Rafale deal: An expensive buy

A highlight of French President Francois Hollande's India visit was the signing of a government-to-government agreement on the purchase of two squadrons of the Rafale multi-role fighter aircraft. But continuing price negotiations, already protracted, stand in the way of a formal contract. It bears recalling that the Rafale offer from Dassault was chosen over rival bids exactly four years ago, in January 2012. That was to have been a contract for 126 aircraft, of which the first 18 were to have been handed over by 2015, with the rest being assembled or made locally. Instead, the rapidly rising cost of the aircraft (deliberately under-stated by Dassault) forced the government last year to cancel the deal as unaffordable, and to decide on buying just two squadrons, without any condition for local assembly or manufacture. Prime Minister Narendra Modi had announced that the new, restricted deal would be concluded in about three months; but negotiations continue even after nine months. The cost, meanwhile, has ballooned to an astronomical $250 million per plane (about Rs 1,700 crore). That is equivalent to the cost of perhaps three or four heavier Su-MK30 planes from Russia, and about 10 of the home-made Tejas light combat aircraft (quoted price: Rs 162 crore). In truth, therefore, the Rafale continues to be unaffordable. The implication of buying a very expensive aircraft is that it will eat up a good chunk of the defence acquisition budget, leaving less money for other badly-needed equipment-for all the forces.

One reason for why the government is sticking with the Rafale may be that the air force is short of fighters, and inordinate time has already been invested in the purchase process. Arguably, the air force could simply buy many more Su-MK30s and scrap the Rafale deal. Two factors mitigate against this: the poor serviceability of the Russian plane (frequent engine failures, with barely half the 200-odd Sukhois air-worthy at any given time), and the poor logic in deploying heavy, fuel-guzzling planes in situations where smaller, lighter ones are better suited for the job. Fortunately, Defence Minister Manohar Parrikar has focused on improving Sukhoi serviceability through new deals on maintenance or spare parts which could improve engine life and cut down maintenance delays. Meanwhile, Hindustan Aeronautics is said to be expanding its servicing capabilities.

The high cost and poor serviceability of foreign aircraft (with long-term dependence for the supply of critical spare parts) underline the importance of developing indigenous capabilities. An important issue here is the reluctance on the part of the air force brass to invest time and energy in supporting the indigenisation process-a contrast with the navy's more productive stance. The air force brass has been quizzical of the Tejas light-combat aircraft project, at a time when replacements for the ageing MiG-21s are urgently required. Indeed, the air force has been so sold on the Rafale that it has even obfuscated on the joint project with the Russians to develop a fifth-generation fighter aircraft. Again, Mr Parrikar seems to have banged heads together, because the Indian Air Force and Hindustan Aeronautics have now agreed on the improvements that will be made to the Rafale (to improve its survivability and also ease of maintenance), following which orders for 100 aircraft will be placed. It is now up to HAL to ensure that it delivers on time and with the quality required.

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