€7.25-billion: France makes its ‘best’ price offer for 36 Rafale fighter jets

[dadeechi]

€7.25-billion: France makes its ‘best’ price offer for 36 Rafale fighter jets

By Manu Pubby, ET Bureau | 12 May, 2016, 02.16AM IST

NEW DELHI: The Rafale fighter deal that has been stuck for the past several months on pricing issues is likely to move ahead with a new offer from Paris that could see India paying 7.25 billion for 36 new jets.


The new offer from France is the lowest price being quoted for the Rafale fighters till now, though a weapons package is to be negotiated separately. Officials involved in the negotiations have told ET that the latest French offer came just over two weeks ago and could be the last price being offered for the Rafale fighter jets that are being procured by India under a government to government deal.

This is a substantial cut from the 8.8 billion Euro figure that was being quoted for the deal in BJP circles and was even advertised by its IT department as a major win for the Modi government.

Officials say that the negotiations will now only move forward after an Indian response to the offer. The two sides are also negotiating a five-year support package for the fighter jets, down from the ten-year package that was being discussed earlier. Sources say that the weapons package will be signed separately as has been the norm but the original requirement has been pruned.


This has been done as several weapons are common with the in service Mirage fighter fleet. On April 21, Parrikar had said that the Rafale deal is "in quite an advanced stage and we intend to close it quite soon". The deal has to be first approved by the defence ministry followed by which it would go for a go ahead by the Cabinet.


The offer for 7.25 billion euros for the 36 aircraft would also include an offset clause that would see French companies like Dassault and Thales investing in the Indian defence and security sector. France agreed to a 50 percent offset clause as a special case for India after the direct intervention of the Indian PMO, sources said. The investment of over 3 billion euros would be a boost for Indian defence and aerospace companies.

Several Indian companies are partnering with French companies for the offsets, including a plan to assemble aircraft parts and even a low cost executive jet in India

Several aircraft technologies, including a special radar absorbing paint are likely to be transferred as well through the defence research and development organization.

http://economictimes.indiatimes.com...-rafale-fighter-jets/articleshow/52230203.cms

 

[Jai Bharat]

So the coercion through the 'corruption probe' worked then?

Funny that we get this report just after that bit of news. Dassault would like this over before the CBI can scrutinize this deal any further.

 

[#hydra#]

Nice development.

 

[Hell hound]

french or your government i don't know who but one them played you again how let me explain
1) they reduce the spare from 10 to 5 years that causes the 50% cut in spare cost which you will eventually need after 5 years and then you guys are going to pay through your noses.because then french will have upper hand and then you could do nothing because rafale is already purchased and you have no other option(its same like buying a Gillette razor with two blade instead of four and then have to buy the blade again which have higher price then razor itself)
2)weapon package is not included.let me remind you guys that the price of a single mica is 2,160,000 EUR and this figure is from 2003 you can add inflation to it.
3)50% offset clause is for this deal only french will only have to invest back 3.625 billion and they will bag 100% amount of weapons and future spares.

 

[Malik Alashter]

french or your government i don't know who but one them played you again how let me explain
1) they reduce the spare from 10 to 5 years that causes the 50% cut in spare cost which you will eventually need after 5 years and then you guys are going to pay through your noses.because then french will have upper hand and then you could do nothing because rafale is already purchased and you have no other option(its same like buying a Gillette razor with two blade instead of four and then have to buy the blade again which have higher price then razor itself)
2)weapon package is not included.let me remind you guys that the price of a single mica is 2,160,000 EUR and this figure is from 2003 you can add inflation to it.
3)50% offset clause is for this deal only french will only have to invest back 3.625 billion and they will bag 100% amount of weapons and future spares.

Wait a second the Indians still the winners.

1- they got the planes for 115 millions each with five years of spare parts
2- they will get top European companies to invest in military sector that's more techs and more money and more Indians involved in those companies as engineers and technicians.
3- Now the French will accept to supply more rafales for discounted price if they want to sell more rafales to keep the line running and to get more money for their next fighter other wise the Indians already got adequate number of the Rafale so they are not in a hurry to induct more of it.

