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The wait for the $20-billion 126 medium multi-role combat aircraft for
the Indian Air Force is going to get longer due to budgetary constraints
and the delay in concluding the negotiations with the French company
Dassault. Though the talks with Dassault have been going on for two
years now, IAF chief Arup Raha has admitted that it would take another
three to four years before the first squadron of Rafale aircraft could
be raised. This effectively means a timeframe of 2015-16 if there is no
further delay in signing the agreement.
Speaking to FE on conditions of anonymity, an officer who has been part
of the negotiating team, said, “While the negotiations with the French
company are on track, there are several other agencies involved in this
project and it will be another few months before the negotiations are
complete. Which means this deal will not be done this fiscal ended March
2015.”
Also, sources have indicated that there could be budgetary issues too as
the Modi government is more focused on social programmes. Hence paying
the first instalment of the deal could be a problem too. When the
approval for procuring the 126 aircraft was given by the previous NDA
regime in 2000, the cost pegged was at around $10 billion, since then
the prices have gone up.
This fiscal’s R2.24-lakh-crore interim defence budget, especially the
R89,588-crore capital expenditure for new assets, has not factored in
the 15% down payment that needs to be immediately made if the MMRCA deal
is inked.
‘’After one-and-a-half decade of that approval, the cost of the combat
machines has gone up, including inflation and the rupee-euro conversion
rates. While the government has benchmarked the likely price of the
machines and the cost increase factored in, the necessary approvals for
budgetary provisions for the planes would need a fresh sanction,”
explained a senior IAF officer.
It is uncertain if the contract would be signed within the current
fiscal even if negotiations were completed by late next month and all
issues relating to technology transfer from Dassault were taken care off
and papers readied by December.
It has been more than two years, since Rafale beat its closest
competitor Eurofighter Typhoon from the consortium — then called EADS
Cassidian. When French foreign minister Laurent Fabius was in Delhi
recently, the Indian response to his efforts to push the deal through
was lukewarm, say officials.
One of the major reasons why the new government is very cautious about
the Dassault aircraft is perhaps its life-cycle cost, which is the
expenditure which would be incurred by India on operations and
maintenance of the plane for 40 years after induction, along with the
price of the planes.
Under the tender provisions, Dassault Aviation will manufacture the
first 18 of the Rafale for the IAF while Hindustan Aeronautics will
build the remaining 108 in India. The talks on life-cycle costs have
taken so long as this is the first-ever Indian defence deal in which
these costs are being worked out. It is now mandatory to calculate this
expenditure before the deal is signed.
Step by step
* The Contract Negotiation Committee will prepare the report of the
negotiations with Dassault
* Since the value is high, the matter will be brought before the Cabinet
Committee on Security
* This will require inter-ministerial consultations, in this case it is
the finance ministry
* The ministry could raise questions that need to be answered
* The CCS will then send the Cabinet note to the PMO and as per the
procedure, there will be a 15-day wait for response.
Source : No softlanding in sight for $20-bn Rafale deal | idrw.org
