DEBUNKING INC’S FALSE CLAIMS ABOUT RAFALE
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Rafale is possibly the most potent Euro-Canards up in the sky, which very few systems can actually bring down. However, a focussed and concentrated effort by the Congress by spreading canards about the deal might hurt the craft in ways no technology can.
You must have all come across posts similar to the one provided below? It isn’t anything new. It is the dead dog of the failed attempt to create a ‘Bofors’ zombie out of a Rafale back in 2018 (that was when I had originally posted this article in my FB Blog). The same brouhaha is being flogged back into life again, now that the Rafales have landed. Insofar as I am concerned, the charges about the Rafale deals are all being made with innuendos, insinuations, asides and whataboutery. If people are so sure about their positions they should be in a position to bring out the issues with specifics, mostly cos there is a plethora of specifics associated with the Rafale, beyond generalities. Enough at least to separate the chaff from the wheat.
Discalimer: At the outset, I would like to state that wrt the Rafale deal I have no privileged information, and all that I have culled has been from public sources. Given the hectic roiling of waters wrt Rafale, I thought I would collate all that I know and place it in a post so that there are a complete FAQ and listing of facts. In case there are any incorrect assumption, misrepresentation OR fallacy, please do point it out and I will correct the same.
Now to address each of these questions one by one.
The figure of Rs.525 crore or approximately €79 million per Rafale, which Rahul Gandhi, the Indian National Congress and those borrowing from them have been citing, is based on Dassault Aviation’s 2007 RFP response towards the Flyaway Cost at the then exchange rate (€I = Rs.66) and that too for only the 18 Rafales that were to be delivered off-the-shelf by Dassault Aviation.
But where was this cost coming from? Was it the only cost for consideration?
However, if the complete development cos is loaded onto the beginning set of aircrafts, it would make the purchase unattractive and the subsequent aircrafts would be subsidised. Thus one generally apportions a portion of it the Flyaway Cost.
Irrespective, the 2007 price of Rs.525 crore or approximately €79 million per Rafale for each of the 18 Rafales would have amounted in 2015 to €100.85 million, adjusting for the inflation allowed (by the MMRCA documents) at 3.5% (Rs.765.4 crore at 2015 exchange rate of €1 = Rs 75.90). Similarly, the 2007 bid price for every Eurofighter EF-2000 would in 2015 have worked out to be €102.85 million, higher than that of the Rafale.
In comparison, the average price of each of the 36 “bare/green” Rafales bought in 2016 is €91.7 million (Rs.696 crore at the 2015 exchange rate), lower than both the earlier 2007 Rafale and Eurofighter EF-2000 RFP responses. The exact price for the 28 single-seat Rafales is €91.07 million (Rs.681 crore) each, and that of each of the eight tandem-seat Rafales is €94 million (Rs.703 crore). This, despite the quantum of the order being smaller than the original 126 (though there is nothing to suggest that the order of 36 is the ONLY order which is going to be placed on the Rafale).
There was one way to still fix the deal. Say one was paying 100+x for the fighter, ‘x’ being the extra component which was to be routed back, yet wanted to give an impression that one has been able to extract a good deal, the best way would be to state that the agreed price is 90+y, where y=x+10. As ‘y’ can’t truly be determined, if one made enough noise about ‘y’, the purported perfidy might be outed. That is the logic on the basis of which some commentators are stating “Most aerospace industry executives agree the ‘India-specific enhancements’ are a part of the Rafale operational platform and should be included in its price.” Thus squarely insinuating that the ‘modifications’ are smokescreen to hide under-the-table accounting. None though are clarifying as to how that can be done in a Govt to Govt deal, where national auditors will be going through each aspect of the deal independently. But, for the sake of argument, let’s say that such a thing was possible, let us inspect each of the modifications:
Thus, none of the above are a part of general fitment of Rafale, whose intrinsic weapon systems details can be found here. It must be noted here that:
The overall upgrade programme of the Mirage-2000s is pegged at nearly Rs 18,000 Crs in 2013. Thus each plane was being upgraded at a cost of nearly Rs 350 Crs. Given the fact that Rahul Gandhi and his acolytes have stated that a complete new Rafale would come at Rs 530 Crs, why did they spend nearly 70% of a new A/C’s cost on refurbishing a 20+-year-old aircraft? Or was the UPA also syphoning money through the French using the ‘modification’ route? Wasn’t the ‘upgrades’ as extensive as the Rafales?
