Author: Huang Guozhi, by special arrangement with The Paper
A January 5th report of the official website of Jane’s Defense Weekly says that India has completed all negotiations and procedures with France for procurement of 36 Dassault Rafales. Francois Hollande, President of France, is scheduled to visit India on January 25th. During his visit, the two governments are likely to sign several inter-governmental agreements, including on a deal for purchase of 36 Dassault Rafales by India.
The news also notifies completion of the Indian Medium Multi-Role Combat Aircraft (MMRCA) bids, a project started by the Indian Air Force (IAF) in 2001. IAF breaks the world record of military procurement with its prolonged bidding process of 15 years.
难得一见的百亿大单 A rarely-seen mega deal of billions
On November 23rd, 2015, in the Eastern Mediterranean, a Dassault Rafale was taking off with bombs from Charles de Gaulls Aircraft Carrier. It was taking the task of combating the targets of ISIS (Islamic State of Iraq and Syria). Photo by CFT.
When IAF first invited bids of new fighter aircraft, it was preparing to replace the third generation of jet fighters of MiG-21. The competitive bidders include “Mirage” 2000-5 Mk2 of Dassault Aviation, Saab JAS 39 “Gripen” and Mikoyan MiG-29M. At that moment, IAF was starting the bid as an emergency measure, in order to fill up the deficiency of fighting capacity of the fleet after retirement of many jet fighters of MiG-21. On the other hand, IAF was trying to buy time for India-made LCA (Landing Craft Assault) fighters which required a long period to complete the R&D process, commence volume production and be available for active service. However, the performance of Hindustan Aeronautics Limited – the only state-owned aerospace and defense company for R&D of military aviation – was quite disappointing. The R&D process of LCA fighters was delayed again and again, and it was virtually impossible to finalise a model in a specified period, let alone volume production. (As a matter of fact, LCA fighters weren’t put on active service until 2013; however, the order quantity was only 20, as the performance of LCA fighters failed to meet with the requirement of IAF.)
On the other hand, the bidding process of IAF didn’t go smoothly either. “Mirage” 2000-5 Mk2 of Dassault Aviation was the favorite choice of IAF, but it failed to reach agreement with the French side with regard to the procurement quantity and upgradation of current fighter models. In the end, IAF decided in 2006 not to wait for the laggard process of HAL with ICA, and changed the previous bid for LCA to MMRCA (Medium Multi-Role Combat Aircraft), which is more advanced, with stronger fighting capacity.
With the IAF upgrading the models it called for bids, the procurement quantity and the contract value witnessed a sharp increase accordingly. Specifically speaking, IAF planned to order 126 new aircrafts at a price of 10.24 billion US dollars. The new bidding plan was announced in 2007, responded by almost all military aviation magnates of the world in fierce competitions with each other. 6 new aircraft modes participated in the competitive bidding, including F-16IN, F/A-18E/F, EF2000, Dassault Rafale, MiG-35 and JAS 39 Gripen NG. After a prolonged process of selection, testing and elimination that lasted for 5 years, the Frenchmen could not wait to announce their final victory to the world upon selection in January of 2012. And it turned out to be a rarely-seen big deal in the field of arms procurement worth billions .
挥之不去中国之阴影 Lingering shadow of China
Dassault Rafale of French Air Force. Photo from uncredited internet source.
The world is a stage, and the dramatic play of India and France in the Dassault Rafale deal combined both cooperation and competition, with their roles rotated more than once – a “Joy Street” indeed!
In the initial stage, India was playing the role of “goddess”, and France was merely an “otaku”.
Dassault Rafale failed to break into the international market of military procurement before the deal, and the French government had to bear very high procurement costs for producing the proto-type for the French Air Force and Navy. As a result, Dassault could not work to its full production capacity with only a small amount of deals. The French government was in urgent need of achieving breakthroughs in export of Dassault Rafale at the time of bidding in India. In the competition with other 5 types, the French government spared no effort to promote Dassault Rafale, and its sales capacity could even match that of the British government. Not only did the France accede to India’s demand for assembling all 108 fighters in India locally, it also offered a reduced price at its own initiative. The price of one Dassault Rafale was settled at 67.2 million US dollars. France also played the affiliation card in view that IAF was equipped with 36 Dassault Mirage 2000H/THs, and finally achieved victory by fully exploiting its advantages.
However, their positions in the negotiations shifted subtly when both countries sat down face to face to settle all the details of the deal.
Frenchmen believed that they had already secured victory, and called the bluff too early: first, they were offering a “ friendship price” by setting the price of one Dassault Rafale at 67.2 million US dollars.As a matter of fact, the total price for 126 Dassault Rafales were supposed to be 15 billion US dollars (119 million US dollars for each) with ancillary equipment, spare and accessory parts, training programmes and safety services. Secondly, although Dassault consented to transfer the technologies of assembling 108 Dassault Rafales to HAL, it refused to take any responsibility in case of any technical problems.
As a matter of fact, the accident rate of fighters on active service assembled by HAL was extremely high, and HAL was already notorious in international aviation industry. Obviously, Dassault was not so stupid to take the blame for HAL.
