Rafale deal: India, France clinch offset deal; France agrees to invest 50% worth in related sectors

[Mamsalaphala]

I can now confirm the following:

1) The first 36 Rafale MMRCAs will be delivered off-the-shelf by Dassault Aviation under a contract to be inked in the very near future this year itself.

2) Dassault has agreed to implement the 50% offsets reqmt AFTER the Govt of India gives a written, irreversible commitment to order more Rafales (up to 189 in all). But this 50% offsets commitment on Dassault's part will be implemented ONLY after follow-on orders for Rafale are placed in successive tranches. For this, Dassault has been granted total autonomy to choose its own team of Indian OEMs that will become vendors to Dassault. Dassault, and not any Indian govt entity will have the final say on the choice of such Indian vendors. It will, of course, include HAL, which is already producing some avionics that are common to both the Rafale & Su-30MKI (Like the Sigma-95N RLG-INS).

3) Of the 50% offsets commitment made by Dassault, only 15% will be implemented as indirect industrial offsets (the Indian MoD refers to them as 'Rainbow Offsets) under the contract for the first 36 Rafales. That means, for instance, if I am the foreign supplier OEM, I can choose whether to invest the 15% offsets value with either an Indian lipsticks manufacturer, or with an Indian potato-chip manufacturer, or an Indian shoe-polish manufacturer. I am no longer obligated to commit my offsets to any MoD-owned DPSU like HAL or BEL or BEML etc etc.

Blogger: TRISHUL - Post a Comment

This makes a lot of sense- 50% offsets for 36 jets never made any sense.

This brings certain clarity to the issue.

1. Its certain that 36 is direct purchase. Hence Cheap (off the shelf cost).

2. It is unlikely the govt. the GoI will go for more Rafale considering they are only going to invest 35% offset in direct Aero space manufacture.

However GoI wants the option to go for more as plan B/C and hence the offset negotiations. The current plan seems to push for 120 LCA mk-1A and then 120 LCA Mk-2.

Rafale will now have to compete with PAKFA for any further sales. This also puts pressure on Russians to deliver ToT faster and cheaper and it plays out on their desire to humiliate France for the Mistral incident. Not to mention the strategic advantage of again becoming India's premium defence partners.

All in All , Well played by Modi ..... I guess IAF will be sulking since it did not get its candy.

Defence Minister Manohar Parrikar to travel to Russia next month | Latest News & Updates at Daily News & Analysis

Defence Minister Manohar Parrikar will arrive here next month to co-chair a joint military commission meeting during which the delayed 5th generation fighter aircraft development programme along with multi-role transport aircraft are likely to be discussed.

In his meeting with External Affairs Minister Sushma Swaraj, Russian Foreign Minister Sergey Lavrov said Parrikar would co-chair the meeting of Inter Governmental Commission on Military Technical Cooperation (IRIGCMTC) on November 2.

Though this meeting had been planned for earlier this month, it could not take place because of German Chancellor Angela Merkel's visit to New Delhi. Parrikar is likely to leave for Russia on October 30.

Besides touching upon the development of the 5th generation fighter aircraft, other issues likely to be discussed include the new-generation Russian S-400 air defence missile systems, capable of destroying incoming hostile aircraft, missiles and even drones at ranges of up to 400-km.

Parrikar along with his Russian counterpart, Sergei Shoigu, will also review the progress of Moscow's plan to manufacture almost 200 Kamov 226T helicopters in India that will give a big boost to government's flagship programme of "Make in India". The question of a possible lease of a second nuclear submarine from Russia could also come up.

The meeting comes amid growing defence ties between Russia and Pakistan. Russia is in talks with Pakistan for the sale of four MI-35 attack helicopters.

India-Russia military technical cooperation has evolved from a simple buyer-seller framework to one involving joint research, development and production of advanced defence technologies and systems.

Sources said spare part issues pertaining to the licensed production in India of SU-30 aircraft will be raised by New Delhi. Both countries are currently also working on a "Super 30" version of the fighter aircraft.

