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I haven't heard any news yet but i think they are not in a hurry. Since IAC2 is planned only after IAC1 is ready, my guess is IN will place order then. Most probably it will be Rafale, there is a little chance for F35 but i doubt they will go for platform which has no experience of AC operation (EF and Gripen). I think F18 has better chance to win than these 2 but in comparison to Rafale it doesn't stand a chance because IN has already said its too huge for their AC.
 
RAF is selling their fighters, but so far is not has not ordered new once to replace them and so far it's also not clear if Oman will take the old once, or some new once of the initial T3B order of the RAF. Either way, that deal will bring the UK, no development costs in return, because they will be sold for the costs that the RAF would paid, or would pay, most likely even less!
The point is, there will be no new orders, where development costs could be added and even hardly 3 year old EFs will be sold for low costs, because RAF can't afford to upgrade, or maintain them. UK will loose a lot of money for sure and they can just reduce it, by diverting the T3B orders to other customers.
Btw, EADS is just a part of the consortium, not the EF manufacturer.

First of all RAF will not pay the development cost while buying the fighter because they have invested it.. That is the thin line you have to understand.. RAF will get at fly away price because the development cost is invested to developed it.. Secondly RAF is selling them to Oman and Not EADS which you have to understand.. thats why RAF is selling them at less price compared to EADS selling us and they could be even less because this is how it goes.. First of all penalty not in buying aircraft + amount in maintaining the spares (i.e.) life cycle cost + training + what ever.. if you some up they are in huge loss than selling them to Oman at less price which is actually a profit for them.. Either way they are not ordering new typhoon and there Typhoons are also sold.. and they are covering the loss with a kind of margin profit.. so neigther RAF is loosing or EADS right?..

They don't have to, they know IAF loves the Mirage and wants to upgrade it and at the same time they are offering it's successor, which has a lot of fans in the Indian forces as well. There is simply no real need for them to give us a low cost upgrade. That has nothing to do with development costs, but with the fact that they prefer to sell us new fighters where they can keep benefiting for the next 30 to 40 years, instead of a simple upgrade for older Mirage for just 10 years.
That's also a reason why they didn't kept the Mirage productionline open and offered the Rafale later, because they new their chances in India are quit good. Not to mention that if we take Rafale instead of the Mirage upgrade, MMRCA is decided as well, because IAF would not add another fighter, that's why Dassault is offering 40 Rafales since 2008.
It's simply a business trick, to sell us the latest fighter and make more profit, but has nothing to do with development costs.

I highly doubt that we will see 50% offsets, that just the benchmark MoD placed to negotiate with the vendors, but be it Dassault, the EF consortium, or Boeing officials, they all said that this is not feasable. On the other side the French actually don't have to build up that much completelly new, because they already have several JV running with Indian counterparts in that regard. Samtel alone could provide the display, HMS and as it seems IRST of Rafale, not to forget that the Kaveri - Snecma, or Shakti engine deal for LUH are fields where offsets will be placed for sure, to GTRE and HAL. I also hope for Thales as a co-development partner for Tejas AESA, in case ELTA is not available, which then would be diverted to LRDE again.

I never said that they are selling Rafale only at flyaway cost, I said they might do it for the same flyaway cost they have and don't development costs on it. The systemcost, which includes training, spares and even some weapons would be way higher of course.



The 18 fighters will be fully produced in France, but even after that they will produce a lot of parts that will be assembled in India only. Look at MKI for example, the licence production started in 2004 I think, but the first fully produced MKI made by HAL came out only in 2010 only. So don't expect that the MMRCAs will be fully produced directly when the licence production starts. It will take years till HAL, or other Indian suppliers will have absorbed the ToT and production routines, to provide us with all the parts.

Dude you are not understanding how the cost is calculated for MLU.. Just like that a number wont crop up for the upgrade... First of all they will have to give explanation for the demand.. this is not a software product.. For (e.g.) take the gorshkov deal.. do you think Russian demanded the money just like that and GoI paid just like that?.. what do you think it made them to settle for the amount?.. They explain all the cost for the GoI and Indian Navy (development, deployment etc during negotiation).. For Mirage IAF themselves feel the cost is more because they understand most of the cost is charged on IAF which they are trying to bring down.. and Thales refused because the Mirage is not open and there is no future prospect.. IAF may consider it because there is life still in the airframe which they dont want to waste.. which is why Thales would have proposed it because If you buy Rafael the development cost would go down as there is a CAP number on which the cost would be split.. There is no doubt IAF loves Mirage and Rafael.. And there is no real business trick.. If you see the inner.. Mirage is closed and it would suit more for france if Rafael is sold...

Secondly on offset i agree 50% is nearly impossible because there is no point in selling fighters.. Most probably on Negotiation the offset value may come up to 35% which comes nearly $3-4 billion.. which is substantially high ... and if Dassault is not including the Development cost say they have charged Euro65 and lets keep it approximately $80(only for the airframe without any weapons and other extra fittings) it nearly comes to $10 billion.. so they have to invest 3 billion back which comes to $4billion.. lets say the cost to manufacture the plane is just $20 million after ToT and offset manufacture assembly set up it comes to nearly $2.5billion ... so what they can expect it on $3.5billion.. it doesnt even come close to $50 billion not even 1% of the cost is recovered.. so you have to agree Dassault is not getting in selling fighters to India.. so you have to understand €65 includes development cost or the Rafale price will be more..

And on manufacturing at HAL.. Look at MKI today.. 90% of it is manufactured in India only from the raw materials.. Just some critical component comes from Russia like Engine hot section , Radar software and Modules etc...Yes this has taken nearly 4 -5 years to happen.. I do agree for MMRCA it will take 3-4 years.. but it wont be of the same level as the first 18.. thats why i said the production line at France will not be dependent on India.. just 10-20% of the production line will work.. Rest will rest in peace..
 
