sancho
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What in your opinion is the risk in scrapping rafale, and redirecting it to PMF FGFA.
You can only re-direct the budget to procure them, but not the operational roles, nor the industrial advantages we hoped to get through MMRCA. FGFA is meant for air superiority in the first place, mini AWACS should be an important role, just as SEAD or pre-emptive strikes, everything where it's stealth or sensor advantages can be used to the maximum effect.
MMRCA on the other side, is based on more basic roles like QRA and CAP especially in peace times, CAS and given that we haven't that capability so far, deep strikes with Cruise Missiles. It takes over roles from both lower and high end fighters in the fleet, either with more performance or lower operational costs. FGFA can't do most of that on a frequent basis, because it's simply too costly to operate heavy class stealth fighters in basic roles. So apart the industrial loss, IAF would have several operational problems too!
LCA mk2 will enter production in 2016, so by 2020, you can have 10 years of life extension on mig27's, two sqdns of LCA mk2 and three additional sqds of Mig 29.
The problem of the Mig 27s are the engines! They cause far too many technical problems, which is why IAF phase them out even earlier than expected and possibly even the 2 already upgraded squads, so that's not an option.
LCA MK2 production start is aimed on 2019 and even that seems to be optimistic the way LCA MK1 IOC and FOC are going on. Adding Mig 29SMTs with limited radar, avionics and no weapon advantages, especially not against China is again only an option to keep squad numbers on paper, but not on getting the neccessary capability into the IAF.
The FGFA is only going to enter service by 2022 at the earliest (around the time the final batch of the 126 Rafales would be delivered into IAF hands). The risk is the IAF's depleting SQD strength won't be addressed for another decade (if you go down the FGFA route)and in about 2 years the fleet numbers will crash through the floor as the MiG-21s and 27s are all retired from service.
Actually that's not a problem, the squadron number was always a hyped issue and is just a matter of the production capacity and available options. The first MMRCA squad is expected at the end of 2017 (at least if we want Rafales) and with the production in India starting slowly, I highly doubt that we would get more than 2 to 3 squads till 2020 .
An alternative would be, to get more LCA MK1 and MKIs from HAL, simply by increasing the production capacity, while one could add 1 or 2 squads of Pak Fa (Russian version) till 2020 too. So we can easily cover the squadron numbers without MMRCA, but the fleet would be top heavy as you pointed out, especially since LCA MK1 is far too less capable to use it against China, which would force IAF to high operational hours of MKI and Pak FA on the eastern side.