 

[Hell hound]

Wait a second the Indians still the winners.

1- they got the planes for 115 millions each with five years of spare parts
2- they will get top European companies to invest in military sector that's more techs and more money and more Indians involved in those companies as engineers and technicians.
3- Now the French will accept to supply more rafales for discounted price if they want to sell more rafales to keep the line running and to get more money for their next fighter other wise the Indians already got adequate number of the Rafale so they are not in a hurry to induct more of it.

1) this is a short term gain for long term loss like i said i don't know how is playing the indian common man here but game is strong they are showing that price of jet is reduced due to their effort but actually it is not due to hard negotiations but reduction in spares.
2)they lost about 1 billion euros worth of foreign investment because of price reduction from 8.8 billion(50%=4.4billion) to 7.25billion(50%=3.625 billion) but in reality they will be paying lot more then 7.25 billion for weapons and spares they could have cashed these purchases too in offset clause.but french played their card very well here.
3)as india will have incurred sunk cost of 7.25 billion in future this will give french the leverage to charge hefty price for more jets and upgrade.classic client trapping technique first get them hooked and then slice them on the hook.

 

[Photon]

1) this is a short term gain for long term loss like i said i don't know how is playing the indian common man here but game is strong they are showing that price of jet is reduced due to their effort but actually it is not due to hard negotiations but reduction in spares.
2)they lost about 1 billion euros worth of foreign investment because of price reduction from 8.8 billion(50%=4.4billion) to 7.25billion(50%=3.625 billion) but in reality they will be paying lot more then 7.25 billion for weapons and spares they could have cashed these purchases too in offset clause.but french played their card here very well.
3)as india will have incurred sunk cost of 7.25 billion in future this will give french the leverage to charge hefty price for more jets and upgrade.classic client trapping technique first get them hooked and then slice them on the hook.

FIrst of all, the price is being reduced from Eur 7.8 Billion( $ 8.8 Billion) to Eur 7.25 Billion ($ 8.2 Billion ). This reporter has mixed up dollars and Euro figures.

So net loss is investment is only Eur 275 million ( (7.8 - 7.25) / 2 = .275 Billion).

The support package is being reduced from 10 years to 5 years, because simultaneous talks are on to manufacture 90 these jets in India.

If In 5 years an assembly line for these jets is opened in India, it might be cheaper to gets these spares in India, than paying heftily for them upfront.

 

[Nimitam]

Its not cheap by any standard. But I am glad that the weapons package is not made part of this deal.

150 million $ per Rafale might be the stand alone price.

 

[Oracle 33]

Wait a second the Indians still the winners.

1- they got the planes for 115 millions each with five years of spare parts
2- they will get top European companies to invest in military sector that's more techs and more money and more Indians involved in those companies as engineers and technicians.
3- Now the French will accept to supply more rafales for discounted price if they want to sell more rafales to keep the line running and to get more money for their next fighter other wise the Indians already got adequate number of the Rafale so they are not in a hurry to induct more of it.

Maybe we can do some joint Rafale training together my friend

 

[Fireaxe888]

The more I think about it the more convinced I am that this deal is a scam and not worth the money. Better spend the money on developing the Tejas/4.5/5g Tejas successor. You guys have to break your dependence on foreign sources for many arms. It also harms India's international image.

 

[Oracle 33]

The more I think about it the more convinced I am that this deal is a scam and not worth the money. Better spend the money on developing the Tejas/4.5/5g Tejas successor. You guys have to break your dependence on foreign sources for many arms. It also harms India's international image.

You must enjoy speaking out the backside it seems

Several aircraft technologies, including a special radar absorbing paint are likely to be transferred as well through the defence research and development organization.


So we can use this for our AMCA project? all these technology transfers

 

[Malik Alashter]

Maybe we can do some joint Rafale training together my friend

With these crap politicians in Iraq we wont get any thing like the Rafale any soon.