Rafale deal: France says no to offset, yes to 'Make in India'

[anant_s]

The sources said the offset clause will simply drive up the cost of each aircraft.

NEW DELHI: The French government has rejected Indian negotiators' demand for a 50 per cent offset clause citing sharp cost escalation but offered to participate in 'Make in India' projects to carry forward the talks for 36 Rafale fighter jets that have hit turbulence.

Defence sources said India's insistence on the offset clause, tweaking of weaponary technology and plans to set up two bases for Rafale fighter jets would lead to cost escalation.

Offset policy was first introduced as part of the Defence Procurement Procedure (DPP), 2005, under which a foreign company has to invest back a portion of the deal into India.

"The 50 per cent offset clause was part of the original tender that was floated for 126 fighter jets. The French President and Indian Prime Minister have now decided to go in for a direct purchase of 36 Rafale jets. So, how can 50 per cent offset clause be asked when the French are offering the fighters at the same rate at which its Air Force is buying," defence sources said.


They added the French have instead offered to undertake 'Make in India' initiatives. "The French can look at the option for making Falcon business jets in India or even the Rafales for future besides other projects," the sources said, adding the French government has made it clear that their companies would like to be part of 'Make in India' initiative.

The sources said the offset clause will simply drive up the cost of each aircraft.

It is not just the offset clause that the French are worried about. Indian Air Force wants to integrate a Israeli helmet mounted display with the Rafale fighter jets besides tweaking the weaponry technology so that the aircraft can fire a missile other than what the Rafales carry. The missile, sources said is of American make.

"The changes asked for are not like changing tyres in cars. It takes time, effort and money, all of which will again drive up the cost," the sources said.

http://timesofindia.indiatimes.com/india/Rafale-deal-France-says-no-to-offset-yes-to-Make-in-India/articleshow/48500796.cms

 

[anant_s]

at the risk of sounding pessimistic, i guess writing in on the wall. to me its quite clear that now if the negotiations falter further and there is no consensus by say november this year, Rafale purchase is dead (even the 36 pieces proposed by this government).
One thing that baffles me is when PM Modi asked for quick purchase of 36 pieces, he would've briefed Indian stand (on conditions etc) to French President. When france in return commented that they are offering some really attractive conditions, price would perhaps be their only focus. Question here is did India tell them how they wish to procure 36 pieces and were France aware of the questions (while making an offer), negotiators are now posing?
Now when as per IAF's requirements, some additional detailing is required, things are going to cost more.
& if in these circumstances, Indian negotiators are using the old template for negotiations including the conditions required by DPP (offset etc), i'm afraid we are heading towards another logjam.
@Abingdonboy @Gabriel92 @Taygibay

 

[[Bregs]]

Middle path will soon emerge and this demand of offset clause of 50% looks absurd as its normally 30%. But this condition can be waived at highest level if rates are competitive and not 200 m$ per aircraft

 

[nForce]

The French argument makes sense.

 

[al_asad_al_mulk]

If IAF want to integrate US made missile on Rafale its mean US seller has to provide source code and other data to France but i think US will not allow this to transfer critical technology to competitor country. i believe french made weapon system is enough.

 

[ito]

India should expedite the whole process...Rafales are urgently required.

 

[Dr Gupta]

A verbal agreement of sorts between Modi and the French PM means the final deal will be signed but too many parameters exist! integrating the Astra missile for one, offsets another, final cost etc.

The French argument makes sense.

It does but we should have a version that suits 'our' needs, even if we have to pay a slightly higher cost it would be worth it in my view.

50% in offsets sounds absurd for 36 Rafales, how are the French ever going to make a profit? instead make it 30% and modify the version for the IAF.

The offset clause is clearly mentioned in the tender, why they are refusing now?

Because the deal has changed it's for 36 now, they have to make a profit also!

 

[[Bregs]]

The offset clause is clearly mentioned in the tender, why they are refusing now?

Because now this deal is not as per that tender which stand cancelled by the Govt. now this is off the shelf outright purchase and needs to be looked and dealt with new perspective now

 

[Dr Gupta]

Forget the tender, it's done. We are in another mode of negotiations now.

 

[Chanakyaa]

Compared to a jet , how hard is it to Build a Carrier , a Rocket and a Nuclear Sub ? IAF is facing this crisis because of Stupid Planning and Short Sightedness.

Navy is rocking coz, they planned and relied on "Team India".

If they had guts they could have relied heavy on Tejas, ( as Navy Did and Result was MKII ).

 

[PARIKRAMA]

Offset is just one issue
the other is IAf insisting on 2 bases of operation for the 36 whereas the earlier deals won by Dassault for Qatar and Egypt had only 1 base. Making 2 base operational for Rafales bodes well for IAF but cost of infrastructure to training to all operational cost spikes the cost per bird up and thus the cost of equalling the FAF rafale cost tends to go up in air..

The best thing is to understand what under Make In india that Dassault wants to make really.. If its Falcon jets then does GOI/MOD or PM modi agree? I am nt sure at all.. Falcon Business jets manufacturing is much lower in terms of highlighting the make in india versus say a Boeing or airbus either manufacturing full aircraft or making vital parts..

If its Rafale they are talking then why dont they say clearly this is under MII and this is the cost of the whole project so that GOI?MOD can come to a conclusion.. Offset is just a bait used by both sides to talk nonsense and stall to see who blinks first..


About Astra i don really care what Dassault and IAF are saying at all.. if its MII and Rafale gets a century order under MII then Dassault can very well make a new standadr called F4I under which it incorporates Israeli tech and present indian missiles of either indigenous or russian origins.. Also it can make the weapons package cost a bit lower to accomodate this issue upfront and slowly bring those weapons platform to the common pool operated by IAF. This makes them more profit over time and thus helps in a much bigger way..

For the time being its a silly way of negotiation stalemate and news reports spreading it more like wildfire

 

[RazorMC]

It's surprising to see India still looking at this deal from the tender's perspective.

Here, I would say, the French are right.

 

[Ragnar]

Always wanting to tinker and make a mutter paneer MKI version. Eh Jaapan se kharido, eh Israel se kharido, bhindi amreeka se, gaajar France se.

 

[Beast]

India should expedite the whole process...Rafales are urgently required.

Wise word. India shall stop arguing but instead give in to all French demand. The French are people with pride who place profit below. Trying to outwit French will only end up in disaster like Russian Mistral deal.

 

[sathya]

50 % offset
Israeli HMD
American missiles
Indian Astra
@ better pricing

Not to mention Nirbhay later on

I don't think even 36 is possible to buy.
I don't think France will allow all or any of these.