Questions about the Rafale

The government should release the price details

From the detailed figures that this newspaper has published, it is clear that the price being paid by India for 36 Rafales is not out of line with other contracts for the fighter aircraft. While apples-to-apples comparisons are difficult in complex transactions of this nature, when the full break-up of costs is rarely known, what seems clear from the data is that the Indian Air Force is getting the Rafales at a lower cost than being paid for by both Egypt and Qatar, and lower also than the price for the French air force if the fighter aircraft’s development costs are included. Consequently, there should be no prima facie cause for concern about the price that India has contracted—although, given the nature and history of defence deals in general, no one can be sure that no money was made on the side. 

There is the issue raised by the Congress, of whether the original 2007 bid by Dassault for supplying 18 out of 126 aircraft in fly-away condition was at a higher or lower cost than for the 36-aircraft order that was finally contracted last year. This is easily resolved if the defence ministry releases the price details for the initial bid and the final order; since the latter had more add-ons than the former, firm like-to-like comparisons are impossible on the basis of currently available information. Regrettably, the defence minister has gone back on her undertaking to place detailed figures in the public domain. If the reason for second thoughts (as has been reported) is a secrecy clause in the contract, the government should say so, and explain why secrecy is necessary when the French government makes public the price it is paying for the same aircraft. 

The real problem with the decision to buy just 36 Rafales (two squadrons), as against the originally proposed 126, is that it does little to alleviate the air force’s depleted squadron strength — now down to 32-33 squadrons, with another 10 squadrons of MiG-21s and MiG-27s to retire in the next few years. If additional Rafales are to be acquired, in order to add more squadrons and bring that fighter’s numbers up to a level that justifies the expenditure on its support infrastructure, fresh negotiations would be needed since the contract for 36 Rafales has no “options clause” for buying more aircraft at the same price. In the circumstances, the IAF has gone back to the 2007 starting point—with the initiation of a brand new acquisition programme for single-engine fighters to replace the MiG fleet. Evidently, the production rate for the home-grown Tejas fighters (123 of which are on order) will be too slow to meet all air force requirements. 

What about “Make in India”? The Rs 58,000 crore Rafale contract is to generate Rs 29,000 crore worth of defence manufacturing in India. However, Dassault and Thales, which are responsible for most offset obligations arising from the Rafale purchase, have partnered a group with little knowledge of high-end engineering, leave alone the aerospace industry. Simultaneously, a billion dollars in offset obligations is to be discharged by French engine-maker Snecma by breathing life into the Defence R&D Organisation’s (DRDO’s) sputtering Kaveri engine. A decade ago, the DRDO had turned down a proposal for partnership with Snecma.