At $50 million per aircraft, the price of modification of each Mirage is way higher than the price of modification for each Rafale.
It’s well known that the MMRCA negotiations broke down as Dassault and HAL couldn’t reach any agreement. The IAF has officially confirmed that Hindustan Aeronautics Ltd (HAL) was ‘ejected’ from the Rafale proceedings in 2016. The rift between Dassault and HAL that notoriously stalled the M-MRCA in its final leg on account of ‘irresolvable differences’ is known by most following the program. Moreover, Dassault refused to take responsibility for the time and cost responsibility of HAL without having any executive control over the project. Who would?
For the Rafales that were to be licence-assembled by the Bengaluru-based and MoD-owned Hindustan Aeronautics Ltd, or HAL (the workshare agreement between HAL and Dassault Aviation was signed on March 13, 2014), Dassault Aviation had estimated that each HAL-built Rafale will cost 2.7 times more (including Rs. 68 crores in labour costs alone per aircraft) than a Rafale delivered by Dassault Aviation. This is because not only would HAL have had to upgrade its in-house airframe fabrication and systems integration capabilities entirely through imported hardware and expertise, but the same also would have had to be undertaken by several of the private-sector and public-sector industrial entities that had been identified by HAL and Dassault Aviation as vendors. These would have included the following:
Nett cost of each of the 18 fully weaponized Rafale M-MRCA in flyaway condition as negotiated by the UPA-2 government was Rs.1,705 crore and that of each meant-to-be-licence-built Rafale was Rs. 4,603.5 crore, whereas the figure for each of the 36 flyaway Rafales now on order works out to Rs.1,646 crore.
There are various stories which abound on this, but what is undeniable is the fact that the MMRCA originated with the Mirages.
The Mirages had given sterling performance in the Kargil conflict and thus was an IAF favourite. Considering that a whole family of aircraft, the Mig 21s/23s/27s were soon to be phased out, the airforce looked at replacing them with the Mirage 2000s. Thus, IAF was either seeking Mirage 2000 Vs OR was seeking to bring the whole Mirage assembly plant, as Dassault was phasing out Mirage production and such that the aircraft could be produced in India. However, given the propensity of raking of defence deals over coals, each defence minister is wary of getting into the single-vendor situation. Thus, the MMRCA was called in.
Now, it was then a convention, that all fighters would be double engined. Even the light fighters (with the exceptions of the F16s, Mirages and Gripen). The logic behind that is, given the rising cost of an aircraft with its subsystems, it can’t be left hostage to just one engine. Two engines meant halving the engine-related risks while adding range, thrust etc. Thus, towards replacing the Mig 21s/23s/27s both single-engined F16/Gripen and double engined solutions were looked at Mig 35/F18/EF2000/Rafale.
IAF rubbed its hand in glee, in having such a smorgasbord to choose from. The question as to whether budgets would be able to accommodate such a replacement was never factored in, nor the economics of purchase (which gives an idea of the decision-making matrix) and the focus was purely on technicalities.
Given the fact that a single-engined plane might cost around $4000 per flight hour to fly (for F16s/Gripen/Tejas) to $15,000 for the double engined (Su 30MKI, Rafales etc), there was no way that a whole complement of Rafales would be inducted to become the mainstay of the IAF without multiplying the current IAF budget. But then, if that was possible, it would be equally possible to put Rs 15 lacs in each person’s bank account. Reality, however, is a bugbear.
