The Never Ending Rafale Debate

 In recent days the Rafale deal has once again been in the news. 

First the Raksha Mantri said that he was a tough negotiator and wanted to save some money for India.(New Indian Express 05 March 16) Later it was said that France (Dassault, the manufacturer of Rafale) was demanding some Rs. 90,000 crores or 12 billion Euros for 36 aircraft whereas India was trying to bring down the price to Rs. 68,000 crores or 8 billion Euros. (NIE 10 march, 2016)

Cost/Price

Since it was shortlisted some four years ago the price of the Rafale deal  has skyrocketed not only because of the downfall of the Indian Rupee but also for some other extraneous reasons that were perhaps not quite factored in at the time. The Rupee fell from about 45-46 to US Dollar in 2007-08 to 67-68 at present and the price has jumped  from US Dollars 9 billion for 126 aircraft to more than 8-12 billion for just 26 aircraft now. This is obviously difficult to understand. Admittedly the average lay person does not know the the actual cost but what this means is that a Rafale would now cost a whopping Rs.1888.8 crores each  whereas in 2009-10 it cost just Rs. 357 crores. In US Dollar terms it would be  222 million each which is  not a small sum. This prohibitively high  price, therefore, does not make sense. 

Affordability

It is generally accepted that India would have to make a down payment of at least 15% of the negotiated price up front at the time of signing the deal which means some 1.2 billion US Dollars or Rs 8,000 crores.  The first of the 36 Rafales will then begin to arrive in India only in 2019-20. Can India really afford to make this commitment  in the present economic climate?  It is quite possible or even likely that the Su-30MKI would also cost high but since India has already been using  some 215 of these (IISS Military Balance March 2015) it would be easier to order and induct additional numbers. India can then decide whether it would  make up the numbers with LCS Tejas or any other aircraft. 

Effect

The effect of inducting just 36 Rafale fighters or two squadrons in 2019-20 may also be only marginal since the IAF would/should be able to reallocate tasks to the additional Su-30MKI fighters. It is alleged that the current serviceability of the Su-30MKI fleet is only 55% and that its maintenance problematic due mainly to India's dependence on Russian manufacturers and spare parts vendors. But this would be so in the case of any new aircraft given our total dependence on the vendor/manufacturer. This may well be true but it is also reported that HAL has in recent years begun the overhaul/servicing and even manufacture of many essential spare parts. It should, therefore, be easier to tweak/improve this system. Some commentators have said that the Mirage-2000 fleet played a crucial role during the 1999 Kargil conflict and more than proved its high costs. This is undoubtedly true but  it is also equally true that at that time the Su-30 was only just entering service and in a limited border war of the future the Su-30MKI should prove eminently worthy. It is also said that Russian technology is not as advanced as its Western counterpart but then why has India been purchasing more and more Su-30MKI fighters and also collaborating with Russia in a variety of other spheres such as missiles and submarines?    

Technology Transfer.  

It is obvious that the IAF chose the Rafale despite its high cost because it saw its induction as a major upgrade in technology. Its induction would no doubt also pave the way for further indigenous aircraft production but that would depend largely on the extent to which France/Dassault  actually allow the necessary technology transfer. If past experience is anything to go by that is not certain. Dassault has already said that it does not accept HAL as the lead technology integrator but wants Reliance, its JV partner to play that role. One wonders if this sticky point has already been resolved or not.

Life Cycle Costs. 

At the time of its selection it was said that the choice of Rafale had taken into consideration its life cycle costs. While the IAF would have done due diligence on this issue, in the absence of local licensed manufacture every spare part including consumables such as aircraft tyres, disc brake pads, filters, and numerous other items would have to be imported from France on an almost day-to-day basis. And since this would be in foreign exchange the year-on-year revenue budget will have to provide for this additional expenditure which might be considerable. In addition, this total dependence on the manufacturer will in all probability seriously affect the serviceability and availability of the Rafale fleet. The IAF would also have to procure additional/spare engines and send those due for major overhauls or repairs back to France.  A not to infrequent bird hit could cost dear both in terms of time and precious foreign exchange. This would further add to the costs.

Training 

The training of IAF aircrews would only begin once the aircraft arrives in India unless France trains the first batch of 20-24 pilots in France on French Air Force fighters. The cost of this training may have already been factored into the overall cost but would be considerable and the actual training time-consuming. Further, these aircrews would also have to be trained in the Indian environment and that would mean more time.  To be fair this would apply to any other foreign fighter as well except the Su-30MKI and the LCA Tejas.

Alternatives

Even at this late stage it should be possible to look at another fighter e.g. the JAS-39 SAAB Gripen which may not be as good as the Rafale in all its attributes and may even be only marginally cheaper but would be worthwhile if the purchase is accompanied with appropriate technology transfer. The Gripen allegedly lost out because it is powered by an American engine and hence would need US approval which at the best of times can be uncertain. Having already purchased a large number of aircraft such as the C-17, C-130 J, and now the Chinook and Apache helicopters India might find herself in a better position cross this hurdle and handle this problem in the future.   

Conclusion 

It should now be clear that procrastination over the decision to choose the right type of aircraft has cost the Indian exchequer dear and even now there is no guarantee that India would eventually get value for money if it goes ahead with this costly purchase. It is, therefore, suggested that this issue be examined de novo  even at the risk of further delay.