Shoigu visited New Delhi for the last meeting (14th session) of the Commission on January 21 to review the ongoing cooperation and future opportunities for progressing bilateral defence cooperation. Last year, the two governments signed an agreement to train Indian Armed Forces personnel in Russia.

 

[PARIKRAMA]

I can now confirm the following:

1) The first 36 Rafale MMRCAs will be delivered off-the-shelf by Dassault Aviation under a contract to be inked in the very near future this year itself.

2) Dassault has agreed to implement the 50% offsets reqmt AFTER the Govt of India gives a written, irreversible commitment to order more Rafales (up to 189 in all). But this 50% offsets commitment on Dassault's part will be implemented ONLY after follow-on orders for Rafale are placed in successive tranches. For this, Dassault has been granted total autonomy to choose its own team of Indian OEMs that will become vendors to Dassault. Dassault, and not any Indian govt entity will have the final say on the choice of such Indian vendors. It will, of course, include HAL, which is already producing some avionics that are common to both the Rafale & Su-30MKI (Like the Sigma-95N RLG-INS).

3) Of the 50% offsets commitment made by Dassault, only 15% will be implemented as indirect industrial offsets (the Indian MoD refers to them as 'Rainbow Offsets) under the contract for the first 36 Rafales. That means, for instance, if I am the foreign supplier OEM, I can choose whether to invest the 15% offsets value with either an Indian lipsticks manufacturer, or with an Indian potato-chip manufacturer, or an Indian shoe-polish manufacturer. I am no longer obligated to commit my offsets to any MoD-owned DPSU like HAL or BEL or BEML etc etc.

Blogger: TRISHUL - Post a Comment


@PARIKRAMA @Gabriel92 @halloweene @SR-91 @Water Car Engineer


This makes a lot of sense- 50% offsets for 36 jets never made any sense.

Finally.. Sanity prevails.. An offset of 4.5Bn $ for 36 birds only and setting up of 2 bases, a MRO kind of facility and requisite infrastructure just for say 2 squadrons for special SFC purposes is the ultimate fantasy scenario.. bcz then 36 birds are really a very very potent white elephant..

It was always clear that 4.5Bn offset or high value offset should be used as a base platform and getting the approval for investment anywhere means Dassault can very well invest the same amount in setting up with say Reliance Aerspace (if they are the partners for MII .. most likely) then this helps them set up the shop easily as no cross funding needs to be done again and again for different deals.. save scost time and of course brings a small amount of cost down simultaneously. Also setting the shop that way, increases the turn around time for assembling Rafales also later once MII starts over instead of taking another lag time to get the factory unit reayd. HAL i do see give some expert advice role in that consortium to keep them happy but i dont assume too much beyond the nameplate bearing HAL name as pvt players and GOI seems clear they don want too much HAL ruling over this line of production in any manner.

very few folks have maintained the numbers of rafales requirement in true sense.. Minimum 6 squadrons required is told by Chief Raha himself so take 108 birds there only with some spares etc the numbers would climb further. Like @Abingdonboy and many other friends we have always maintained 189 seems to be the number which will be the first of the final tier for Rafales. These number can very well swell up later when we face either more need of Rafales in IAF alone or we see more delay in commercialising our AMCA venture into live serial production age.

@Abingdonboy Bro i do see one more thing.. I firmly believe we should order a second set of 36 flyaway too and make the flyaway 36+36 and rest orders 189-72=117 as MII or similar 90+ MII and rest all direct from france. The idea is 3 rafales a month from 2017 gives us a superb chance to execute say a similar number joining IAF from France and from India directly a year from say 2018-2019 timelines... If we can match such an output of say 14-16 jet assembling a year then we can very well start inducting like 1.5-2 squads a year (one part from france and one part from india MII).. That could very well be a much bigger shot in arm and of course i firmly believe GOI would have considered a similar option to ensure squadron numbers are met with potent platform in shortest possible time.

One side question since we have ordered so far limited engines for our LCA tejas program why not we say look at an uprated M88 version also... we know that engine is good and is also very user friendly similar to GE ones.. @DrSomnath999 your thots on the efficacy and perhaps comparison of GE 404 versus uprated M88 versions.. or you both sirs feel keeping GE engines gives more benefits beyond just specs (geopolitical?)