Any idea where the N-MMRCA is at? Or are IN waiting for results of IAF MMRCA or induction of Vikramditya so IN can their own needs? ie STOBAR or CATBAR as if it is STOBAR then N-EFT, N-Gripen an Mig-29k (possibly F-35B) are contenders if CATBAR then SH, RAFELE-M and F-35C are contenders.

It might depend more on the development and production progress of IAC1 and if catapults will be available for us, which will depend on the US. The IAF MMRCA deal will have a bearing only if Rafale wins, because the Sea Typhoon will be simply too expensive and immature to be a real solution for IN. Like angeldemon_007 said, Rafale, F18SH and as an outsider the F35 should be the only real contenders, especially if there are possibilities that naval FGFA, or AMCA in future would be used on these carriers as well.

STOBAR layout doesn't mean the Rafale couldn't be used, because it is redesigned for the same arrested landing as well, while unassisted depends only enough thrust and a deck that is long enough. Size and weightwise the Rafale M is smaller and lighter than our Mig 29Ks, while offering similar thrust. IN evaluated the Rafale M and F18 in the early 2000s, when they started the planing stage for IAC1, but in that time catapults were not available from the US and the Gorshkov deal was a fixed deal with Russian fighters. Su 33s were too big for these small carriers, which left us with the Mig 29 and the N-LCA.
 
First of all RAF will not pay the development cost while buying the fighter because they have invested it.. That is the thin line you have to understand.. RAF will get at fly away price because the development cost is invested to developed it.. Secondly RAF is selling them to Oman and Not EADS which you have to understand.. thats why RAF is selling them at less price compared to EADS selling us and they could be even less because this is how it goes.. First of all penalty not in buying aircraft + amount in maintaining the spares (i.e.) life cycle cost + training + what ever.. if you some up they are in huge loss than selling them to Oman at less price which is actually a profit for them.. Either way they are not ordering new typhoon and there Typhoons are also sold.. and they are covering the loss with a kind of margin profit.. so neigther RAF is loosing or EADS right?..

Let me explain it differently...

The UK paid money for the development of the EF and to buy a certain number of fighters. To get profit out of exports and some of the development costs in return, they need to export the EF, but that have to be completely new orders!
The RAF are selling 2nd hand fighters, which as I pointed out are too costly to upgrade, that's why they rather sell them with a calculated loss. But the RAF has also the T3 orders, which they didn't wanted and was forced by Germany to get at least the T3A orders, but there are still the follow orders and if they cancell it, they have to pay penalities. The only way to not pay this, is to divert these orders to export customers, which means that they can buy new EFs, for the costs that the RAF normally would pay, which does not include development costs, because they were paid before.
So the UK can reduce their loss by not paying penalities, by selling these fighters to Oman for example, but will not get any of the development costs back.
Sweden btw is doing the same! They ordered many Gripens initially, but bugdet cuts forced them to get rid of some, that's why they leased them to other countries, or why they offered us, or now Bulgaria fighters from their own order as a low cost fast to induct deal.
Germany has ordered the 53 x A400Ms, but new budget cuts force them to reduce the number, but again, cancelling them means paying penalities, that's why they didn't to it and already decided to sell 13 of them to other countries for lower costs and it's likely they they do the same with their T3B orders.
These are just ways to reduce the loss, but doesn't make any profit and they don't get any development costs back!


so what they can expect it on $3.5billion.. it doesnt even come close to $50 billion not even 1% of the cost is recovered..

Of course not, because just like you said, that's the calculation based "only" on the flyaway cost, but Dassault and the other companies that are selling Rafale with the system costs, which includes training, spares, toolings...
From Brazil again, Rafale is rated at around $140 millions systemcost (after the flyaway cost was reduced from to around $80 millions) x 126 = $17.64 billions. Even if you cut 35% for offsets offsets, that's a profit of nearly $11.5 billions with a single deal, not to mention that it will increase through further spare, weapon and upgrade deals over the lifecycle.

As I meantioned earlier, the deal is expected to cost more than $35 billion at the end and that were the speculations before the shortlisting. Not to forget that the money they invest in India is not lost! Offsets doesn't mean they are donating us the money, they are investing in field where they can profit as well. I gave the example of the new Thales and Samtel JV earlier, where Samtel will produce Topsight and TopOwl HMS, or even FSO and displays, but the low cost production of these parts, compared to do the same in France will obviously benefit the French in further exports. The advantage for India lies in the higher participation, where we can learn and improve us, which could lead to future co-developments.

No matter what, the wining manufacturer will benefit a lot from this deal, even if they don't add development costs on the initial procurement cost of the fighter. That's why EF is also offering us the partnership, which also means no development costs in return, but we have to invest in the EF upgrades in return. The small loss they take for not getting a payback in this field, is countered by the high profit they make with the systemprice and the additional costs over the lifecycle (in EFs case also for upgrading the fighter).
 
Besides that, there is always confusion about EADS and the EF consortium as a whole and the shares and relation in EADS itself and I found a very informative post on BR regarding this and think it's worth posting it here as well:

Dear all,

I've been reading BR for a few years. I'm working on financial markets in a big european bank and i'm in charge of a portefolio of defence assets. I just want to clarify some points regarding shareholding and relations between EADS, Dassault, MBDA etc...

First of all, we must keep in mind that EADS is not a classical company. The French States holds (via Lagardère and Sogeade) a little bit more than 22.45% of the whole group and is consider as the most influent shareholder of EADS. But the french state has nothing to do with Eurofighter GMBH.

