Dassault Rafale, tender | News & Discussions [Thread 2]

[Dash]

36 platforms for 9 billion? If I am not mistaken that is 250 million/ ac (no "sir" thing please)

Indeed, but where did this $9 billion figure appear from? In the past few weeks I have seen 36 jets for $7BN-12BN and thus the derived unit cost has vaired signifcantly within the range I have stated. I won't cast judgement until I hear an offical line on the project cost from the Indian Govt.

$9 billion is last offered by French and India is negotiating for $8 billion.

 

[PARIKRAMA]

Edit:- @PARIKRAMA Do me a favour. I have read somewhere that we have to pay 10% advance and 50% of the value in some year. Can you confirm this or dig up some article about if true.

I had said the following as told by source
15% contract signing but India is looking at 50% advance payment to facilitate the offset implementation and Make in India Rafale line in India


This is what print media has been carrying

"At least 50 per cent advance will have to be made, including 15 per cent immediate payment," the sources said

Its carried by PTI and hence multiple media quotes the same line/
French have marginally reduced Rafale price: Sources - The Economic Times

French have marginally reduced the price of Rafale planes: Govt sources | The Indian Express



++

Something more interesting

Excerpts from an interview

Rafale deal will be better on price and delivery: French Ambassador Richier

• SUHASINI HAIDAR
• February 3, 2016 02:03 IST

Some would say that the pricing for a deal like this is not just a piece of the puzzle or the last mile. The pricing is the most important part, if the two sides don’t agree on pricing, what then?
I’m quite hopeful they will. Of course, the price is important, but what you must look at, is that the two countries are embarking in a cooperation that will last decades, fourty years, maybe more. There is an expectation from India that there will be ‘Make in India’ component in all future partnerships for defence aerospace, and yes this is going to happen. As this constitutes deep partnership in this area of aerospace, we are going to see something that has never been done before either by France or by India. So we are not talking just about money. Money is the last piece in the IGA puzzle, but when it is completed it will be a very large, very ambitious project. The money should not overshadow the strategic element of this defence partnership.

Yes, but in a way it has already, by holding up the IGA. Officials in the government say the price of the Rafale, which will be finalised will be lower than the price discussed during the previous UPA regime, can you confirm that?
We are committed and are on the way to demonstrate that the conditions will be better (than before). Better doesn’t just mean lower price, but additional elements. We are going to make it better on all fronts.

Could you explain that…are you saying the price of the plane may be lower, or the offsets will be reduced?
The price will be better, the conditions for delivery will be better, each and every part of the deal will be better than before.

You said it could be a few weeks, President Hollande said a couple of days….Realistically, how long do you see this price negotiation go on?
Let’s say between a few days and a few weeks. To be specific, we need to conclude negotiations, and then the Indian government will have to go over its processes for the agreement. So you have to put both sides together. If we talk about the conclusion, where we are involved, I think about four weeks is reasonable. And then there is an Indian procedure, which is not in their hands, over which we have no control.

You said much depends on the Indian government. The Rafale deal is unique because this is the first time a deal of this nature has been announced by the Prime Minister himself, and many of the details of this deal have been discussed by the Prime Minister and President directly. The invitation to Mr. Hollande was seen as a signal that the IGA was ready to sign. Given that there is such a high-level backing to this deal, has the time taken become a test-case for how quickly India can deliver?
Well, we have a direction given by our leadership that we have to work out sequentially. There are legal issues, technical issues; supply protocol given these planes will be sold in ‘flyaway’ condition. All these take time, and negotiation of price doesn’t start on day 1, so it’s very premature to say this is a stumbling block. Of course, the negotiations could be quicker, but it is completely wrong to draw any link between the President’s visit and the conclusion of the IGA. We do not negotiate contracts under pressure of time and neither does India. It is not because there is a visit that negotiations can be accelerated.

Rafale deal will be better on price and delivery: French Ambassador Richier - The Hindu
++
MII confirmed again by French ambassador.
MII confirmed by Prez Hollande before coming to India also

Hindu still stands by Dinakar Peri statement which is inline with my source based post here
Efforts were on to reduce the price per aircraft by 20 per cent, which is now over Euro 100 million or Rs. 800 crore, along with the weapons package.

