG reconnaissance pod. Thales’ RBE2-AA AESA radar has been installed, and is now much closer to fielding. While it will still require additional funds and work to integrate many non-French weapons if one wishes to use them on the Rafale, India’s long-delayed contract to upgrade its Mirage 2000s makes that less urgent, by widening the aircraft base for the Rafale’s French armaments.
The Rafale’s failure to win any export competitions was also an issue – one that reaches beyond mere perception of “also-ran” status. As Singapore’s choice has shown, export failures are already forcing cuts in future Rafale procurement, in order to pay for modernization. That dynamic is likely to get worse over the next 30 years, unless a big buyer like India steps up. Fortunately for Dassault, the Rafale was picked as India’s “L1″ package. That big buyer could be just around the corner, and India’s pick could also help the plane in Brazil.
Indra Dhanush 2007:
SU-30MKI, Typhoon, F3
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Eurofighter Typhoon (EADS/BAE, Europe & Britain). A fourth generation aircraft currently optimized for the air-air role through its performance characteristics, and what is by all accounts an excellent pilot interface. Some observers believe that aside from the F-22A Raptor, the Eurofighter is the next-best in-service air superiority aircraft world-wide, though the 2007 Indra Dhanush exercise that matched it up against India’s SU-30MKI makes a case for Sukhoi’s fighter.
India’s delay has given the fighter more time to mature, and upgrades and new weapon options are giving current production versions full multi-role capabilities. Typhoon fighters reportedly have “supercruise” capability, though it probably isn’t sustainable once the fighter is armed. Eurofighter GmbH even unveiled a proposed naval variant at Aero India 2011, which it claims could launch without catapults from the “ski-jump” decks on India’s future carriers.
With respect to industrial offsets, BAE already has an order from India for 123 BAE Hawk trainers, 69 of which are being built in India. Those Hawk orders ran into trouble, but the troubles were resolved, and India upped the order from 66 to 123. That gives BAE solid industrial experience and credentials, and given EADS’ key role in the Eurofighter consortium, Airbus might also be able to contribute.
Weaknesses include the aircraft’s $100+ million price tag, which may stretch India’s budget to the breaking point; the fact it’s a new aircraft type for the IAF so the entire support infrastructure would have to be developed; its lack of naval capability; the developmental status of its CAPTOR-E (Captor AESA Radar) technology; and the non-existent geopolitical benefits of selecting it. Given the Eurofighter’s performance and costs, simply buying more SU-30MKIs would appear to make far more sense. India’s shortlist process ignored cost, however, so Eurofighter made the short list.
Not Shortlisted
F/A-18E, Parked
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F/A-18 E/F Super Hornet (Boeing, USA). Highly upgraded version of the F/A-18 A-D Hornet, enlarged and given new engines and avionics. Commonality between the Hornet and Super Hornet is only about 25%. Strengths include its powerful AN/APG-79 AESA radar, which has drawn significant interest from India. This radar could allow Super Hornets to play a unique role in India’s fighter fleet as versatile “quarterbacks” (or better yet, “cricket captains”) due to their radar’s performance and information sharing abilities. Other advantages include carrier capability, a very wide range of integrated weapons, a design that is proven in service and in combat, F414 engines that may also serve as the base for LCA Tejas Mk2; and complete assurance in its future upgrade spiral, given the US Navy’s commitment to it.
The existence of a dedicated electronic warfare variant as of 2009 in the EA-18G Growler offers a unique selling point, as the growth of sophisticated air defense systems will place a growing premium on this unique capability.
Last but certainly not least, this choice offers an opportunity to create an early “win” which would strengthen India’s new alliance with the USA and prove its new status in the world. After all, when clearance for the aircraft’s export to India was given, no other nation had even been offered the F/A-18 E/F Super Hornet. Since then, close American ally Australia has bought 24 F/A-18F Block IIs, and even taken steps to modify 12 aircraft toward EA-18G Growler status, giving the platform an additional selling point in the “allied commonality” department. Defense industrial requirements are helped by Boeing’s network of Indian investments and relationships, stemming from its P-8i sea control aircraft sale and commercial push into India.
Weaknesses of the Super Hornet platform included deep distrust of America’s reliability as an arms supplier, technology transfer concerns, and the aircraft’s expense. Given the costs to other customers so far, it seems unlikely that Boeing can deliver 126 fully-equipped F/A-18 E/F Block II aircraft for just $10.2 billion, let alone aircraft plus lifetime support. Since it’s a new aircraft type for the IAF, that entire support infrastructure would have to be developed from the ground up. Finally, the Super Hornet offers poorer aerodynamic performance than the Eurofighter or Rafale, due to inherent airframe limitations. Carnegie Endowment’s Andrew Tellis says that last disadvantage was the killer.