EADS France is controled by french state (via by-laws of EADS NV - The choice of the "NV" Dutch corporate law for the holding has been made to allow independants affiliates). EADS France holds 46.32% of Dassault and 37.5% of MBDA. The rest of EADS has nothing to do with Dassault and MBDA (MBDA is mainly a French-UK company with half of its activity in France).

The Shareholding of Eurofighter GMBH is : 13% for EADS CASA (Spain) and 33% for EADS Deutschland (germany not Dutchland), the rest is 21% for Alenia Aeronautica and 33% and for BAE Systems. For example, Airbus or Eurocopter can not be part of Eurofighter offsets proposals (french veto).

Regarding the evolutions to come : the french defense landscape will change (merger Safran-Thales-DCNS, under the control of French State and Dassault). BAE is negociating a place in the futur big structure to come. The brits don't want to work anymore with EADS and the Germans, they now want to put in place bilateral programms (mainly BAE-Dassault with Thales). That's the big change to come in Europe. A merger between EADS and Dassault has never been a option since France and UK don't trust EADS anymore on military issues.

Finally, regarding financial figures there is a confusion above... The 2010 annual net results are :

Dassault Aviation : + 0.395 billion Euros
Safran : + 0.207 billion Euros
EADS : + 0.553 billion Euros
BAE : -0.242 billion GBP
Thales : -0.107 billion Euros

BAE has a huge turnover but very poor margins and Dassault has a very small turnover but very good margins... Thales is not very well, that's why they should merge with Safran (and maybe Zodiac Aerospace). To be complete we should take into account the debt of each player and its capacity to deal with this debt but this is a hard work... I just wanted you to be very carefull with financial figures.

Regards

Credits to kelesis
 
Let me explain it differently...

The UK paid money for the development of the EF and to buy a certain number of fighters. To get profit out of exports and some of the development costs in return, they need to export the EF, but that have to be completely new orders!
The RAF are selling 2nd hand fighters, which as I pointed out are too costly to upgrade, that's why they rather sell them with a calculated loss. But the RAF has also the T3 orders, which they didn't wanted and was forced by Germany to get at least the T3A orders, but there are still the follow orders and if they cancell it, they have to pay penalities. The only way to not pay this, is to divert these orders to export customers, which means that they can buy new EFs, for the costs that the RAF normally would pay, which does not include development costs, because they were paid before.
So the UK can reduce their loss by not paying penalities, by selling these fighters to Oman for example, but will not get any of the development costs back.
Sweden btw is doing the same! They ordered many Gripens initially, but bugdet cuts forced them to get rid of some, that's why they leased them to other countries, or why they offered us, or now Bulgaria fighters from their own order as a low cost fast to induct deal.
Germany has ordered the 53 x A400Ms, but new budget cuts force them to reduce the number, but again, cancelling them means paying penalities, that's why they didn't to it and already decided to sell 13 of them to other countries for lower costs and it's likely they they do the same with their T3B orders.
These are just ways to reduce the loss, but doesn't make any profit and they don't get any development costs back!


Of course not, because just like you said, that's the calculation based "only" on the flyaway cost, but Dassault and the other companies that are selling Rafale with the system costs, which includes training, spares, toolings...
From Brazil again, Rafale is rated at around $140 millions systemcost (after the flyaway cost was reduced from to around $80 millions) x 126 = $17.64 billions. Even if you cut 35% for offsets offsets, that's a profit of nearly $11.5 billions with a single deal, not to mention that it will increase through further spare, weapon and upgrade deals over the lifecycle.

As I meantioned earlier, the deal is expected to cost more than $35 billion at the end and that were the speculations before the shortlisting. Not to forget that the money they invest in India is not lost! Offsets doesn't mean they are donating us the money, they are investing in field where they can profit as well. I gave the example of the new Thales and Samtel JV earlier, where Samtel will produce Topsight and TopOwl HMS, or even FSO and displays, but the low cost production of these parts, compared to do the same in France will obviously benefit the French in further exports. The advantage for India lies in the higher participation, where we can learn and improve us, which could lead to future co-developments.

No matter what, the wining manufacturer will benefit a lot from this deal, even if they don't add development costs on the initial procurement cost of the fighter. That's why EF is also offering us the partnership, which also means no development costs in return, but we have to invest in the EF upgrades in return. The small loss they take for not getting a payback in this field, is countered by the high profit they make with the systemprice and the additional costs over the lifecycle (in EFs case also for upgrading the fighter).

First there are two things.. First one for (e.g.) EADS sells EFT like (Total developmentcost+ noofplanestoproduced*planecost)/noofplanestoproduced say = $140million... which means countries like UK,Germany etc... will pay so much for each plane.. while they had paid upfront so much of money.. the remaining gap they will give to acquire the fighters... so UK, Germany etc got the plane ... with no development cost recovered .. Yes to recover this they have to sell there product to recover the budget.. so they will sell $140 million to others like India and others.. to recover it... while EADS will have got the money and sold it...
Coming to RAF/Germany exporting.. They purchased the product and are selling to others.. so EADS got the money with development cost.. Now Germany/RAF are selling back on lower cost.. so the product exist.. but the money Germany/RAF will be spending on training, spares and MLU on long term is saved.. Money saved is profit for them which means there is no budget needed for it.. so it is a win-win situation.. they are not paying penalty at the same time they are not on total loss on long therm the development cost is recovered.. yes EADS is on loss because the sale prospect is hampered but yes it can live with it.....


Second now coming to your logic on Dassault... Now you say Dassault itself giving on less price say $80 million a piece without development cost.. now they sold it to India.. so France which has spent on development cost how will it recover? because the cost of the Figther was $120 million to france and it is $80 million to India.. can you see the gap i am explaining? Which means France will loose the taxpayers money over $20 billion which is more that MMRCA amount.. thats why i said Dassault will add the development cost to MMRCA or the fighter cost includes the development cost..