In an indication of the progress, French President Francois Hollande said in Chandigarh on Sunday that one of the main aims of his visit was to “implement the decisions taken during Prime Minister Narendra Modi’s visit to France.”

“The Rafale is a major project for India and France. It will pave the way for an unprecedented industrial and technological cooperation, including ‘Make in India’, for the next 40 years. Agreeing on the technicalities of this arrangement obviously takes time, but we are on the right track,” he said in an interview to PTI.

Hollande in India: Rafale deal likely to see some progress - The Hindu

Money is the last piece in the IGA puzzle, but when it is completed it will be a very large, very ambitious project. The money should not overshadow the strategic element of this defence partnership.

@Abingdonboy @Taygibay @Vauban

+++

oh forgot to add

Some folks in the supply chain side who are in the loop about the deal says that they are feeling very positive and are kind of satisfied. They state that based on discussion and finalization, its not a contract but CONTRACTS (plural) which is done and dusted. They said a similar term of association which will last over next 4-5 decades and strengthening Inde French relationship


++

 

[Dash]

“The Rafale is a major project for India and France. It will pave the way for an unprecedented industrial and technological cooperation, including ‘Make in India’, for the next 40 years. Agreeing on the technicalities of this arrangement obviously takes time, but we are on the right track,” he said in an interview to PTI.

That's what I have been stating all along. No disagreements whatsoever.

This is what print media has been carrying

"At least 50 per cent advance will have to be made, including 15 per cent immediate payment," the sources said

That's for @Abingdonboy who was saying that 10% of cost at the time of signing and rest spread across years of delivery.

Efforts were on to reduce the price per aircraft by 20 per cent, which is now over Euro 100 million or Rs. 800 crore, along with the weapons package.

This needs to be read correctly, $112 million (Euro 100 million) is only the fly away cost and weapons, support, maintenance extra. The over reduction of 20% is on total cost that will be paid including everything ( I mean everything). Out of which some reduction close to 10% has been achieved and another 10% is left.

Any mods here? Lets merge this thread to Rafale sticky? I cant see any mods now..
@PARIKRAMA do you see any mods?

 

[PARIKRAMA]

This needs to be read correctly, $112 million (Euro 100 million) is only the fly away cost and weapons, support, maintenance extra. The over reduction of 20% is on total cost that will be paid including everything ( I mean everything). Out of which some reduction close to 10% has been achieved and another 10% is left.

Efforts were on to reduce the price per aircraft by 20 per cent, which is now over Euro 100 million or Rs. 800 crore, along with the weapons package.

Euro INR is around 72-75. Present its 75.75
It was around 72+ when Prez Hollande came to India

800 crs = Euro 111 Mn

Source indicated India asking for Rs 650 Crs for these 36 jets and MII at Rs 500-550 Crs. It may be that with reduction implies around the cost of jets+weapons at around Rs 720 Crs or Euro 100 Mn and Dollar would be USD 108 Mn. Thats why Jets + weapons from initial Euro 4Bn is now being quoted Euro 3.6 Bn.

@waz @Oscar @WAJsal @HRK
Can you guys pls merge this thread with rafale sticky

Sorry for the inconvenience and thanks in advance...

 

[Dash]

Source indicated India asking for Rs 650 Crs for these 36 jets and MII at Rs 500-550 Crs

MII @ 500 corers is too much to be 50% or I am reading it wrong?

Rs 720 Crs or Euro 100 Mn and Dollar would be USD 108 Mn. Thats why Jets + weapons from initial Euro 4Bn is now being quoted Euro 3.6 Bn

Yes, 720 corers amounts to another 10% reduction. But I doubt it. With French committing UAE @ 250 million, the chances are less, but still workable according to the above interview.

Can you guys pls merge this thread with rafale sticky

Sorry for the inconvenience and thanks in advance...

Thank you

 

[PARIKRAMA]

MII @ 500 corers is too much to be 50% or I am reading it wrong?

