DEFENCE MINISTRY GETS RS. 86,000 CRORE FOR RAFALE FIGHTERS & MR-SAM

[cerberus]

New Delhi: The Defence Ministry will have about Rs 86,000 crore for the financial year 2016-17 to fund the purchase of the French made Rafale fighters, Medium Range Surface to Air Missiles (MRSAM) and Submarines for the Indian Navy.

If the Rafale deal goes through, at an estimated cost about Rs 60,000 crore, India will have to pay about one-sixth of the total cost in the financial year to France.

Rafale On Instalments Is The Answer To Defence Ministrys Tight Budget - NDTV.com


The total budget allocation for this financial year of Rs 2,49,099 crore is an increase of nearly one per cent over last year's allocation.

This is apart from the funds for pension and allocation for payment for One Rank One Pension which stands at Rs 82,332 crore.

The Defence Ministry returned back about Rs 20,000 crore worth of unspent funds to the exchequer this time. "This is excess is largely because of low international fuel prices," a senior MoD official told NDTV.

Out of nearly Rs 2,50,000 Crore allocated to the ministry, Rs 1,62,759 crore is allocated for Revenue expenditure. It includes expenditure for Defence Ordnance factories, Research and Development, Rashtriya Rifles, Military Farms and the National Cadet Corps.

Rafale On Instalments Is The Answer To Defence Ministrys Tight Budget - NDTV.com

 

[$@rJen]

New Delhi: The Defence Ministry will have about Rs 86,000 crore for the financial year 2016-17 to fund the purchase of the French made Rafale fighters, Medium Range Surface to Air Missiles (MRSAM) and Submarines for the Indian Navy.

If the Rafale deal goes through, at an estimated cost about Rs 60,000 crore, India will have to pay about one-sixth of the total cost in the financial year to France.

Rafale On Instalments Is The Answer To Defence Ministrys Tight Budget - NDTV.com


The total budget allocation for this financial year of Rs 2,49,099 crore is an increase of nearly one per cent over last year's allocation.

This is apart from the funds for pension and allocation for payment for One Rank One Pension which stands at Rs 82,332 crore.

The Defence Ministry returned back about Rs 20,000 crore worth of unspent funds to the exchequer this time. "This is excess is largely because of low international fuel prices," a senior MoD official told NDTV.

Out of nearly Rs 2,50,000 Crore allocated to the ministry, Rs 1,62,759 crore is allocated for Revenue expenditure. It includes expenditure for Defence Ordnance factories, Research and Development, Rashtriya Rifles, Military Farms and the National Cadet Corps.

Rafale On Instalments Is The Answer To Defence Ministrys Tight Budget - NDTV.com

Its not installment... that's how usually India pay for defence purchases of Large Amounts..

 

[PARIKRAMA]

The question to wonder is

1. 10% signing amount ranging from 5600 Crs to 6000 Crs helps seal the deal for 36 jets and pay the rest in tranches
2. What about the proposed 50% upfront payment to facilitate MII line. Now this leaves us with further two sub options
   • The MII line cost is handled as part of offset and will be borne by DA as a part of the package
   • There is No MII at all

If the MII line cost is handled as part of the offset package and is borne by DA as of now and later included as part of tranches to be paid by India, that is a simple indication that the numbers of Rafales in India has to be substantial for any economic sense.

If i assume at say Rs 56000- 60000 Crs the offsets is around 50% or 28000-30,000 Crs or close to Euro 3.6-3.8 Bn and i have always said a line will require closer to Euro 3Bn kind of investment.

The other way to look is there is No MII so there is no point of making a large 50% payment.

It is interesting to note what structure is finally arrived at.

Oh BTW the article also says this
Of the Rs. 80,000 crore, three-fourth will have to be set aside for "committed liabilities" - the MoD's phrase for payments to be made for previous purchases

This implies its left with Rs 20,000 crs or USD 3Bn or Euro 2.6 max.
We have no choice but to stick with lower tranche payment of just signing amount 10% for 2016-17.

 

[Abingdonboy]

What about the proposed 50% upfront payment to facilitate MII line. Now this leaves us with further two sub options

• The MII line cost is handled as part of offset and will be borne by DA as a part of the package
• There is No MII at all

I'm not sure about this bro, I'm pretty certain the MII aspect is entirely de-linked to this off the shelf procurement, I was never expecting 50% of the MII part to be paid in full when this deal was signed, that will have to come later as the MII agreement for the Rafale is nowhere near ready. From what I expect/understand, the off the shelf purchase for 36 will be cleared up and signed and THEN attention will go to the MII part as it is the natural progression from there.

 

[SR-91]

I'm not sure about this bro, I'm pretty certain the MII aspect is entirely de-linked to this off the shelf procurement, I was never expecting 50% of the MII part to be paid in full when this deal was signed, that will have to come later as the MII agreement for the Rafale is nowhere near ready. From what I expect/understand, the off the shelf purchase for 36 will be cleared up and signed and THEN attention will go to the MII part as it is the natural progression from there.

I think they are working on this simultaneously. Deal should be for 36 Rafales and MII together, they might be delinked but probably using one as a leverage for the other.
The excessive time taken by MOD explains they are working with both d3als.

 

[Abingdonboy]

I think they are working on this simultaneously. Deal should be for 36 Rafales and MII together, they might be delinked but probably using one as a leverage for the other.
The excessive time taken by MOD explains they are working with both d3als.

For sure both are being worked on simultaneously but I meant to say that the payments for the 36 off the shelf will have no real relation to the MII aspect- that is part of a seperate (and more complex) arrangement that will involve an Indian partner.