On offset ... I dont think they gain anything otherwise why will they argue with MoD saying that 50% is too tough?.. They give technology to India by spending there money.. They gain money only with HAL.. because they will give HAL with less price and with hold the profit with them..
 
UAE May Buy 60 More F-16s
By PIERRE TRAN
Published: 6 Jul 2011 13:17

PARIS - The United Arab Emirates (UAE) is now talking with Lockheed Martin about buying more F-16 fighter aircraft because France's offer of an advanced version of the Rafale combat jet is seen as too expensive, said a source familiar with the negotiations in the gulf.

"The UAE is finding the Rafale offer to be too costly compared to the capabilities of aircraft and other technologies on the market," the source said. "The negotiations with France are still ongoing and both sides are looking for a compromise."
UAE May Buy More F-16s - Defense News
Not directly related , but still.......
 
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Again mate, EADS is not selling the EF, it's the EF consortium in which EADS is just a part!

Coming to RAF/Germany exporting.. They purchased the product and are selling to others.. so EADS got the money with development cost.. Now Germany/RAF are selling back on lower cost.. so the product exist.. but the money Germany/RAF will be spending on training, spares and MLU on long term is saved.. Money saved is profit for them which means there is no budget needed for it.. so it is a win-win situation.. they are not paying penalty at the same time they are not on total loss on long therm the development cost is recovered.. yes EADS is on loss because the sale prospect is hampered but yes it can live with it.....

They got development costs from the partner countries, but not from the export countries and we are talking about the partner countries getting the development costs back aren't we?

The EF consortium can't add development costs on the sale of new EFs, when they are not ordered from them, but directly from UK, or Germany. So all the T3B orders that might end up in other countries does not bring any development costs back and the only export countries that paid at least some development costs so far (Austria bought only a few new fighters, most are from Germany) is Saudi Arabia. That shows again that the manufacturers do agree to a calculated loss, if they can benefit in the long run!
If Germany and UK cancells the T3 orders, they just have the loss of the penalities, but the EF consortium have a loss of the next 30 to 40 years lifecycle and they can't simply live with that like you said. So selling these fighters without adding development costs to Oman, or Rumania, might not give the development costs back, but will keep the production line open for some more years and let the companies profit over the lifecycle of the fighters again!
Also don't forget, that the increased sales for their companies, means also increased taxes for the countries as well, be it the deal for the fighters, or the weapons, spares, future upgrades, all points where the country benefits from additional sales, no matter with, or without added development costs.



On offset ... I dont think they gain anything otherwise why will they argue with MoD saying that 50% is too tough?..

Because our industry is not at a level that they could take over that much offsets, or absorb that much ToT now. They of course have an interests not to share too much of their techs, or production secrets, while we need it to get better. But any of those companies would outsource certain parts of their R&D, or production to India, as long as it will remain under their control. Take Boeing for example, they already produce minor parts of the F18SH airframe at HAL, because of the lower costs and still they highly doubt that HAL would be able to take over much more of the production.


UAE May Buy More F-16s - Defense News
Not directly related , but still.......

That's just tactics to put pressure on France to reduce the costs, same fake news was spread by the media with UAE negotiating F18SH. There are 2 key points that the US can't offer, once the resale of Mirage 2000-9 fighters and more importantly from their point of view, to integrate Black Shaheen cruise missiles to the US fighters. The UAE might buy more F16 Block 60s, but will remain with the Mirage for the deep strike role, or replace them with Rafale. The only other and imo even better option would be the Eurofighter, because it should be able to use the same missiles with CFTs and would be the better hi / low combo with the F16.
 
US not pressuring India to reopen the fighter jet bid: Blake

Washington, July 8 (PTI) The US is not "pressuring" India to reopen the bid for the multi-billion bid for fighter jets, but would welcome any such move if New Delhi decides to do so for its own reasons, a top official said today.

"We are not pressuring Indian Government in any way to try to reopen the bid," Assistant Secretary of State for South and Central Asia, told reporters during a web-chat hosted by the State Department ahead of the India-US Strategic Dialogue later this month.

"Certainly for their own reason, if they decided that they need to reopen the bid, we will certainly welcome that opportunity and our companies would welcome that opportunity," Blake said.

The United States had expressed its disappointment after India decided to exclude two US companies � Lockheed Martin and Boeing � from its multi-billion bidding process of its 100 plus fighter jets purchasing process.

"We look forward to with great interest other opportunities that will exist in the Indian defence market over the next several years -- USD 30 billion.

American companies are keenly interested in expanding their cooperation with India counterpart � co-development, co-production type of activities.

This I think, will be an exciting area of co-operation," Blake said.

Responding to questions, Blake said the US is not concerned in lagging behind countries like France and Russia to get bids for nuclear power plants in India.

"We do not have any concerns about losing out to the French and the Russians. We think there are quite important opportunities for American companies still," he said in response to a question.

US not pressuring India to reopen the fighter jet bid: Blake -  International News
 
Again mate, EADS is not selling the EF, it's the EF consortium in which EADS is just a part!

They got development costs from the partner countries, but not from the export countries and we are talking about the partner countries getting the development costs back aren't we?

The EF consortium can't add development costs on the sale of new EFs, when they are not ordered from them, but directly from UK, or Germany. So all the T3B orders that might end up in other countries does not bring any development costs back and the only export countries that paid at least some development costs so far (Austria bought only a few new fighters, most are from Germany) is Saudi Arabia. That shows again that the manufacturers do agree to a calculated loss, if they can benefit in the long run!
If Germany and UK cancells the T3 orders, they just have the loss of the penalities, but the EF consortium have a loss of the next 30 to 40 years lifecycle and they can't simply live with that like you said. So selling these fighters without adding development costs to Oman, or Rumania, might not give the development costs back, but will keep the production line open for some more years and let the companies profit over the lifecycle of the fighters again!
Also don't forget, that the increased sales for their companies, means also increased taxes for the countries as well, be it the deal for the fighters, or the weapons, spares, future upgrades, all points where the country benefits from additional sales, no matter with, or without added development costs.