Thats actually based on localisation elements + Human capital costs reduction.
The insider reports says Rafales produced at Merignac plant + supply chain uses 6000 people and with production increased from 1-3 planes a month the number goes up to 9000 people and almost 40-50% jump in human capital costs.
So a line in India will ensure a straight forward reduction of around ~10-15% owing to human costs. but that will be visible as we approach the Break even value in quantity for the assembly line Euro 3Bn approx line and localisation via OEMs setting shops under MII. After all its a supply chain part also we want shifted to India.

So the cost ranges from Rs 500 Crs for almost 200 jets to Rs 540 Crs for 144-150 odd jets to Rs 600 Crs for almost 90 Jets to Rs 650 Crs for approx 50-60 Jets

This is per jet cost + weapons as negotiated price is around Rs 720 Crs. Imagine if the cost is say reduced by 10% more or original 20% reduction sought by India on Rs 800 Crs then the price works out to be Rs 800-160=640 Crs

Thats why if you consider the inflationary pressure + commodities price spiral and consider a slack % price over these quoted numbers, the deal size has to be much bigger and closer to 200 or more to see that we suffer minimal price revision upwards and ensure a near about 10+ years of production post plant being online. As longer timeline sees the benefit of localisation and inversely negates the inflationary pressure on prices marginally.

Yes, 720 corers amounts to another 10% reduction. But I doubt it. With French committing UAE @ 250 million, the chances are less, but still workable according to the above interview.

720 Crs or Euro 100 Mn is plane+weapons

Add in infrastructure+training+spares for 5 years+Total cost of ownership+MRO setup+ etc etc it should be another similar amount or may be 10-20% less.. thus that should be Euro 3.4-3.5 Bn or another Euro 80-90 Mn per jet when we divide it by just 36 . that adds up to Euro 180-190 Mn.

For UAE or Qatar the number of base remains fixed and so is the fleet. Thus a direct division of USD 15Bn by 60 jets gives you all inclusive USD 250 Mn like price tag. And since they dont plan for localisation or local production these costs are fixed in nature,

In our case, these costs will come down as we start using more bases. In fact, there are many Mig 21/27 bases infra which can be either used by LCA or Rafales with minimum modification. This implies a further cost reduction over a larger fleet.

That is why we need a large MII part. a typical benefit which we derive from having a large 272 Su 30MKI where such costs are divided by numbers and bases.

Thank you

You are welcome

 

[Dash]

This is per jet cost + weapons as negotiated price is around Rs 720 Crs. Imagine if the cost is say reduced by 10% more or original 20% reduction sought by India on Rs 800 Crs then the price works out to be Rs 800-160=640 Crs

I will make a small adjustment there. We are not likely to see a 10% reduction in Unit production cost. The cost reduction will only happen around 2% in weapons and 8% in support and maintenance, depending on the terms we both agree (blurry as of now, so to say).

In a most likely scenario, I see this.

In present scenario - $250 million is for each AC, including everything+ 10% reduction from original price
now- Further reduction of 10%, not on flyaway cost (note that the Unit program value for Rafale is @ ~$140 million
So - $250 million- $110 million= $140 million - (10% of $140 million)= $ 126 million

Total cost now comes after 10% reduction is 126+110= $236 million. Total cost of the deal to $ 8.5 billion.
That's my estimate. And I feel that's what France will settle for. Anything beyond that, I have no hopes.
Note that I have not considered the support and weapons cost split in my calculation.

Thats why if you consider the inflationary pressure + commodities price spiral and consider a slack % price over these quoted numbers, the deal size has to be much bigger and closer to 200 or more to see that we suffer minimal price revision upwards and ensure a near about 10+ years of production post plant being online. As longer timeline sees the benefit of localisation and inversely negates the inflationary pressure on prices marginally.

IMHO, the numbers will increase, from both economical and military POV. But as drastic as 200 seems far fetched at the moment and I wont bet it like Su 30 as French and Russians are two different people when it comes to business.

For UAE or Qatar the number of base remains fixed and so is the fleet. Thus a direct division of USD 15Bn by 60 jets gives you all inclusive USD 250 Mn like price tag. And since they dont plan for localisation or local production these costs are fixed in nature

We have the same price and we know French have categorically denied any further reduction from 250 figure as this will damage their deal with UAE.