F-16F “Desert Falcon”
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F-16 Fighting Falcon (Lockheed Martin, USA). Lockheed’s “Block 70″ offering would have been an modified version of the F-16E Block 60 “Desert Falcon” currently serving with the UAE. Strengths include the widest multi-role capability among lightweight fighters; its proven AN/APG-80 AESA radar; the addition of integrated IRST (Infra Red Search & Track) capability; the widest choice of proven avionics and weapon systems; a long record of proven service so all issues are known; and widespread compatibility with potential allies in Asia and the Middle East who also fly F-16s. The combination of an AESA radar on a less expensive platform is also good news for cruise missile defense efforts, if that’s considered a priority.
Even so, the Indian Air Force never seemed very interested in the F-16. Weaknesses include the fact that Pakistan also flies F-16s; the fact it’s a new aircraft type, so the entire support infrastructure would have to be developed; Lockheed Martin’s difficulty in complying with industrial offset provisions, given their lack of penetration in India. The MMRCA RFP’s delays may have helped Lockheed, by allowing them ample time to find arrangements with Indian firms. There are also reports that the US government was pushing this option, because of the regional reassurance factor. While the common underlying aircraft type would probably take some of the edge off of the deal from Pakistan’s point of view, and an F-16 E/F Block 60+ would have a number of important advantages over even Pakistan’s new F-16C/D Block 50/52 aircraft, its conformal fuel tanks would give it poorer turn performance and handling. This disadvantage, and perceptions that the platform had limited capacity for further upgrades, were reportedly fatal in India’s trials.
MiG-29OVT, MAKS 2005
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MiG-29OVT, became the MiG-35 (Rosonboronexport, Russia). This modified MiG-29 includes improved radar and avionics that give it multi-role capability, extra fuel in a new aircraft “spine,” and thrust-vectoring engines a la India’s SU-30MKIs. While the MiG-29 has traditionally been considered a lightweight fighter, the combined effect of these changes push the MiG-29 toward the mid range.
Its strengths included compatibility with India’s existing and future MiG-29 fleet, and its ability to carry advanced Russian missiles already in service: the revolutionary AA-11/R-73 Archer and longer range AA-12/R-77 “AMRAAMski.” The presence of MiG-29-related manufacturing and maintenance, including a new plant for license-building RD-33 Series III engines in India, would make compliance with industrial offset requirements easier.
The MiG-29′s biggest weaknesses were short range, engines that produce telltale smoke (very bad in air combat) and lack of true multi-role capability; the MiG-35 largely fixes these issues, and may even add an AESA radar of its own if Phazotron-NIIR can have its new Zhuk-AE ready in time. Technology sharing and co-production are also considered to be strengths; as one Indian officer put it: “Russians have their problems of delayed projects and unreliable spare supply but they give access to everything, unlike the Americans.” He’s referring to the IAF’s not-so-great experience with India’s existing MiG-29s, which have had maintenance problems in addition to their other deficits.
Remaining weaknesses in the MiG-35 bid include the serious difficulties India has had with Russian firms over the refit of its new carrier, order for more Mi-17 helicopters, and order for 3 more Krivak-III class frigates. All have featured failure to deliver, and post-contract price renegotiation demands that have raised prices up to 200%. Reports that MiG-35 delivery cannot start before 2014 at the earliest add a further disadvantage, especially compared to competitors with active production lines and rapid delivery capability.
There has also been legitimate speculation about the future viability of the MiG-29 family platform, which has been eclipsed by the SU-30 family. Despite Yemen’s interest in buying more MiGs, Algeria’s canceled $1.8 billion order adds further risk to a platform whose current order book revolves around refurbishment programs. India has ordered a handful of MiG-29K variants as its future carrier aircraft. Nevertheless, doubling down to add the MiG-35 would make India the first customer for both variants – neither of which has other sale opportunities on the near horizon. That could be spun as a positive industrial opportunity, but it was also a cost and risk issue.
JAS-39s in South Africa
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JAS-39 Gripen (Saab, Sweden). The Gripen is a true 4th+ generation lightweight fighter and significantly more capable than category competitors like the F-16 and Mirage 2000, though the MiG-35 may give it a run for the money. Gripen NG begins to address the aircraft’s range limitations, and would include an AESA radar among its other enhancements. Other strengths include a wide choice of integrated weapons and pods; reasonable purchase cost; the fact that it has been designed for exceptional cost of ownership; and the ability operate from roads instead of runways if necessary. With respect to industrial offsets, Saab has made a strong offer, backed by excellent record in countries like South Africa, Hungary, The Czech Republic et. al.