The best part is autonomy to Dassault, this gives a much bigger thing to pvt sector.. Dont expect LM or boeing to manufacture jets if u dont give autonomy and expect them to fund DPSUs and reap nothing over long time... whichever companies come in the consortium they should make good use of this opportunity and contribute to the growth of military industrial complex in a step by step manner over time. Hope some good things from such products flow into our domestic projects and we upgrade to more potent and complex aircraft manufacturer..

Expecting a signing soon. may be before year end..

 

[Mamsalaphala]

I fail to understand why IAF fans continue to believe more Rafale's are coming.

Its rather clear that Rafale will be competing with PAK-FA for any other larger orders.

The competition will be between Dassault+ Reliance vs Sukoi+HAL..

The battle could go either way as they are evenly balanced.

But in either scenario the winner will be India.

 

[anant_s]

Finally.. Sanity prevails.. An offset of 4.5Bn $ for 36 birds only and setting up of 2 bases, a MRO kind of facility and requisite infrastructure just for say 2 squadrons for special SFC purposes is the ultimate fantasy scenario.. bcz then 36 birds are really a very very potent white elephant..

It was always clear that 4.5Bn offset or high value offset should be used as a base platform and getting the approval for investment anywhere means Dassault can very well invest the same amount in setting up with say Reliance Aerspace (if they are the partners for MII .. most likely) then this helps them set up the shop easily as no cross funding needs to be done again and again for different deals.. save scost time and of course brings a small amount of cost down simultaneously. Also setting the shop that way, increases the turn around time for assembling Rafales also later once MII starts over instead of taking another lag time to get the factory unit reayd. HAL i do see give some expert advice role in that consortium to keep them happy but i dont assume too much beyond the nameplate bearing HAL name as pvt players and GOI seems clear they don want too much HAL ruling over this line of production in any manner.

very few folks have maintained the numbers of rafales requirement in true sense.. Minimum 6 squadrons required is told by Chief Raha himself so take 108 birds there only with some spares etc the numbers would climb further. Like @Abingdonboy and many other friends we have always maintained 189 seems to be the number which will be the first of the final tier for Rafales. These number can very well swell up later when we face either more need of Rafales in IAF alone or we see more delay in commercialising our AMCA venture into live serial production age.

@Abingdonboy Bro i do see one more thing.. I firmly believe we should order a second set of 36 flyaway too and make the flyaway 36+36 and rest orders 189-72=117 as MII or similar 90+ MII and rest all direct from france. The idea is 3 rafales a month from 2017 gives us a superb chance to execute say a similar number joining IAF from France and from India directly a year from say 2018-2019 timelines... If we can match such an output of say 14-16 jet assembling a year then we can very well start inducting like 1.5-2 squads a year (one part from france and one part from india MII).. That could very well be a much bigger shot in arm and of course i firmly believe GOI would have considered a similar option to ensure squadron numbers are met with potent platform in shortest possible time.

One side question since we have ordered so far limited engines for our LCA tejas program why not we say look at an uprated M88 version also... we know that engine is good and is also very user friendly similar to GE ones.. @DrSomnath999 your thots on the efficacy and perhaps comparison of GE 404 versus uprated M88 versions.. or you both sirs feel keeping GE engines gives more benefits beyond just specs (geopolitical?)

The best part is autonomy to Dassault, this gives a much bigger thing to pvt sector.. Dont expect LM or boeing to manufacture jets if u dont give autonomy and expect them to fund DPSUs and reap nothing over long time... whichever companies come in the consortium they should make good use of this opportunity and contribute to the growth of military industrial complex in a step by step manner over time. Hope some good things from such products flow into our domestic projects and we upgrade to more potent and complex aircraft manufacturer..

