Why Rafale is a Big Mistake

For Paris a lot is at stake and in India the French have found an easy mark, a country willing to pay excessively

Published: 25th July 2014 06:00 AM  |   Last Updated: 25th July 2014 12:55 AM   |  A+A-

Why would India buy the Rafale combat aircraft rejected by every other interested country—Brazil, Canada, the Netherlands, Norway, South Korea, Singapore, and even the cash-rich but not particularly discriminating Saudi Arabia and Morocco?

The French foreign minister Laurent Fabius’s one-point agenda when he visited New Delhi was to seal the deal for Rafale, a warplane apparently fitting IAF’s idea of a Medium Multi-role Combat Aircraft (MMRCA) in the service’s unique typology, which includes “light” and “heavy” fighter planes as well, used by no other air force in the world. Alas, the first whiff of corruption led the previous defence minister, A K Antony, to seize up and shut shop, stranding the deal at the price negotiation committee stage. It is this stoppage Fabius sought to unclog.

France’s desperation is understandable. Absent the India deal, the Rafale production line will close down, the future of its aerospace sector will dim, and the entire edifice of French industrial R&D sector based on small and medium-sized firms—a version of the enormously successful German “Mittelstand” model—engaged in producing cutting-edge technologies could unravel, and grease France’s slide to second-rate technology power-status.

More immediately, it will lead to a marked increase in the unit cost of the aircraft—reportedly of as much as $5-$10 million dollars to the French Air Force, compelling it to limit the number it inducts. With no international customers and France itself unable to afford the pricey Rafale, the French military aviation industry will be at a crossroads. So, for Paris a lot is at stake and in India the French have found an easy mark, a country willing to pay excessively for an aircraft the IAF can well do without.

Consider the monies at stake. Let’s take the example of Brazil, our BRICS partner. For 36 Rafales the acquisition cost, according to Brazilian media, was $8.2 billion plus an additional $4 billion for short-period maintenance contracts, amounting to nearly $340 million per aircraft in this package and roughly $209 million as the price tag for a single Rafale without maintenance support. Brazil insisted on transfer of technology (ToT) and was told it had to pay a whole lot extra for it, as also for the weapons for its Rafales. But the Brazilian air force had doubts about the quality of the AESA (active electronically scanned array) radar enabling the aircraft to switch quickly from air-to-air to air-to-ground mode in flight, and about the helmet-mounted heads-up-display. Too high a price and too many problems convinced the government of president Dilma Rousseff that the Rafale was not worth the trouble or the money and junked the deal, opting for the Swedish Gripen NG instead.

During the Congress party’s rule the Indian government did not blink at the prospective bill for the Rafale, which more than doubled from $10 billion in 2009 to some $22 billion today, and which figure realistically will exceed $30 billion, or $238 million per aircraft, at a minimum. But India, unbeknownst to most of us, is apparently a terribly rich country, with money to burn! Meanwhile, the United Kingdom, an apparently poorer state or at least one more careful with its money, is blanching at the $190 million price tag for each of the 60 Lockheed F-35Bs (vertical take-off, technologically more complex, variant of the air force model)—a full generation ahead of the Rafale—ordered for the first of the Royal Navy’s Queen Elizabeth-class 65,000-tonne aircraft carriers.

The prohibitive cost of the French aircraft supposedly made finance-cum-defence minister Arun Jaitley apprehensive. He did the right thing, as is rumoured, of revising the order downwards from 126 aircraft to 80 or so Rafales. The IAF headquarters pre-emptively acquiesced in the decision to save the deal. However, if this change was affected in the hope of proportionately reducing the cost, it will be belied. Because in contracts involving high-value combat aircraft, the size of the order does not much affect the unit price, the cost of spares and service support, and of ToT! This is evident from the rough estimates of the per aircraft cost to Brazil of $209 million for 36 Rafales compared with the $238 million for 126 of the same aircraft to India!

Because New Delhi has been inclined to make India a military “great power” on the basis of imported armaments—a policy that’s a boon to supplier states as it generates employment and new technologies in these countries, and sustains their defence industries, a confident French official told me with respect to another deal that “India will pay the price”. Considering the various negatives of the proposed deal and the long-term national interest Jaitley would do well to nix the Rafale transaction altogether.

The bureaucratic interest of the IAF prompts it to exaggerate wrong threats and talk of declining fighter assets. But it will not tell the defence minister about the logistics hell routinely faced by frontline squadrons in operations owing to the mindboggling diversity of combat aircraft in its inventory, a problem only the Rafale acquisition will exacerbate and, hence, about the urgent need to rationalise the force structure, ideally to Su-30s, the indigenous Tejas Mk-1 for short-range air defence, Tejas Mk-II as MMRCA, and the Su-50 PAK FA as fifth-generation fighter. Nor will the department of defence production officials disclose to Jaitley that the ToT provisions in arms contracts are a fraudulent farce because, while the foreign suppliers pocket billions of dollars, no core technologies, such as source codes (millions of lines of software) and flight control laws, are ever transferred. And that the local defence industry monopolised by defence public sector units (DPSUs) is incapable of absorbing and innovating even such technology as is, in fact, relayed to it because it only assembles aircraft from imported kits.

Terminating the Rafale deal will be disruptive but sending the message to the military, the DPSUs, the defence ministry bureaucracy, and foreign companies salivating for rich, one-sided, contracts that the Narendra Modi government is determined to make a new start and conduct defence business differently, is more important.

The author is professor at the Centre for Policy Research and blogs at www.bharatkarnad.com

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