In our case, these costs will come down as we start using more bases. In fact, there are many Mig 21/27 bases infra which can be either used by LCA or Rafales with minimum modification. This implies a further cost reduction over a larger fleet

Not always, more bases doesn't always translate to cheaper support. Sometimes it inversely proportional.
However for Rafale we are asking for 2 support stations at 2 bases. Which is a good idea.

 

[airmarshal]

I think India plans to negotiate for another twenty years.

 

[kaykay]

I think India plans to negotiate for another twenty years.

Or may be even more but again its our concern. May be you should show some concern about dead J-10 deal...ain't it?

 

[Ankit Kumar]

If they are negotiating, and keep negotiating..... why not negotiate on one point?
That is.... some Mirage 2000 free from French inventories? I mean only the aircrafts, we are willing to pay for the upgrades.......

 

[Taygibay]

Our DefMin has become a sandwitch but he is doing exceptionally good so far. Its the IAF which has got its priorities mixed for quite sometime but that requires another thread for any justification or explanation.

Well, I was alive, aware and interested for the last two decades regarding mil planes in Bharat ...
so I'll have to disagree mate!
The IAF's priorities never wavered : it wants flocking X-wing starfighters ... to blast Chengdu deathstars with!
A long time ago, a program was set to make them for it in India ... that wavered! Unfinished ...
Then a competition with more arms than Shiva, all tied behind her back for kicks, was opened
to buy starfighters from elsewhere to plug the gap and that wavered to death.
We've got the starfighters; are you rebels?

Sadly, this breaks down your myth of saint Manny ( you must have him confused with his predecessor ).
Parrikar has been doing a sorry job at communicating over that deal, period!
While Bharati media are one of the most wildly extrapolating bunch of weirdos thinking themselves wise
ever seen, in the case of your present MoD, it was not from journo to journo that reports varied but from
interview to interview! He was surprised by the very GtoGovt deal in Paris, he said more Sukhois, more
Tejas and once possibly more Rafale over time, he plays hardball as Modi sweetens things by calling
Hollande directly and so on and etc. The clear impression is that he is limit out of the loop to be honest!

By comparison, I dare you to find a dissension in terms and meaning between Le Drian and his Prez!
In France, the system puts the president in charge of defence and foreign relations. Those are his pre-
rogatives. As such, he loftily lords over the governmentat large but Le Drian and Fabius are his men!
The quality of the relationship shows in the unified expression of will.
( Sometimes, it falters between MoD & FRmin though; boys will be boys and compete with each other. )

He should be a sandwich part ( That t typo was magistral BTW! ) as the butter is at the heart of one, the element
by which the meat ( IAF ) is kept fresh within the confines of the bread ( Central govt will & moneys )!
A MoDs first duty is to the country by means of the armed forces, whims of central babus should be third.
Had he been in that position that he should have faced-off with Modi if opposed to Rafale, encouraged
the process if a fan or apply discreet internal pressure if uncertain. He choose to do it all in fine which
makes no sense.
Typical press conference by now :

"I'm happy to report that we'll have to buy more of that entirely too expensive aircraft that I decided the
IAF wanted for bad reasons although they'll also get more LCAs for the same ones. ...
But worry not my friends for there's another press conference in 2 days and I'll report the opposite!
Go MKIs!"
​

I'm sorry but I really am not a fan! This would not matter if he was consistent, he's not!
And thinking as an Indian for a minute, between Modi IAF and Parrikar, the latter is the most expandable!

But you're right that it leads out of aircraft deals so let's leave it be.
All the best to you and yours, Tay.

P.S. All puns are intended and still just for kicks, so are typos for this once ... if any.

 

[Taygibay]

In a separate answer to both Dash and Abingdon who've been haggling,
the s at contracts is normal for a product like the Rafale but also a marker of strategic ties.

Examples of each :
Within the GIE Rafale, there are different suppliers that all converge on Dassault per unit ...
but keep separate timelines and thus tabs. A bolt manufacturer for fuselage wing junctions
only feeds the main assembly line. A radar or weapons maker in reverse will feed the armed
forces of the client directly for years after the buy. The former is included once in cost while
the latter does support & is expected to receive new orders over the service life of the aircraft.
The big ones sign associated contracts especially if, as is the case, huge off-sets are included.