Expecting a signing soon. may be before year end..

interesting observations.
historically speaking only Russia and France have stood by India in times of sanctions. so its pretty clear that till the time defence aviation industry matures to a level of other countries, Making in India is best bet to allow maturing of local manufacturing. this policy can be seen with P 75i project too where government is allowing private participation and thereby not only creating competition for public sector PSUs but also allowing for creation of parallel capacity for faster induction of hardware. it is quite obvious that given modernization program of armed forces is so huge, government neither has capacity to solely depend on public sector enterprises nor time and money for their upgradation in such short time.
induction of private venture is therefore not only welcome but unavoidable IMHO.
@Mamsalaphala
while its true that present order size is low but the fact that private participation is being mooted tells that neither Dassault nor private entity would put their money unless there is a substantial bussiness with order books for atleast 6-7 years.
so while we can debate the numbers that could be on order finally, i guess we can safely bet that this definitely shall be higher than 36. I'm quite convinced with 189 number that @Abingdonboy has said

 

[Mamsalaphala]

@Mamsalaphala
while its true that present order size is low but the fact that private participation is being mooted tells that neither Dassault nor private entity would put their money unless there is a substantial bussiness with order books for atleast 6-7 years.
so while we can debate the numbers that could be on order finally, i guess we can safely bet that this definitely shall be higher than 36. I'm quite convinced with 189 number that @Abingdonboy has said

Wishful thinking is not reality.

IF Indian govt. really wanted to build Rafale in India they would not have opted for direct purchase of 36 Rafale as a seperate deal.

It is rather clear that the unreasonable stand of dassault and the price quoted made it impossible to make the deal work.

The 36 rafale is to douse the IAF Fire. Once that is done, strategic purchase will define the way ahead.

Under the Modi govt., India's FIRST Priority is LCA, Second Priority is AMCA.

Third Priority is Rafale OR PAKFA.

Not both. There is not enough money for both.

There will be 189 built. Only it will be either Rafale or PakFa.

Finally neither dassault nor Reliance is putting ANY money as of today. GoI has only taken an assurance that IF they decide to increase the purchase THEN dassault will have to invest 50% and have the freedom to chose its partner.

This concept itself is absurd. Reliance has ZERO knowledge in Aerospace.

HAL has crazy experience in Aerospace. They might not be the best, but its certainly greater than Zero.

There is NO WAY Reliance can compete with HAL and win. Dassault was foolish enough to let their pride cloud their judgement. Sukoi is unlikely to make that mistake.

 

[nik141991]

I can now confirm the following:

1) The first 36 Rafale MMRCAs will be delivered off-the-shelf by Dassault Aviation under a contract to be inked in the very near future this year itself.

2) Dassault has agreed to implement the 50% offsets reqmt AFTER the Govt of India gives a written, irreversible commitment to order more Rafales (up to 189 in all). But this 50% offsets commitment on Dassault's part will be implemented ONLY after follow-on orders for Rafale are placed in successive tranches. For this, Dassault has been granted total autonomy to choose its own team of Indian OEMs that will become vendors to Dassault. Dassault, and not any Indian govt entity will have the final say on the choice of such Indian vendors. It will, of course, include HAL, which is already producing some avionics that are common to both the Rafale & Su-30MKI (Like the Sigma-95N RLG-INS).

3) Of the 50% offsets commitment made by Dassault, only 15% will be implemented as indirect industrial offsets (the Indian MoD refers to them as 'Rainbow Offsets) under the contract for the first 36 Rafales. That means, for instance, if I am the foreign supplier OEM, I can choose whether to invest the 15% offsets value with either an Indian lipsticks manufacturer, or with an Indian potato-chip manufacturer, or an Indian shoe-polish manufacturer. I am no longer obligated to commit my offsets to any MoD-owned DPSU like HAL or BEL or BEML etc etc.

Blogger: TRISHUL - Post a Comment


@PARIKRAMA @Gabriel92 @halloweene @SR-91 @Water Car Engineer


This makes a lot of sense- 50% offsets for 36 jets never made any sense.