As an interesting side note, the JAS-39NG’s use of GE’s F414G engine would have created future commonality with India’s own Tejas Mk2, which will also be powered by the F414 after DRDO’s Kaveri engine failures put the entire project in jeopardy.
The JAS-39′s drawbacks include its short range; the fact it’s a new aircraft type for the IAF; its AESA radar’s developmental status; perceived similarity (whether valid or not) to the Tejas fighter’s potential performance; and a low volume of international orders to date that raises questions about the platform’s ability to modernize over the next 30-40 years.
While ordering a Swedish fighter carries no geopolitical benefits, the platform did have a pair of wild cards. One was South Africa’s adoption, and Brazil’s potential adoption, of the Gripen. These 3 countries are beginning to collaborate more closely in defense matters, and a common fighter platform could have offered intriguing military and industrial benefits. The other wild card was less positive. The long-running Bofors scandal is reported to have tainted any future buys from Sweden, casting an irrational and unjustified, but still present, shadow over the Gripen’s chances.
Cast a Long Shadow: Tejas, Mirage 2000, F-35
Tejas LCA
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Tejas LCA (HAL et. al., India). A lightweight, indigenously-developed fighter aircraft expected to enter service around 2010. Currently in testing using GE’s F404 engine, while India’s accompanying Kaveri jet engine project stalled and was scrapped in favor of a potential new engine partnership. The Tejas is not an M-MRCA competitor – but confidence in its development plans, its ability to stay under $25 million per plane, the potential for a naval variant, etc. has had a behind-the-curtains influence on every MRCA decision.
IAF Mirage 2000TH takeoff
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Mirage 2000-5/9 (Dassault). Before M-MRCA became a formal competition, Dassault reportedly offered to move the global Mirage 2000 production line to India. When India refused the offer and launched its competition, Dassault looked at how long an Indian decision would take, and their order book, and decided that the Mirage 2000 line couldn’t be kept open that long. The aircraft was withdrawn before the official RFP was released, and the larger and more expensive Rafale was offered instead.
A Mirage 2000 entry would have had a number of strengths. One is compatibility with Mirage 2000s already in service, which performed very well in the 1999 Kargil skirmishes. An infrastructure already exists for industrial offsets, and its low end price could be raised, along with its capabilities, by adding equipment developed in the Rafale program. India has already been negotiating with France along those lines, for upgrades to its existing fleet.
Industry analyst Richard Aboulafia points out that the history of global fighter purchases shows strong clustering at the lower-price end of the market; shutting down Mirage 2000 production will shut Dassault out of that niche, leaving it to new entries like India’s own Tejas LCA.
Indeed, the Mirage 2000′s potential performance similarity to the Tejas LCA project was both its weakness and its strength in India. One the one hand, Mirage 2000s offered a good insurance policy if confidence in the Tejas fell. On the other hand, it would not be seen as adding enough to the force mix, if confidence in the Tejas program remained high. The Tejas program’s qualified success over the past few years would probably have doomed the Mirage 2000. Instead, India will upgrade its existing 51-plane Mirage fleet, in a separate $2.3+ billion deal.
F-35B JSF Cutaway
by John Batchelor
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F-35 Joint Stike Fighter (Lockheed-led, multinational). In February 2006, India’s Chief Air Marshal recently specifically noted that the JSF was not in their plans for this buy, a likelihood that DID’s analysis had noted earlier due to probable lack of availability before 2015. The August 2007 MRCA RFP confirmed this.
If it were operational today, the F-35B STOVL variant would probably be by far the best fit for India’s requirements. The planes would be carrier-capable from all of India’s naval air platforms, including smaller carriers the size of INS Viraat (ex-Hermes) or LHD amphibious assault ships, and could use roads and short field runways on land for maximum operational flexibility. F-35 JSFs would sport ultra-advanced systems that include the AN/APG-81 AESA radar, and incredibly advanced sensor systems and electronics that would make it India’s most capable reconnaissance asset, and even a potential electronic warfare aircraft. Other strengths would include greater stealth than any other competitor, which is critical for both air-air dogfights and strikes on defended targets. The Super Hornet may be able to fill the role of an aerial cricket captain, but the JSF is more like Sachin Tendulkar.
India has been invited to F-35 events. With potential US order numbers dropping, India might even be accepted into the program if they pushed for it. The F-35′s killer weakness was that it could not deliver the fighters in India’s time frame, even as India’s pursuit of its FGFA program with Russia offers it a semi-indigenous stealth alternative. Lockheed Martin and the US government have been pushing the F-35 ever since the F-16 and F-18 were eliminated, but even if India changed its mind, the F-35′s advanced systems, established industrial partnership structure and program procurement policies could make it nearly impossible to meet India’s technology transfer and industrial offset rules.
MMRCA: Updates and Developments
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 Ayer-Metra 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 ope