Outside the GIE Rafale, there are valid reasons to spread off-sets if a strategic partnership exists.
The Raffy is a mature product. To get 50% off-sets, you'd need to buy 50% of total production.
Total production overall in history? The present number prior to India is between 228 and 273
as we await the next French order/s. Plus options, etc but without any new deal.
Minimum buy is thus at 114 for a full Indian co-localisation.
Yes, except that ... if we are partners, while unable to share direct work on that one program,
we can share work elsewhere since we sign deals in so many fields and ventures. For instance,
the 50% off the Raffy deal would rationally be limited to say 25% easy to implement and maintain.
Meanwhile, 5% can be found in the nuc plants as either reduction of price or better workshare
for the Indian facilities. That is to be negotiated first and foremost by the French govt as a form
of arbitration between the corporations involved, some private as Dassault, some with control
investments as Thales and some public as Areva. Then proposals are put forth to Delhi-Modi!
The same goes for ToT : a rumour has it that we suddenly discovered that some AIP patents
could actually be shared with you guys for example ... about at your last Republic Day's time!

You can imagine how far reaching this becomes in ToT in fact. If we have full tech and you none,
the plant in India will provide such basic workforce that nothoing but good work ethics will be gained
as you work for us. But if a project is open to collaboration, things change! Let's suppose that
within the AMCA project, some pieces of the puzzle involve on-going source study programs
France is looking at, what is commonly called technological bricks. A joint venture to make that
part is interesting strategically. In this case, ToT will be much higher. And surprisingly, there is
yet another level of ToT. Dassault Systèmes AKA 3DS has 5 locations in India.

Dassault Aircraft Services India Pvt. Ltd.
Dassault House

A-280 Defense Colony
New Delhi 110 024
Tél. : +91 112 465 24 65​

Work for the future on products that are used by everyone is being done in Bharat too :
3DPLM Software

and I do mean everyone : Boeing, Bombardier Aéronautique, Dassault Aviation, SNECMA, Airbus, Airbus Helicopters, Thales, Safran, SONACA, Jet Aviation, Liebherr Aerospce, Zodiac Aerospace, Embraer, Astrium, Groupe Bénéteau, Meyer Werft, US Navy for its first computer designed sub USS Virginia (SSN-774), Frank Gehry, Microcar, Michelin, Renault, Renault Sport F1, PSA, BMW, Daimler, Toyota, Honda, Porsche, Audi, Mygale, Goodyear, Carat Security Group, Autoliv, Valeo, Plastic Omnium, Faurecia, Renault Trucks, Alstom, Bombardier, CAF, Swatch Group, Nokia, LG, Thales, Arc International, Rotarex, Education National, CERN, Fermilab, CNRS, Iter, Hydro-Québec, Alstom Power Bergeron, Areva, Nexter are all clients of Catia.​

In such a venture if somewhat further away from jets themselves, backlog of knowledge is relatively unimportant
as the field is new and creates its own solutions. Bright young minds are free to blossom which may very well be
the best form of ToT possible. They'll help design the tools that design the AMCA.

Now that we've seen the options, we can imagine the subtleties involved, right?
Almost none of which will ever be uttered save behind closed doors, away from
half-deaf reporters concentrated on citing double the price to show India to be big ...

Keep calm guys or when the feast is finally served, you'll be in the ICU with acute indigestion, Tay.

 

[Dash]

Well, I was alive, aware and interested for the last two decades regarding mil planes in Bharat ...
so I'll have to disagree mate!
The IAF's priorities never wavered : it wants flocking X-wing starfighters ... to blast Chengdu deathstars with!
A long time ago, a program was set to make them for it in India ... that wavered! Unfinished ...
Then a competition with more arms than Shiva, all tied behind her back for kicks, was opened
to buy starfighters from elsewhere to plug the gap and that wavered to death.
We've got the starfighters; are you rebels?