While the Su 30MKIs does answer the air dominance needs, filling in the gap for deep penetration strike and nuclear delivery platform is a specialised need and Rafales were ideally suitable for that purpose, beyond its Omni role. Thus, going in for 2 squadrons (one for each front) as the first tranche makes sense. As does getting the aircraft off the shelf as against manufacturing them for kits and multiplying the acquisition cost (cos then, one pays for the production of parts, the conveyance of parts, the assembly line, the production at home and its subsequent testing, without the whole thing translating into a growth of any technological base at home.
IF technical capability was being grown at home, after screwdriver manufacturing from Mig 21s to the Su 30MKIs, we would now be capable of producing our own range of aircrafts, wouldn’t we? Are we?
1) Has any truly fourth-gen MRCA like Eurofighter EF-2000 or Rafale or even the F-15SD ever been licence-built anywhere in this world? No. Why? Because it is cost-prohibitive & unaffordable.
Take the example of Su 30MKI, the pride of IAF. Producing the same aircraft in India, by HAL, costs the Indian exchequer 250% of what it would have cost to buy it off-the-shelf from Russia. Why? Cos now there has to be a complete production facility which has to be set up over and above the cost of the aircraft. Moreover, ‘assembling’ an aircraft doesn’t naturally transfer an ability to build one’s own aircraft. India has built: Mig 21, Jaguars, Su 30 MKIs…yet, when it came to building Tejas, it had to start from scratch and had to face all the hiccups of a new enterprise.
2) No plane today is made by a single source. Instead, different parts are sourced from different OEMs. Like the ejection seat, the radar, the Electronic Warfare suit, the radome, the refuelling probe etc. Manufacturing in India would still entail importing the various sub components. Or, setting up factories for each, and that too for restricted numbers, which would, of course, scuttle any economy-of-scale and shoot up the costs.
3) Will ANY 4th-gen MRCA to be licence-built ever be subjected to the product warranty/liability obligations/coverage by their OEMs? Never. What very few folks know for a fact is that none of the aircraft licence-built in India by HAL to date have been covered by product performance guarantees of their OEMs, be they from France or the UK or USSR/Russia.
In case of the Rafale, while Dassault Aviation was totally agreeable to HAL licence-building the Rafales, it was refusing to issue product performance guarantees for such licence-built aircraft. And this was totally unacceptable to the IAF, which was not compromising on this issue & had wanted product performance guarantees for its Rafales.
Instead, it made sense to seek out specific technical inputs towards areas where we are lagging, like the Kaveri engine, and supplement our gaps, rather than bring in another wheel of re-invention.
Moreover, there was never going to be money enough to make Rafale a backbone fighter to replace Mig 21s/23s&27s. Not only would we be blocking up a huge outlay of the budget, but we also needed an aircraft which would operate @ $4000 per Hour. Here the toss-up between LCA & the Gripens/F16s come about. Again, there is no way we will be able to afford BOTH LCAs (be it Mk2) AND a Gripen or F16. Not to mention how wasteful it would be. IF, after evaluation, Tejas is found wanting, it will have to be killed if one goes for Gripen. However, locally manufacturing Gripen will bring about the same multiple of costs. The number of Rafales might go up though, but it will be as per theatre requirement and tranches.
Comparing with the MMRCA deal, beyond just cost per aircraft
Further details on this can be found here.Comparing with other countries (Egypt and Qatar)
One of the reasons that Congress and its apparatchiks don’t seem to get, or are feigning ignorance about, is the difference in the Rafale standards.
Rafale has been developed in tranches, each of the subsequent tranches has been more capable and advanced over the other. When Rafale was pitched to India for the M-MRCA, France had pitched the F3 version, as it was then the latest of its models. By the time NDA came into power, the latest variant was the F3R.