To make it clear.. what is the cost of the Fighter plane ?... As far as open source is concerned.. it is (development cost+manufacturing cost)/CAP order.....
so if the European members get the EFT for $140 million ... it will be the above cost... further they would have seeded money initially to build the project... so then at the end they will pay the remaining gap to get there aircraft.. agreed to this point they don't get any development cost back.. because they are getting the fighter planes.. till this place both the consortium and Dassault are playing equal... i was initially wrong to say the cost to the development partners will not include development cost.. but it does include... i felt it wrong because i forgot about the seed money they gave it to the consortium

Now coming to selling to India.. you are telling Dassault are giving less compared to what they sold to french air force... how is this possible?.. this is what i am talking about.. France will have a loss isnt it?.. because they have planted seeded the money and they should expect the returns...
Secondly the basic for exporting to others is to gain money which will include the development cost.. how is it possible to say that they will export less compared to the partner companies??... There is no way it happens.... As you said selling them to Oman will be a loss to EADS because it was sold from the partner countries because the sale prospect is hampered .. but the partner countries already paid for the cost.. but the partner countries paying less to Oman... will be a loss to the current fiscal year to the country but on long term that is going to be on profit because they have saved lot of money in subsequent fiscal years... On the other had if EADS/Dassault sells they will sell it with the same cost they sold it to their countries or even more..

For T3B if EADS invest the money or the partner countries seed it.. the plane will come with the development cost to India that is the splitted cost... this is the same thing with Dassault... if Dassault sells less to IAF compared to Army of the air... it is France that is eating the loss.. because there is no returns... either way this is not feasible
 
COLUMN: MMRCA, The Right Choice For The Wrong Reasons





By Admiral Arun Prakash

Media reports that the Ministry of Defence (MoD) has asked two of the six aspirants for the ongoing Medium Multi-role Combat Aircraft (MMRCA) competition to extend the validity of their quotes would seem a clear indication that these two; the French Dassault Rafale and the Eurofighter Consortium’s Typhoon II – both of European provenance – have overhauled their rivals, to reach the finals. This development coupled with US Ambassador Roemer’s recent resignation, related or not, is likely to cast a pall of gloom, at least temporarily, over Indo-American relations.

These are lean times, world-wide, and bagging this huge contract will have a positive impact on the relatively small economies of the European nations involved. Conversely, the loss of business worth $11 billion (running into many times this figure on account of product-support extending over the full 30-35 year life-span of the aircraft) would come as a blow to the aerospace industry of even a major economic power like the USA.

More than anything else, it could be interpreted as a rebuff to the sustained efforts of three successive US Presidents who have gone out of their way to bring about unprecedented warmth and proximity in Indo-US relations. There is a view that awarding the MMRCA contract to one of the two US contenders, the F-16 Super Viper or the F/A-18 Super Hornet, would have been an appropriate quid pro quo; a suitable expression of gratitude, ensuring strategic convergence between the two nations. Such a buy would have brought the respective industries and armed forces into much closer engagement, and possibly gained entry for the IAF into the world-wide US military logistics loop.

However this may merely be a simplistic view, because the affairs of State are guided by diverse weighty considerations, and things are not always as they appear to the man on the street.


The Good News and the Bad

On the other hand, let us look at the positives.

The IAF is now guaranteed a versatile, highly-agile and potent - albeit expensive - fourth generation combat aircraft in its inventory which can dominate the regional skies for the foreseeable future. Having flown both the F/A-18 and the Rafale, I can say that while the former would certainly have met all the IAF requirements competently and economically, the breathtaking performance of the latter leaves one in no doubt that it is a “generation-next” machine. The Eurofighter Typhoon, by all accounts, is equally impressive.

The complex and elaborate selection process involving field trials for six competitors in diverse locations in a compressed time-frame seems to have been pursued without a hitch by the IAF. Short-listing of the contenders has been undertaken meticulously, by the rules of the game, framed under the Defence Procurement Procedure (DPP). Given the dismal track-record of delays in earlier projects, if the MMRCA contract is signed by year-end, the MoD would have broken some Indian records for “quick” decision-making. To crown it all, there has – so far – not been a whiff of scandal that one has come to expect from contracts of such magnitude.

By itself, the MMRCA decision is not a matter of huge significance; and we can safely assume that our thoroughly professional air force has chosen a combat aircraft that will capably discharge the multiple tasks of defending Indian airspace, conducting strikes inside enemy territory and providing aerial cover to ground and maritime forces for the next four decades or so. Furthermore, Indo-US relations will weather this minor turbulence, and soon resume an even-keel.

However, in the midst of breathless speculation and gossip relating to the MMRCA contract, we are likely to miss the forest for the trees. What we really need to worry about is a deeper malaise in India’s national security framework which has been starkly highlighted by the unfolding of the decade-long MMRCA saga. This is an opportune moment to reflect on the flawed processes and procedures that India follows in the critical areas of force planning and weapon system acquisition.

There are two deeply disturbing aspects here. Firstly; India’s huge defence expenditure, which represents a significant proportion of the central budget, is spent with cavalier abandon and fails to accrue proportionate benefits for national security. And secondly, into its 64th year of independence, and having become a trillion-dollar economy, India remains abjectly dependent on foreign sources for its security needs. And yet nobody seems to be bothered.

India’s Blinkered Vision


Most major powers undertake periodic Strategic Defence Reviews or issue defence White Papers which clearly highlight national interests, identify vital goals and objectives, and undertake an evaluation of the security environment. A deliberate exercise of this nature helps visualize the kind of armed forces the country needs, and pinpoints the specific capabilities they must field.