Do we have money to by 189 Rafael & if we do how much the whole deal will cost

 

[GURU DUTT]

Do we have money to by 189 Rafael & if we do how much the whole deal will cost

looks more like ground work bieng laid for a totally Russian built single seat FGFA and possibally the land based version of F/A-18 E/F as LCA MK2, AMCA & F/A-18 E/F will have engine comminality

 

[nik141991]

looks more like ground work bieng laid for a totally Russian built single seat FGFA and possibally the land based version of F/A-18 E/F as LCA MK2, AMCA & F/A-18 E/F will have engine comminality

I am totally confused ,this government cleared so much deals I wonder where the money gonna come from & now there are talks of bying 12 divisions of S 400 for 400 million$ each to plug the gap between dwindling SQ numbers for the time being

 

[GURU DUTT]

I am totally confused ,this government cleared so much deals I wonder where the money gonna come from & now there are talks of bying 12 divisions of S 400 for 400 million$ each to plug the gap between dwindling SQ numbers for the time being

point is someone has to make up for one full decade lost deu to UPAs corruption and negligence and the musik is onli going to get shrill as for S400 looks like there is more than what is reported or declassified .... cheers mate

 

[C130]

9 billion $ for only 36 ? ( including set up, maintainence, training etc )

We could have bought more F35 with that money...

Of course strings remain the main obstacle .

But we did buy helis and transport aircraft, so why not ?

I can't even imagine how many gripen , F 16 , tejas , JF 17 could be bought with that money...

I am pretty sure tejas will cross 200 for that money..

Are we sure it s only 36 ? Not 48 ?

by the time India get's all it's 36 Rafales the F-35 will cost less than $80 million per

Lockheed eyes 2-4 percent cost reduction in next F-35 contract | Reuters

it's still in LRIP just waiting for FRP and the cost reductions


U.S bought 43 F-35s for $4 billion so I wouldn't be surprised if India could of bought 80 to 90 for $9 billion, but no ToT or offset clause

 

[GURU DUTT]

by the time India get's all it's 36 Rafales the F-35 will cost less than $80 million per

Lockheed eyes 2-4 percent cost reduction in next F-35 contract | Reuters

it's still in LRIP just waiting for FRP and the cost reductions


U.S bought 43 F-35s for $4 billion so I wouldn't be surprised if India could of bought 80 to 90 for $9 billion, but no ToT or offset clause

maybe US and india are showing interests in IAF for F/A-18EF but just might be working on F-35 who knows

 

[PakEye]

maybe US and india are showing interests in IAF for F/A-18EF but just might be working on F-35 who knows

The End is Near for F/A-18 E/F Super Hornet Production
Shane McGlaun (Blog) - February 18, 2014 9:19 AM
One of the staples U.S. Navy for a number of years has been the F/A-18 E/F Super Hornet fighter. However, reports indicate that the new U.S. defense budget that is set to be unveiled next month has no allowance for purchasing new versions of the fighter. New purchases of the electronic attack version called the EA-18G Growler are also nonexistent - The Hornet has been around since the 1970's and replaced the F-14 Tomcat and A-6 Prowler. When the last orders are completed, the Navy will have 563 Super Hornets and 138 Growlers. The current orders will have production of the aircraft continuing through 2016. Boeing says that 90,000 full time jobs around the country are dependent on Super Hornet production, and the company is currently shopping the jet to foreign nations now. Boeing had hoped to court Brazil with the purchase of 36 Super Hornets, but concerns over the NSA’s spying program led the Latin American country into the arms of Sweden and its Saab JAS-39 Gripen NG. The existing Super Hornets will be supplemented by the troubled (and expensive) F-35 Lightning II for U.S. Navy duties.

 

[C130]

maybe US and india are showing interests in IAF for F/A-18EF but just might be working on F-35 who knows

India could of gained a lot if it had re-opened the MRCA tender. Boeing is pretty desperate to sell more Super Hornets.


Advance Super Hornet is a beast

 

[sudhir007]

Bahut mehnga Hai.

Nahi chahiye

 

[Mamsalaphala]

India could of gained a lot if it had re-opened the MRCA tender. Boeing is pretty desperate to sell more Super Hornets.


Advance Super Hornet is a beast

The ONLY way that can happen is if Boeing offers it on 100% ToT and make it in India. I am certain India will buy more than 200+ Aircrafts.