Everyone,
I have been curious to figure out why Indian Govt. is hell bent on making Dassault accountable for 108 air-crafts to be manufactured by HAL. It makes little business sense since Dassault doesn't control HAL and will have limited say in the processes and manufacturing schedules of HAL.
WELL HERE IS THE ANSWER (Don't ask how i learnt about it)
- This entire thing is a just an euphemistic way of saying "transfer the technology and do the knowledge transfer to HAL"
- HAL won't be able to meet schedules if the engineers don't have complete understanding of various sub-systems and how to integrate them down to the very code level. HAL knows it and Dassault understands it! Since 50% of the deal value must come from Indian firms (considering 17% of deal value is already taken up by the first 18 planes) . Dassault has little choice but to establish the knowledge base of manufacturing know-how so the systems can be delivered on time
- Dassault wanted Indian govt to immediately exercise option for 63 more because now the deal value increased by 50%. What is does in effect is that it allows Dassault to have more foreign components. (Let me explain here)
Initial deal value for 126 aircrafts : 12B
Foreign Systems Value: 6B (1.7B value in effect for first 18 planes, Dassualt left with only 4.3B to source from outside India )
Indian Systems Value: 6B
Initial deal value for 189 aircrafts : 18B
Foreign Systems Value: 9B (1.7B value in effect for first 18 planes, Dassualt now left with 7.3B to source from outside India )
Indian Systems Value: 9B
This difference of 3B (7.3 - 4.3) will allow Dassault to keep some critical technologies that it will otherwise have to part should the deal is only signed for 126 planes in order to adhere to the terms and conditions of local sourcing mentioned in the contract.
- The role of Reliance.....well i will talk more next time.
As an FYI: After all the haggle, deal will be signed!
So cheer up if you were concerned if this deal will fall and India will go for Euro-fighter