India, for all its fiscal constraints and competing demands on scarce resources, is one of the few countries which neither undertakes such introspection, nor generates security doctrines. In such a vacuum the Services tend to produce equipment wish-lists which focus on numbers (one for one replacement) rather than technologies or capabilities. Such demands take little or no account of force-multiplication, jointness, or duplication.

Moreover, such is the nature of the Chiefs of Staff Committee (COSC) system that a determined Service Chief can demand hardware for his Service by invoking the mantra of dire “operational necessity”. No provision exists, in the current dispensation, for the three Chiefs, the generalist bureaucracy or the Raksha Mantri (RM) to engage in a doctrinal discussion relating to the operational need of a requisitioned weapon-system, and the priority that must be accorded to it. After many instances of internecine sniping, an unwritten understanding has emerged in the COSC that, no Service will comment on another’s plans in the interests of harmony.

The MoD has neither the expertise nor the inclination to call for professional studies regarding national security issues. Therefore no critical examination or cost-benefit analysis has ever been undertaken on (for example) the continuing future relevance of weapon-systems such as battle-tanks, aircraft-carriers or short-range ballistic missiles in the Indian context, or the impact of an anti-ballistic missile defence system on deterrence stability. In such a scenario all wish-lists from the Services (and DRDO) become sacrosanct and, eventually, receive MoD approval.

The IAF Inventory


It is against this background that the IAF force-planning process, in general, and the MMRCA case in particular need to be examined, on the basis of information available in the public domain (IISS “Military Balance” 2010 edition). I must emphasise that the MMRCA case is being used only because it happens to be a current issue. This critique may also hold good for the acquisition programmes of the other two Services.

The mainstay of the IAF inventory, at its lower end, continues to be the vintage force of about 200 MiG-21 interceptors. Of these more than half have been upgraded to the Bison standard, encompassing a ground-attack capability. At the top end of the inventory are 140 Sukhoi-30 MKI air-dominance fighters which also have a significant strike capability. Additional Su-30s have been contracted and their eventual number will reach 272. Dedicated to the ground-attack role are 100 MiG-27 ML and 110 deep-strike Jaguar aircraft. Fifty Mirage-2000 multi-role fighters and 70 MiG-29 air-superiority fighters are available for combat tasks as required. The Jaguar, Mirage-2000 and the MiG-29 are all awaiting upgrades which will give them enhanced capabilities and extended life. This assorted force of about 650-700 combat aircraft is supported by air-air refuelling (AAR) and airborne warning and control system (AWACS) squadrons.

In addition to these combat aircraft of Russian, British and French origin already in service, the IAF has placed an order for 40 indigenous Tejas combat aircraft, with possibly another 80-100 more to follow. In December 2010 India signed a deal worth $ 300 million with Russia for the “joint development” of a 5th generation fighter aircraft. It is understood that about 250 of these aircraft, designated PAK-FA in Russia, will enter IAF service during the next decade. Finally, the Aeronautical Development Agency (ADA) is reported to have commenced design work on a fifth generation indigenous Advanced Medium Combat Aircraft (AMCA) expected to fly by 2025..

Assuming that the MiG-21s are withdrawn by the end of the decade, to be replaced by the Tejas; the MMRCA, when it joins the fleet, will become the 8th type of combat aircraft in IAF service. The increasing diversity of aircraft types (mostly of foreign origin) being accumulated by the IAF is going to become a nightmare in the spheres of training, maintenance, logistics and inventory-management.

The IAF had decided, in the early years of the last decade that the logical answer to its problems of obsolescence, attrition and declining strength was to induct additional numbers of the Mirage-2000. With a few upgrades, this excellent machine could become the future multi-role aircraft; bridging the gap between the heavy-weight Su-30 and the light-weight Tejas. It was the MoD’s rejection of this proposal that gave birth to the MMRCA project. However, a lack of clarity has prevailed about the specific space that the MMRCA is meant to occupy in the IAF order of battle, given the growing fleet of Su-30s, and the planned induction of the PAK-FA and the AMCA.

In this context, it is interesting to note the contrasting approach of two other medium sized air forces; the British and French. Both are equipped with about 300 combat aircraft, with which they meet operational commitments, not just at home but also world-wide. Their inventories are restricted to two or three types of aircraft: Typhoon and Tornado in the Royal Air Force, and Rafale, Mirage-F1 and Mirage-2000 in the Armee de l’Air. Versions of these aircraft undertake all combat tasks, including air-defence, ground-attack and strike & recce.

Foreign Dependence


One of the most deeply disturbing aspects of India’s national security policies is the nonchalance with which the country continues to spend colossal sums of money in acquiring weapon systems from foreign sources. There does not seem to be adequate realization of the fact that every such purchase makes India hostage to the seller nation, and seriously undermines our security as well as autonomy. For example, if the aircraft-carrier Vikramaditya arrives in 2012, the Indian Navy (IN) will remain captive to the whims and fancies of Russia’s creaky supply chain till at least 2052 for spares, and maintenance support.

In similar fashion every foreign aircraft that the IAF acquires, will place the Service at the mercy of another nation for 30-40 years thereafter. The denial of a tiny aircraft component can ground fleets, and we should be in no doubt that our dependence for spares, product-support and weapons on sources as diverse as Russia, UK, France, Israel and South Africa constitutes a crippling strategic vulnerability. We may soon be adding Italy, Spain and Germany to this list.

