In the wake of India's deal to acquire 36 Dassault Rafale fighters, NEELAM MATHEWS analyses this key defence procurement.

Four years after Dassault Aviation’s Rafale was chosen for India’s 126 Medium Multi Role Aircraft, India and France have signed a watered down deal for 36 aircraft valued at €7.87bn. It includes 28 single seaters at €91.7m each and eight twin seaters at €94m each. India has become the third international customer to buy Rafale after Qatar and Egypt.

India will receive the first Rafale fighter within 36 months of signing the agreement while the remaining jets will be delivered in the following 30 months. “We have requested them to (deliver it) as fast as possible,” said defence minister Manohar Parrikar. Analysts view this in the backdrop of increased cross border tensions following numerous alleged Pakistan Army supported terrorist attacks on Indian military bases.

The contract

India's Chief of the Air Staff, Air Chief Marshal Arup Raha, has praised the Rafale (Neelam Mathews)

“With the Rafale deal, plans to purchase up to 500 utility helicopters, armoured infantry vehicles, artillery and warships can also expect concrete funding commitments,” said Bharat Dogra, Partner at consultancy, Khaitan & Co. “Rafale is definitely a very good fighter. It is considered as four plus generation or four and half generation, just maybe slightly behind the fifth generation, particularly in terms of stealth. But, we have a lot of India-specific attachments or additions to it, which would ensure that it virtually matches almost any fifth generation aircraft,” said Parrikar in an interview to a TV channel. The Rafale package includes the cost of 36 Rafales (€3,402m, associate supplies (€1,800m), India-specific enhancements (€1,700m), performance-based logistics (€353m) and the weapons package (€710m). The Inter-Governmental Agreement (IGA) pending since January due to a divergence on price, was inked between the Indian and French defence ministers in New Delhi on 23 September, a confirmation of the MoU signed between the two Heads of State, Prime Minister Narendra Modi and President François Hollande in January. The IGA specifies details of the contract including timelines. However, the support, logistics, and 50% offsets package will be signed in a few months, a senior MoD official said. Unlike the Foreign Ministry Sales (FMS) of the US government, under the IGA, the French government does not negotiate on behalf of the company (Dassault). In addition, the IGA does not benchmark French firms to guarantee (India) the lowest price offered to a similar contract anywhere in the world. The US government does. “This contract will assure the global aerospace and defence industry that India is open for business,” Rahul Gangal, Partner Roland Berger told Aerospace. The procurement will increase the strength of the Indian Air Force (IAF), which is currently down to 34 squadrons as against a required 44, by two and a half squadrons.

 

Capability boost

 

The weapons package includes MICA, Meteor and SCALP missiles. (Dassault Aviation)

The weapons package gives the IAF a capability that has been missing in its arsenal. For instance the beyond visual range air-to-air missile 190kg Meteor with around 150km range has a ramjet propulsion system and a solid fuel, variable flow, ducted rocket. The missile is equipped with both impact and proximity fuses and a fragmentation warhead that detonates on impact or at the optimum point of intercept. The package also includes the 1,300kg, 250km range SCALP EG (Système de Croisière Autonome à Longue Portée – Emploi Général, General Purpose Long Range Standoff Cruise Missile), the French designation for the MBDA Storm Shadow precision strike missile. The missile is equipped with an imaging infrared seeker that is activated during the final target approach phase. Fitted with the ‘BROACH’ penetrator and warhead, and with the ability to select direction and dive angle of attack, Storm Shadow/SCALP is able to engage a variety of targets such as control centres, hardened aircraft shelters, runways, buildings and bridges, air defence emplacements and ships in port. The French Air Force is believed to have used it against Daesh sites in support of the coalition in the Mosul area in September. The package also includes the BVR MICA air-to-air missiles with a range of over 70km. In September, the IAF fired the recently acquired MICA on a target from an upgraded Mirage-2000. India purchased 450 MICAs from MBDA as part of the 49 Mirage 2000 upgrade deal in 2012 for $1.23bn.

Said Chief of the Air Staff of the IAF, Air Chief Marshal Arup Raha: “Any air force will be proud to have an aircraft like the Rafale in the mid weight class. The weapons, avionics, electronic warfare suite and instrumentation are exceptional and it is the leading aircraft in the current generation...We would like to have more but the decision will be taken in the near future based on cost and capability.”

The Rafale contract specifies delays and will attract a penalty in terms of liquidity up to 5% and waiver in inflation indices. Dassault will also need to ensure that at least 75% of the entire fleet remains operational at any given time under a five-year warranty with an option by India to extend it for two-years at the original cost. The Rafales will also have 14 India-specific enhancements to suit the requirements of the IAF, including integration of Israeli helmet-mounted displays, an operational requirement to carry nuclear weapons and high altitude runway testing starting in Leh, Ladakh, India.”

 

Another 'Made in India' fighter contest

Rafales will be built in France - but India still aims to build its MiG-21 replacement locally. (Dassault Aviation)

A 50% offset clause worth around €3bn has yet to be signed, learns AEROSPACE. As part of the offsets, France has offered an investment of €1bn to revive India’s stalled Kaveri Gas turbine project by Safran to jointly develop the engine to power the indigenous Low Combat Aircraft-Tejas by 2020. Safran’s M88 powers the Rafale.

Thales provides systems on board, including the RBE2 AESA radar, a joint venture with Samtel Avionics. The JV develops, customises, manufactures, sells and maintains helmet-mounted sight & display (HMSD), optronics and other avionics systems for the Indian market. “The offset clause will provide an opportunity for indigenous manufacturers …It outlines the commitment made by the Indian government to promote the Indian manufacturing industry. The future holds an opportunity for India to become a global manufacturing hub for these fighter planes in case there is successful transfer of technology,” said Puneet Kaura, MD and CEO Samtel Avionics.

To further the 50% offsets, a new joint venture “Dassault Reliance Aerospace” was signed on 3 October between Reliance Group and Dassault for manufacture of large components for aerostructures, electronics and engines. Reliance Defence Systems already has an industrial license and access to a runway at the Nagpur International Airport where these parts will be manufactured, ultimately becoming part of the global supply chain for Dassault, AEROSPACE learns.

This contract now paves the way for a ‘Make in India’ fighter in joint production with OEMs, for which Lockheed, Boeing and Saab have made presentations. “Lockheed Martin is offering India the exclusive opportunity to produce, operate, and export F-16 Block 70 aircraft. With new technologies derived from our fleet of advanced fifth Generation aircraft….(the) exclusive F-16 production in India would make India home to the world’s only F-16 production facility….None of our competitors can offer that,” Abhay Paranjape, Director Air Mobility Business Development for India, Lockheed Martin told Aerospace.

While Eric Trappier, Chairman and CEO, Dassault Aviation, has said, the company: “will endeavour to ensure ambitious industrial under the ‘Make in India’ policy,” an anonymous analyst said: “Shifting production to India will not create jobs for the French. Besides, the cost of the Rafale is exorbitant.” He added that India could likely order more Su-30s to fill its immediate requirement of at least 90 fighters.

While there is reason to be optimistic, there is a word of caution. “The window of opportunity is shrinking. The government has essentially another 14 months to push reforms on the sector for economic activity to start, since the general elections are bound to push these initiatives to the backburner,” said Kabir Bogra, Associate Partner, Khaitan.

Neelam Mathews
21 October 2016