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India signs euro 7.8-bn deal for 36 Rafale fighters

Each Rafale to cost Rs 686 cr; will be IAF's most expensive fighter

On Friday, India drew the curtain on a tortuous, nine-year selection process for a medium, multi-role fighter, signing up to buy 36 fighter aircraft from French aerospace vendor, Dassault, for euro 7.8 billion (Rs 58,000 crore).

In New Delhi, Defence Minister signed an inter-governmental agreement (IGA) with his visiting French counterpart, Jean-Yves Le Drian; while officials signed commercial components of the actual contract.

is a potent weapon which will add to the capability of IAF,” Parrikar said.

Senior ministry of defence (MoD) officials, speaking anonymously after the signing, said the average cost of each was fixed at euro 91.7 million (Rs 686 crore). This included 28 single-seat fighters, each costing euro 91.07 million (Rs 681 crore); and eight twin-seat fighters priced at euro 94 million (Rs 703 crore).

Surprisingly, the contract for 36 fighters has no “options clause”. This means the Indian Air Force (IAF) must operate just two squadrons of this new fighter — the seventh type in the inventory — or negotiate afresh for additional Rafales.

With 36 bare-bones aircraft costing euro 3.3 billion, the remaining euro 4.5 billion is for spares, logistics and weaponry, say officials.

This includes a stockpile of Meteor “beyond visual range air-to-air missiles” (BVRAAMs), which can shoot down enemy fighters that are 120-140 kms away. Each Meteor missile, built by Franco-British-Italian vendor MBDA, has a ticker price of some euro 2 million. The Meteor is currently integrated into three fighters — the Eurofighter Typhoon, Gripen NG and Rafale.

The contract also includes a stock of the million-dollar SCALP missile — a French acronym for General Purpose Long Range Standoff Cruise Missile — also known as the Storm Shadow. The SCALP, which can be fired from standoff ranges at ground targets 500 kilometres away, allows the to strike heavily-defended airfields, military headquarters and strategic infrastructure.

Like the Mirage-2000 that supplied the earlier, the can be modified to carry nuclear weapons. Its long operating range — it can strike targets more than a thousand kilometres away — make it especially suitable as an aerial nuclear delivery platform.

Following the model of the C-17 Globemaster III procurement from the US, a large share of the payout is for “performance based logistics” (PBL). This means that for the first five years of a Rafale’s service, will supply all spares and components, including engines, and technicians needed to keep the fighter flying. The vendor is liable to ensure that 75 per cent of the fleet is available at all times.

The has the option to extend PBL to 12 years, subject to a fresh contract being negotiated for the next seven years. Says a top ministry official: “We are currently getting 55-56 per cent availability from the Sukhoi-30MKI fleet. The will give us 20 per cent more.”

Air power experts note that this sounds better than it actually is. Over a fleet size of 36 Rafales, an extra 20 per cent amount to 7 extra fighters operational at any time.

officials cite Dassault’s claim that the Rafale’s quick “turnaround time”, or the time between two sorties, allows each fighter to do five operational sorties each day. While this claim would need verification during actual usage, the has determined during trials that the Rafale’s engine can be replaced in just 30 minutes, compared to eight hours for replacing a Sukhoi-30MKI engine.

The contract stipulates that the first Indian Air Force (IAF) must be delivered within 36 months, i.e. in September 2019. The entire order must be delivered within 67 months, which means the last must join the by April 2022.

Even though this is a significantly slower induction rate than what the had promised, will be hard pressed to deliver in this time frame. It was building 11 fighters per year for the French air force and navy, which are likely to slow down induction. Last year, Egypt and Qatar ordered 24 Rafales each. It is not clear how quickly can raise production or how it will sequence these commitments.

Indian officials say some delay was inevitable because the demanded a range of India-specific improvements to customise the and “make it more potent than the French air force Rafales”.

These include operational features like “helmet mounted display sights” that allow pilots to aim their weapons merely by looking at a target; a “radar warning receiver” to detect enemy radar and “low band jammers” to foil it; a radio altimeter, Doppler radar, extreme cold weather starting-up devices for airfields like Leh, and others.