It is true that no third-world nation can aspire to be completely autarchic in advanced weapon-systems. And yet China has demonstrated that resolute pursuit of self-reliance can produce wonders. By deploying their scientific resources to “steal” technology and resort to reverse-engineering, the Chinese produce everything they need; from AK-47 assault rifles, cruise-missiles and stealth fighters to carriers and nuclear submarines. They also export $ 2 billion worth of arms annually. While it is sometime appropriate to disparage and berate the DRDO for its many delays, failures and false promises, the armed forces need to undertake some soul-searching themselves. Very often it has been their own their own detached attitude, and penchant for the illusory “fast-track” import option that has caused them to bypass any attempt at indigenization, and perpetuate foreign dependence.

Delving a little into history, it is interesting to note that it was at about the same time in the mid-1950s that two significant initiatives were taken towards self-reliance in defence. The IAF issued an Air Staff Requirement for an indigenous jet fighter, and the IN established a Corps of Naval Constructors (later to become Directorate of Naval Design) with the aim of starting indigenous warship production. HAL delivered the first twin-jet HF-24 Marut, designed by Dr. Kurt Tank, to No. 10 Squadron in 1967. Mazagon Docks Mumbai launched the first, licence-built, Leander class frigate, INS Nilgiri in 1968.

The stories diverge thereafter. Having delivered 150 Maruts, HAL doggedly persevered with further development of this elegant looking fighter. The designers, however, lost heart as successive versions like the HF-73, HF-24-M.53 and the single-engine HF-25 had to be shelved for lack of IAF interest and government support. Finally, HAL gave up when the IAF opted for the Jaguar and the Mig-23 BN, and the Marut programme was shut down. The LCA project taken up by DRDO, 30 years after the Marut, did not, till recently, evoke much enthusiasm from the IAF; which accounts for its tardy and halting progress.

On the other hand, Mazagon Docks went on to build four more Leanders before Indian naval architects stepped in to re-design the hull and add weapons and sensors to produce three different classes of warships. Today, the navy’s perspective plans rely heavily on the regular delivery of frigates, destroyers, amphibious ships and submarines by carefully nurtured Indian shipyards. A nuclear submarine was launched in 2010, and an indigenous aircraft-carrier will follow in 2015.

Backing Self-reliance



It may be somewhat late in the day, but there is still time to ensure that India’s aerospace industry does not completely miss the technology bus, and leave the nation forever dependent on foreign sources for combat aircraft. The MMRCA contract provides an invaluable window of opportunity, via the Offset Clause.

For far too long, have Indian defence PSUs claimed “transfer of technology” when they were only assembling components received from abroad using “screwdriver technology”. For the MMRCA offsets to be beneficial to India, they must be selectively chosen to fill known gaps in key technologies or provide high-end production-engineering skills lacking in our aerospace industry today. The USA had conveyed a distinct message that selection of either American candidate would open a cornucopia of technology to India – including the F-35 Joint Strike Fighter. The Europeans must be reminded of this and prevailed upon to follow a similar paradigm.

As far as the PAK-FA “joint development” contract is concerned, there is need for us to be even more careful because the prototype made its maiden flight early this year at Komsomolsk-on-Amur. The developmental process of this aircraft is, obviously, at least a decade old, and has been guided by the requirements of the Russian Air Force rather than the IAF. Thus, even if the “joint development” is no longer possible India must ensure that key technologies in areas such as stealth, super-cruise and active electronically scanned radar are actually transferred to the DRDO in return for the heavy investment made. The Russians are known to be parsimonious with technology transfer, and the pointless licence-production of 850 MiG-21s and aero-engines, as well as many BrahMos missiles is proof of this.

The IAF, on its part, can reinforce India’s aero-space self-reliance endeavours by articulating a 25-30 year capability-cum-force-planning vision, if possible, jointly with DRDO. This vision must use the LCA, AMCA and experiences and technologies as the basic building blocks for futuristic combat aircraft – manned or unmanned. Perhaps the establishment of a small Aero-space Design Cell in Vayu Bhavan may help.

The Advantage of Numbers


The IAF has justly complained, for many years, that its long-standing requirement of 45 fighter squadrons has never been met. Worse still, even the arbitrary “authorised" strength of 39.5 squadrons has been steadily eroded by attrition and obsolescence, so that today it is a force of less than 30 squadrons.

A point repeatedly made by the IAF leadership, in the context of declining force-levels, has been that while technology may have its place, “numbers have their own logic”. This is a valid argument for a force required to divide its strength between the western sector facing Pakistan, the north-eastern sector facing China, and the northern sector facing both adversaries. It must also be borne in mind that the Strategic Forces Command does not own any aircraft assets, and relies on dual-tasked IAF machines to be withdrawn for nuclear delivery missions. However the numbers argument has its limitations.

The IAF Hawker Hunter FGA Mk.9 that I flew in the 1970s could deliver a ton’s worth of rockets and iron bombs out to a little under 200 miles, and weapon accuracies of 15-20 yards were considered reasonable. The Jaguar, inducted in mid-1980s, was a great improvement and could deliver a 4 ton payload to over 300 miles. Today’s combat aircraft carry 6-8 tons of lethal weaponry to ranges of over 400 miles and deliver them with pinpoint precision on the target. Such is the accuracy and lethality of “smart” weapons that a single modern fighter can achieve the same effect in one mission as 15-20 earlier generation aircraft using “dumb” weaponry. This was amply demonstrated by the Mirage-2000 on Kargil heights in 1999. The “multi-role” appellation represents the ability to switch rapidly between interceptor, strike and recce tasks.

It is a moot question that if numbers are indeed so critical for the IAF, then why have the cheaper MMRCA options been discarded? Given that all six aircraft seem to have qualified in the flight-trials and technical evaluation processes, the line-up, in ascending order of price, shown in parenthesis, is as follows: MiG-35 ($ 45 m), F-16 ($60 m), F/A-18 ($60.5 m), Gripen ($82.2 m), Rafale ($ 85.5 m) and Typhoon ($124 m). The IAF could have, for example, added 400 Super Hornets to its inventory for the price of 200 Typhoons, and resolved many of its problems.