Sadly, this breaks down your myth of saint Manny ( you must have him confused with his predecessor ).
Parrikar has been doing a sorry job at communicating over that deal, period!
While Bharati media are one of the most wildly extrapolating bunch of weirdos thinking themselves wise
ever seen, in the case of your present MoD, it was not from journo to journo that reports varied but from
interview to interview! He was surprised by the very GtoGovt deal in Paris, he said more Sukhois, more
Tejas and once possibly more Rafale over time, he plays hardball as Modi sweetens things by calling
Hollande directly and so on and etc. The clear impression is that he is limit out of the loop to be honest!

By comparison, I dare you to find a dissension in terms and meaning between Le Drian and his Prez!
In France, the system puts the president in charge of defence and foreign relations. Those are his pre-
rogatives. As such, he loftily lords over the governmentat large but Le Drian and Fabius are his men!
The quality of the relationship shows in the unified expression of will.
( Sometimes, it falters between MoD & FRmin though; boys will be boys and compete with each other. )

He should be a sandwich part ( That t typo was magistral BTW! ) as the butter is at the heart of one, the element
by which the meat ( IAF ) is kept fresh within the confines of the bread ( Central govt will & moneys )!
A MoDs first duty is to the country by means of the armed forces, whims of central babus should be third.
Had he been in that position that he should have faced-off with Modi if opposed to Rafale, encouraged
the process if a fan or apply discreet internal pressure if uncertain. He choose to do it all in fine which
makes no sense.
Typical press conference by now :

"I'm happy to report that we'll have to buy more of that entirely too expensive aircraft that I decided the
IAF wanted for bad reasons although they'll also get more LCAs for the same ones. ...
But worry not my friends for there's another press conference in 2 days and I'll report the opposite!
Go MKIs!"
​

I'm sorry but I really am not a fan! This would not matter if he was consistent, he's not!
And thinking as an Indian for a minute, between Modi IAF and Parrikar, the latter is the most expandable!

But you're right that it leads out of aircraft deals so let's leave it be.
All the best to you and yours, Tay.

P.S. All puns are intended and just for kicks, so are typos for this once ... if any.

I agree,Parikar was dilly dallying like a newcomer to a monstrous deal that hasn't been cracked for a decade now. But we can spare him considering the fact that he is no position aware of the diplomatic coup Modi was trying to score , made him say such.

But saying something is better than saying nothing at all At least we gotta know what was IAFs position on this deal.

The surprise came to all of us and him not being privy to an affair like this. However, we can see how he has managed himself post the declaration of the it's 36 deal in France.

The deal was made complicated by everybody who handled it before. this govt has made us know the real deal to our masquerade heads forced by IAF and th bureaucracy.

Your being there statement didn't help the argument apart fromasking me to accept the whole post from face value.

Keep calm guys or when the feast is finally served, you'll be in the ICU with acute indigestion, Tay.

Tayji, Thank you for the detailed post on this and we all appreciate and value you your contribution a lot.

Having said that i say that me amd @Abingdonboy understand what you are so humbly trying to convey here. In fact we both agree with you.

The poin of contention however is different, especially btn me ans him.
According to his calculation, this 36 is a total waste and we must go for 200.

I say lets settle for less and wait to seeto which dirextion my mind allows to hold the umbrella when the wind starts blowing, when it blows.

You too seem to hold the same opinion as Abingdonboy but yout numbers are 114.

I would like to see some mathbhind it. 50% buying for 50% offset need to to be validatrd with data. And as far as my information goes French have gone on records to say that they will abide to 50% offset only for 36.

Regards,
Dash

 

[Abingdonboy]

According to his calculation, this 36 is a total waste and we must go for 200.

To make it economically viable the numbers have to be 100+. To meet the IAF's requirements in the immediate to medium term their orginal 189 figure remains unfulfilled. Any thing less than 100 is a complete waste of time and the MoD/GoI would be foolish to pursue such a limited deal.

 

[Dash]

To make it economically viable the numbers have to be 100+. To meet the IAF's requirements in the immediate to medium term their orginal 189 figure remains unfulfilled. Any thing less than 100 is a complete waste of time and the MoD/GoI would be foolish to pursue such a limited deal.

Show me your calculation in a precise way not only for me but for public consumption and I will agree until then its jingoistic and has nothing valuable to add.