The contract requires the to pay a 15 per cent advance of about Rs 8,700 crore on Friday. Since, the budget does not cater for this, an additional allocation would be needed. Another 25 per cent would be paid next year, for which the would have to budget Rs 14,500 in addition to its other commitments. The balance amount would be paid to the vendor at stipulated delivery milestones over the coming years.

officials say one of their biggest achievements during price negotiations was to peg annual cost inflation at the actual inflation level; or a maximum of 3.5 per cent. Earlier contracts with French vendors had stipulated annual inflation at 4-4.5 per cent.

“Actual inflation in Europe is barely one per cent, while we were paying four per cent. That means we have saved about three per cent per year; or Rs 4,000-14,000 crore over the contract period, depending upon the actual inflation in Europe”, says a senior official.

The contract makes French vendors, and Thales, responsible for discharging offsets worth 50 per cent of the contract value, i.e. Rs 29,000 crore. While the vendors get to choose their offset partners, the contract stipulates that 74 per cent of the liability value must be discharged through component exports from India. There is also a “technology sharing component”, amounting to six per cent of the total offsets, which the vendors will negotiate with the Defence R&D Organisation.

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Business Standard

India signs euro 7.8-bn deal for 36 Rafale fighters

Each Rafale to cost Rs 686 cr; will be IAF's most expensive fighter

Ajai Shukla  |  New Delhi 

A French Air Force Rafale fighter jet takes part in the close air support (CAS) exercise Serpentex 2016 hosted by France in the Mediterranean island of Corsica, at Solenzara air base
A French Air Force Rafale fighter jet takes part in the close air support (CAS) exercise Serpentex 2016 hosted by France in the Mediterranean island of Corsica, at Solenzara air base

On Friday, India drew the curtain on a tortuous, nine-year selection process for a medium, multi-role fighter, signing up to buy 36 fighter aircraft from French aerospace vendor, Dassault, for euro 7.8 billion (Rs 58,000 crore).

In New Delhi, Defence Minister signed an inter-governmental agreement (IGA) with his visiting French counterpart, Jean-Yves Le Drian; while officials signed commercial components of the actual contract.



is a potent weapon which will add to the capability of IAF,” Parrikar said.

Senior ministry of defence (MoD) officials, speaking anonymously after the signing, said the average cost of each was fixed at euro 91.7 million (Rs 686 crore). This included 28 single-seat fighters, each costing euro 91.07 million (Rs 681 crore); and eight twin-seat fighters priced at euro 94 million (Rs 703 crore).

Surprisingly, the contract for 36 fighters has no “options clause”. This means the Indian Air Force (IAF) must operate just two squadrons of this new fighter — the seventh type in the inventory — or negotiate afresh for additional Rafales.

With 36 bare-bones aircraft costing euro 3.3 billion, the remaining euro 4.5 billion is for spares, logistics and weaponry, say officials.

This includes a stockpile of Meteor “beyond visual range air-to-air missiles” (BVRAAMs), which can shoot down enemy fighters that are 120-140 kms away. Each Meteor missile, built by Franco-British-Italian vendor MBDA, has a ticker price of some euro 2 million. The Meteor is currently integrated into three fighters — the Eurofighter Typhoon, Gripen NG and Rafale.

The contract also includes a stock of the million-dollar SCALP missile — a French acronym for General Purpose Long Range Standoff Cruise Missile — also known as the Storm Shadow. The SCALP, which can be fired from standoff ranges at ground targets 500 kilometres away, allows the to strike heavily-defended airfields, military headquarters and strategic infrastructure.

Like the Mirage-2000 that supplied the earlier, the can be modified to carry nuclear weapons. Its long operating range — it can strike targets more than a thousand kilometres away — make it especially suitable as an aerial nuclear delivery platform.

Following the model of the C-17 Globemaster III procurement from the US, a large share of the payout is for “performance based logistics” (PBL). This means that for the first five years of a Rafale’s service, will supply all spares and components, including engines, and technicians needed to keep the fighter flying. The vendor is liable to ensure that 75 per cent of the fleet is available at all times.