Comparing the F3 tranche and the F3R tranche is like comparing Mig 29 with Mig 35. Or the difference between Gripen C-D v/s Gripen E. What the F3R has over its previous versions are:
All of these functional and physical modifications reinforced Rafale’s omni-role character. During the same flight, the aircraft can carry out different types of missions, such as ground attack, air superiority and air defence; attack of land and naval targets; close air support of ground troops; reconnaissance and nuclear strike.
In total, more than one billion euros was invested in the upgrade programme, which will benefit all of France’s combat aviation industry.
ref: https://www.sps-aviation.com/story/?id=1366
By the time this present Govt came, F3R was well on its way to being realised. So what does the Govt do? Go for an older version when the latest was available? But if it brought in the latest version then it would have to go over the WHOLE M-MRCA rigamarole once more. Which meant a delay of another decade?
Thus, it scrapped the M-MRCA and decided to procure the plane in tranches. That would explain the number of 36 Crs. Remember, when Pappu is tom-tomming figures, they are:
– Non-finalised and assumed flyaway cost
– Even the touted cost is half a decade previous to when UPA left power
– UPA NEVER finalised any price for Rafale. Thus it can actually throw any fictional price it feels like.
Given the fact that India has got a much more potent a version than what was even envisaged by the IAF in MMRCA, WITH India specific modifications AND weapons, what exactly is the case which Pappu has?
The quantum of offsets in the Inter-Governmental Agreement (IGA) for 36 Rafale fighter jets is 50 per cent, which includes investments in terms of Transfer of Technology (ToT) for manufacture and maintenance of eligible products and services. The current offsets policy of the Defence Procurement permits the vendors to provide details of their Indian Offset Partners (IOP) either at the time of seeking offset credits or one year prior to discharge of offset obligations. Vendor/Original Equipment Manufacturers (OEM) is free to select his Indian Offset Partner.It is in the offset clause that the deal finds its weakest link. Cos, while Mukesh Ambani’s company was fighting to corner the manufacturing deal with Dassault under the UPA, it was Anil Ambani’s company which got a slice of the offset. And it is in how it could have gotten a slice of the offset which raises the maximum number of questions. However, this needs a few clarifications:
Transfer of Technology (T-o-T) for manufacture and maintenance of eligible products and services. The current offsets policy of the Defence Procurement permits the vendors to provide details of their Indian Offset Partners (IOP) either at the time of seeking offset credits or one year prior to discharge of offset obligations. Vendor/Original Equipment Manufacturers (OEM) is free to select his Indian Offset Partner.”The first slide, pertaining to airframe offsets and sourcing, lists the Dassault-Reliance joint venture firm (DRAL) as being part of a group of companies that will produce mechanical parts and sub-assemblies. Other companies in this list include Indian majors like L&T, the Mahindra Group, the Kalyani Group and Godrej & Boyce etc. The full details of the offset can be found here.
The essential reason, as I see it, to build the noise around Rafale is cos the Congress is taking a page out of BJP’s playbook. BJP had raised the same amount of smokescreen and noise wrt the VVIP Helicopter deal without any kind of substantial proof and raised equal amount of canards and innuendos. Not to mention go after Air Marshal Tyagi, when there was nothing to suggest any kind of wrong doing had happened. The money which AgustaWestland was for an internal issue which though improper had nothing to do with India’s helicopter purchase and, in fact, it was the ONLY helicopter which could serve India’s requirements. Thus, one can’t blame Congress for doing what BJP had done…only, in all these political shenanigans, it is the nation’s security which is held hostage and, admittedly, Rafale has a much deeper strategic implication than a few VVIP helicopters. Thus…we come to the essential questions:
All the brouhaha aside, aren’t we all glad, that the Squall (Rafale) has landed?
Note. The above were first published as FB posts by me in September 2018.
DISCLAIMER: The author is solely responsible for the views expressed in this article. The author carries the responsibility for citing and/or licensing of images utilized within the text.