From this it becomes obvious that the time has now come for the IAF to undertake an exercise to determine the “capabilities” that it needs to discharge its roles and missions rather than insisting on a fixed number of squadrons. At between Rs. 350-550 crores per aircraft it would be unrealistic to demand the numbers contemplated in the 1960s; especially when technology opens up so many operational vistas.

Integrating the Expertise


There is no doubt that the General, Naval and Air Staffs at the three Service Headquarters embody in themselves the highest levels of field experience, domain knowledge and professional expertise. However, rhetoric apart, future wars are not going to be fought or won by a single Service. Whether we like it or not, concepts like “sea control” as well as “air dominance” are mere preliminaries for “boots on the ground”. It was for this reason that the post-Kargil Group of Ministers convened to “Reform the National Security System” recommended, in 2001, the creation of an Integrated Defence Staff to support the Chief of Defence Staff (CDS).

The CDS was to constitute the “single point of military advice to the Government”, and apart from administering the Strategic Forces Command (SFC), his two main functions, as Chairman COSC, were to be:
To enhance efficiency and effectiveness of the force planning process through intra and inter-Service prioritisation.
To ensure the enhancement of capabilities by engendering Jointness, demanded by modern warfare, in the armed forces.
A combination of bureaucratic resistance and political indecision bolstered by scare-mongering from within a section of the armed forces, unfortunately, stalled the institution of a CDS. An IDS HQ was, however, created and has been functioning under a 3-star Chief of Integrated Staff to Chairman COSC (CISC for short) since 2001.

The Integrated Defence Staff (IDS) with a large number of 2 and 3-star officers from the army, navy and air force could have become a most valuable pool of inter-Service expertise. It could play a crucial role in rendering advice to the RM on all issues relating to capability creation, force planning and inter-Service prioritisation of acquisitions. However, in the absence of a CDS, the functioning of the CISC, understandably, remains constrained by the Chiefs, and the IDS HQ remains an under-utilised formation.

Fixing the System

In the current system of India’s higher defence management the Chiefs feel that the acute scrutiny of their respective Services will not permit any down-sizing or right-sizing, especially if it means disbanding units or losing high-ranking billets. No significant reform, or move towards Jointmanship is, therefore, likely to take place unless imposed by the political leadership – as has happened in other democracies like the USA and UK.

With China bearing down hard on us, and Pakistan ready to descend into chaos, India’s external security scenario is fraught with hazard. Internally, the Indian state, which has been struggling to cope with Naxalism and terrorism, is now confronted with a restless civil society seeking relief from all-pervasive corruption and administrative ineptitude. National security is, therefore, in parlous straits.

The political leadership in India has overwhelming political preoccupations which obviate focused attention on national security issues. The bureaucracy is only too happy to step-in wherever it can, but does not know enough about operational issues to make drastic interventions. Under these circumstances, there is a strong element of tunnel-vision and ad-hocism in our defence planning and expenditure; dictated by the compulsions of individual Service HQs. Consequently, our colossal defence expenditure of $ 35 billion (and growing), does not contribute effectively to national security, and some urgent re-engineering is called for.

At the conclusion of this, somewhat lengthy essay I have, regrettably, no “silver bullet” to offer. However the national security establishment needs to pay urgent heed to four salient recommendations:

Create a source of advice which is not merely “single point” but conveys a non-parochial, inter-Service view of issues for the RM’s consideration. This source can be designated the “Permanent Chairman COSC” (or PCC) rather than CDS. The PCC will have no forces to command, but will administer the SFC and Andaman & Nicobar Command. His advice to the RM will be a distillate of the combined wisdom of the COSC, tempered by the counsel of the CISC and IDS HQ staff who represent all three Services.


Progressively integrate the IDS HQ and the MoD, so that the uniformed and civilian staffs work in harmony rather than as adversaries. This will enhance efficiency, cut down processing times for acquisition cases, and ensure that the defence budget is fully utilized.



Give utmost priority to attaining self-reliance in weapon system acquisition. This will require radical reforms in the structure and management of the DRDO and defence PSUs. It will also call for much closer integration of the DRDO with the IDS HQ, so that a meaningful and time-bound programme for attaining self-sufficiency in key defence technologies can be pursued even at this late stage.
Management of the DRDO budget should be placed under a board which has the three Service Chiefs as members. All defence R&D projects should be subjected to periodic user reviews for a decision on their continued relevance and viability.


Returning to the MMRCA issue as a post-script; no matter which aircraft eventually emerges as the winner in the competition, there can be only one litmus test for the decision. Has this choice been made for the right reasons, and does it serve India’s vital national interests? As a corollary one might also ask: how much longer must India remain dependent on foreign sources for security?

(A naval fighter pilot, Admiral Arun Prakash PVSM AVSM VrC VSM served as India's Chief of the Naval Staff from 31 July 2004-31 Oct 2006. As Chairman of the National Maritime Foundation (NMF), he currently divides his time between Goa and Delhi. This column is copyright and courtesy VAYU Aerospace & Defence Review (III/2011), at which the Admiral is Editorial Advisor. He contributes columns to journals, magazines, newspapers and, occasionally, to LiveFist)


Livefist: COLUMN: MMRCA, The Right Choice For The Wrong Reasons
 
COLUMN: MMRCA, The Right Choice For The Wrong Reasons
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A very interesting article, although I have some doubts about the price he quotes because he seems to mixed up some flyway and system costs. However, here is a pic of the admiral and his Rafale flight back then (although some sources said, that he has flown a Rafale M F1, which is not the one in the background) :

arunprakash.jpg
 
Lybia, Rafale takes off from Malta:

 
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