The has the option to extend PBL to 12 years, subject to a fresh contract being negotiated for the next seven years. Says a top ministry official: “We are currently getting 55-56 per cent availability from the Sukhoi-30MKI fleet. The will give us 20 per cent more.”

Air power experts note that this sounds better than it actually is. Over a fleet size of 36 Rafales, an extra 20 per cent amount to 7 extra fighters operational at any time.

officials cite Dassault’s claim that the Rafale’s quick “turnaround time”, or the time between two sorties, allows each fighter to do five operational sorties each day. While this claim would need verification during actual usage, the has determined during trials that the Rafale’s engine can be replaced in just 30 minutes, compared to eight hours for replacing a Sukhoi-30MKI engine.

The contract stipulates that the first Indian Air Force (IAF) must be delivered within 36 months, i.e. in September 2019. The entire order must be delivered within 67 months, which means the last must join the by April 2022.

Even though this is a significantly slower induction rate than what the had promised, will be hard pressed to deliver in this time frame. It was building 11 fighters per year for the French air force and navy, which are likely to slow down induction. Last year, Egypt and Qatar ordered 24 Rafales each. It is not clear how quickly can raise production or how it will sequence these commitments.

Indian officials say some delay was inevitable because the demanded a range of India-specific improvements to customise the and “make it more potent than the French air force Rafales”.

These include operational features like “helmet mounted display sights” that allow pilots to aim their weapons merely by looking at a target; a “radar warning receiver” to detect enemy radar and “low band jammers” to foil it; a radio altimeter, Doppler radar, extreme cold weather starting-up devices for airfields like Leh, and others.

The contract requires the to pay a 15 per cent advance of about Rs 8,700 crore on Friday. Since, the budget does not cater for this, an additional allocation would be needed. Another 25 per cent would be paid next year, for which the would have to budget Rs 14,500 in addition to its other commitments. The balance amount would be paid to the vendor at stipulated delivery milestones over the coming years.

officials say one of their biggest achievements during price negotiations was to peg annual cost inflation at the actual inflation level; or a maximum of 3.5 per cent. Earlier contracts with French vendors had stipulated annual inflation at 4-4.5 per cent.

“Actual inflation in Europe is barely one per cent, while we were paying four per cent. That means we have saved about three per cent per year; or Rs 4,000-14,000 crore over the contract period, depending upon the actual inflation in Europe”, says a senior official.

The contract makes French vendors, and Thales, responsible for discharging offsets worth 50 per cent of the contract value, i.e. Rs 29,000 crore. While the vendors get to choose their offset partners, the contract stipulates that 74 per cent of the liability value must be discharged through component exports from India. There is also a “technology sharing component”, amounting to six per cent of the total offsets, which the vendors will negotiate with the Defence R&D Organisation.

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India signs euro 7.8-bn deal for 36 Rafale fighters

Each Rafale to cost Rs 686 cr; will be IAF's most expensive fighter

Each Rafale to cost Rs 686 cr; will be IAF's most expensive fighter On Friday, India drew the curtain on a tortuous, nine-year selection process for a medium, multi-role fighter, signing up to buy 36 fighter aircraft from French aerospace vendor, Dassault, for euro 7.8 billion (Rs 58,000 crore).

In New Delhi, Defence Minister signed an inter-governmental agreement (IGA) with his visiting French counterpart, Jean-Yves Le Drian; while officials signed commercial components of the actual contract.

is a potent weapon which will add to the capability of IAF,” Parrikar said.

Senior ministry of defence (MoD) officials, speaking anonymously after the signing, said the average cost of each was fixed at euro 91.7 million (Rs 686 crore). This included 28 single-seat fighters, each costing euro 91.07 million (Rs 681 crore); and eight twin-seat fighters priced at euro 94 million (Rs 703 crore).

Surprisingly, the contract for 36 fighters has no “options clause”. This means the Indian Air Force (IAF) must operate just two squadrons of this new fighter — the seventh type in the inventory — or negotiate afresh for additional Rafales.