In view of the changing situation, the Indians differed and held their own opinions. On one hand, the Indian government refused to provide additional funds for the MMCRA program, and used the R&D progress of India-made LCA fighters as the chip in the prolonged negotiations with France. The Indian government even cozied up to those companies who failed to win the bid, and threatened France with a rebidding process. IAF, on its part, was evidently displeased with the “miserliness” of the Indian government; the primary concern of IAF was to settle with the deal of Dassault Rafales as early as possible, and it had obviously lost confidence in India-made LCA fighters. An anonymous senior officer of IAF revealed that although India-made LCA light fighters had been endorsed, they could never replace MMCRA in actual combat. The operational radius of action of LCA lighter fighter is no more than 200 kilometers. In case of military confrontations with China, IAF would face serious threats with its limited combat power. IAF was in urgent need of a new model of fighter whose minimum operational radius of action reached 1000 kilometers, like Dassault Rafale, for example.
In light of that, IAF proposed a compromise plan. IAF suggested procuring the first batch of 36 Dassault Rafales from France, so that they could be on active service and form a battle squadron as early as possible. However, India and France couldn’t settle the price of even a single Rafale, and 3 years glided away with no progress achieved by either side.
After 2015, however, France seemed to win the heart of Lady Luck after years of strenuous efforts. In February, Egypt and France signed the formal deal for procurement of 24 Dassault Rafales; in May, Qatar and France signed the formal deal for procurement of 24 Dassault Rafales, and Qatar reserved the right to procure 12 more of them. At that moment, France had two finalized deals in her hand, and India kept delaying with the unfinished negotiations – their roles were switched all of a sudden.
In the early stage, the Indian government schemed to reduce the prices once again with the advantage of buyer’s market. However, the domestic and foreign situation of India became worse than ever for India. On the one hand, the R&D process of Sukhoi T-50 by Russia met with serious obstacles, and India could only wait indefinitely for a joint R&D plan with Russia for fifth-generation fighters on the basis of T-50. Not to mention the Su-30MKI fighters, which were assembled in India locally but failed to meet the standard of the IAF. On the other hand, JF-17 Thunder Fighter Aircrafts, which were born with the joint R&D efforts of China and Pakistan, were produced as batch equipment for the Pakistan Air Force. Therefore, IAF had to cope with the substantial threat from the Pakistan Air force, as the latter was not only able to assemble JF-17 Thunder Fighter Aircrafts on its own, but also could improve their functions.
The primary concern of IAF is China, of course, as PLAAR (People’s Liberation Army Air Force) has launched a series of improved versions of stealth strikers (third and fourth generations) in recent years. IAF has to envisage the awkward fact that the gap between Chinese and India Air Force with regard to air power construction is ever widening. Under such circumstances, India had no choice but to make necessary compromises in the negotiations with France, so as to secure the procurement of Dassault Rafales.
未来仍有诸多变数 Uncertainties in the future
2015年9月27日，法国政府发布的照片显示，法国空军的阵风战斗机现身波斯湾军事基地。 视觉中国 资料
The photo release by the French government on September 27th, 2015 shows 3 Dassault Rafales of French Air Force in the military bases in the Persian Gulf. Photo by CFP.
Open sources reveal that the French government has raised the unit price of Dassault Rafale to 130 million US dollars, and 36 Dassault Rafales will cost Indians as much as 4.68 billion US dollars – not including the expenses of equipment maintenance, training programs for pilots and technicians, weapons and military supplies, and spare and ancillary parts. India also has to take consideration the expenses on modification and integrating India-made carrying arms on Dassault Rafales. For example, the BVRAAM (Beyond Visual Range Air To Air Missile) known as Astra, which was in the development phase. The cumulative price is estimated to reach 9 billion US dollars, which means that the actual selling price of Dassault Rafale would be 250 million US dollars – even more expensive than US-made F-35 stealth jet.
Apart from the high price, the Indians may feel wronged for another reason: India was supposed to become the first foreign user of Dassault Rafales, but was soon surpassed by Egypt and Qatar. That means Dassault has to finish the deals of Egypt and Qatar before it can produces Dassault Rafales for IAF. Dassault can only produce 11 Rafales every year, and even if it increases its production capacity immediately, India cannot receive the first Rafale until 2018 – a most optimistic estimation. Furthermore, it’ll take two years and a half for India to get all 36 Rafales according to the deal. It remains a mystery whether France will charge far more than the deal, or India will abandon Rafales for other better types of warcraft.
Onthe contrary, if India had reached the deal of Dassault Rafales with France as early as possible, IAF could have its first battle squadron composed of Dassault Rafales in 2016. In that case, India could have exerted her influence on neighborhood situations and regional politics. To be frank, Dassault Rafale boasts outstanding comprehensive performance among all third-generation fighters, especially with the improved hardware of the F3 standard, notably the RBE2 AA active electronically scanned array (AESA) radar, and two Snecma M88-3 engines. Armed with various kinds of airborne precision guided weapons produced by France, the combat effectiveness of Dassault Rafale surpasses all expectations.
Per current schedule, IAF’s first battle squadron composed of Dassault Rafales cannot contribute to its fighting capacity until 2020. Till then, PLAAR will already have been equipped with large batches of J-20 stealth fighters, and the Pakistan Air Force will possibly have been equipped with FC-31 stealth fighters exported by China. India should be aware that the gap between third-generation and fourth-generation stealth fighters can never be filled up even with 36 Dassault Rafales.