With 36 bare-bones aircraft costing euro 3.3 billion, the remaining euro 4.5 billion is for spares, logistics and weaponry, say officials.

This includes a stockpile of Meteor “beyond visual range air-to-air missiles” (BVRAAMs), which can shoot down enemy fighters that are 120-140 kms away. Each Meteor missile, built by Franco-British-Italian vendor MBDA, has a ticker price of some euro 2 million. The Meteor is currently integrated into three fighters — the Eurofighter Typhoon, Gripen NG and Rafale.

The contract also includes a stock of the million-dollar SCALP missile — a French acronym for General Purpose Long Range Standoff Cruise Missile — also known as the Storm Shadow. The SCALP, which can be fired from standoff ranges at ground targets 500 kilometres away, allows the to strike heavily-defended airfields, military headquarters and strategic infrastructure.

Like the Mirage-2000 that supplied the earlier, the can be modified to carry nuclear weapons. Its long operating range — it can strike targets more than a thousand kilometres away — make it especially suitable as an aerial nuclear delivery platform.

Following the model of the C-17 Globemaster III procurement from the US, a large share of the payout is for “performance based logistics” (PBL). This means that for the first five years of a Rafale’s service, will supply all spares and components, including engines, and technicians needed to keep the fighter flying. The vendor is liable to ensure that 75 per cent of the fleet is available at all times.

The has the option to extend PBL to 12 years, subject to a fresh contract being negotiated for the next seven years. Says a top ministry official: “We are currently getting 55-56 per cent availability from the Sukhoi-30MKI fleet. The will give us 20 per cent more.”

Air power experts note that this sounds better than it actually is. Over a fleet size of 36 Rafales, an extra 20 per cent amount to 7 extra fighters operational at any time.

officials cite Dassault’s claim that the Rafale’s quick “turnaround time”, or the time between two sorties, allows each fighter to do five operational sorties each day. While this claim would need verification during actual usage, the has determined during trials that the Rafale’s engine can be replaced in just 30 minutes, compared to eight hours for replacing a Sukhoi-30MKI engine.

The contract stipulates that the first Indian Air Force (IAF) must be delivered within 36 months, i.e. in September 2019. The entire order must be delivered within 67 months, which means the last must join the by April 2022.

Even though this is a significantly slower induction rate than what the had promised, will be hard pressed to deliver in this time frame. It was building 11 fighters per year for the French air force and navy, which are likely to slow down induction. Last year, Egypt and Qatar ordered 24 Rafales each. It is not clear how quickly can raise production or how it will sequence these commitments.

Indian officials say some delay was inevitable because the demanded a range of India-specific improvements to customise the and “make it more potent than the French air force Rafales”.

These include operational features like “helmet mounted display sights” that allow pilots to aim their weapons merely by looking at a target; a “radar warning receiver” to detect enemy radar and “low band jammers” to foil it; a radio altimeter, Doppler radar, extreme cold weather starting-up devices for airfields like Leh, and others.

The contract requires the to pay a 15 per cent advance of about Rs 8,700 crore on Friday. Since, the budget does not cater for this, an additional allocation would be needed. Another 25 per cent would be paid next year, for which the would have to budget Rs 14,500 in addition to its other commitments. The balance amount would be paid to the vendor at stipulated delivery milestones over the coming years.

officials say one of their biggest achievements during price negotiations was to peg annual cost inflation at the actual inflation level; or a maximum of 3.5 per cent. Earlier contracts with French vendors had stipulated annual inflation at 4-4.5 per cent.

“Actual inflation in Europe is barely one per cent, while we were paying four per cent. That means we have saved about three per cent per year; or Rs 4,000-14,000 crore over the contract period, depending upon the actual inflation in Europe”, says a senior official.

The contract makes French vendors, and Thales, responsible for discharging offsets worth 50 per cent of the contract value, i.e. Rs 29,000 crore. While the vendors get to choose their offset partners, the contract stipulates that 74 per cent of the liability value must be discharged through component exports from India. There is also a “technology sharing component”, amounting to six per cent of the total offsets, which the vendors will negotiate with the Defence R&D Organisation.
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