Rafale Deal Nosedives in Negotiation Combat

[TimeTraveller]

The much-awaited multi-billion dollar Rafale combat aircraft deal with
France has once again run into rough weather. After negotiations of
almost three years, it has now hit a ‘deadlock’ with both India and
France refusing to concede to the other’s demands.

When Rafale was declared the lowest bidder in January 2012, all eyes
were on the inking of this deal that was touted as the ‘mother of all
defence deals’. But the cost negotiation committee set up in February
2012 to work out the modalities for the deal has not reached a
conclusion yet.

The newly-appointed Defence Minister Manohar Parrikar and a top official
of his ministry are determined to block the deal till the ministry’s
demands are accepted by the French side. Though during the recent visit
of French defence minister Jean-Yves Le Drian earlier this month
Parrikar had assured he would do everything in his power to expedite the
deal, he is firm that his ministry’s demands must be accepted first.
According to defence ministry officials privy to developments, at a
presentation on the Medium Multi Role Combat Aircraft (MMRCA) programme
a fortnight back, Parrikar said that the government must stand its
ground and not give in during negotiations. Parrikar’s opinion is
seconded by the Joint Secretary and Acquisition Manager (Air) Rajeev
Verma, who plays a key role in the deal. Verma, a 1992 UT-cadre IAS
officer, has made it clear that till the French side agrees to
ministry’s demand, which was specified in the original tender, there
will be no progress on the matter. During recent meetings of the
negotiations committee, Verma has been virtually hostile towards the
deal, say sources.

After cost escalation, the French major Dassault Aviation, which
manufactures Rafale fighter jets, has refused to take “full
responsibility” for the 108 fighters to be manufactured in India by
Hindustan Aeronautics (HAL) as per the original tender. Eighteen of the
126 planes will be purchased directly from Dassault, while Hindustan
Aeronautics Limited will manufacture the other 108 under a licence, at
an upcoming facility in Bangalore. “The ministry is in no hurry to
conclude the negotiations despite what people may say. Dassault has to
accept commitment mentioned in the RFP (Request for proposal),” a key
defence ministry official said on the condition of anonymity.

Another ministry insider said the production sharing agreement with HAL
is stuck as well. Furthermore, Dassault is not agreeing to HAL’s demand
that it take responsibility for manufacture in India, regardless of
French government’s pressure. It is too risky, according to a defence
ministry source.

“After cost escalation, now accepting terms and conditions of the
original tender have emerged as the key issue to be resolved. The RFP
clearly stated that under the transfer of technology agreement, the
French will have to fully comply with it and also take full
responsibility of Indian manufactured fighter jets,” said a senior
defence ministry official. Officials say in 2007, when the tender was
floated, the cost of the programme was $12 billion (`42,000 crore). When
the lowest bidder was declared in January 2012, the cost of the deal
shot up to $18 billion (`90,000 crore). Now with inclusion of transfer
of technology, life cycle cost and creating assembly line, the deal has
virtually crossed a whopping $20 billion.

The Air Force is seeking to replace its ageing MiG-21s with a modern
fighter and MMRCA fits well between India’s high-end Sukhoi-30MKIs and
its low-end Tejas LCA lightweight fighter. The IAF has a sanctioned
strength of 45 fighter jet squadrons. However, it only has 32 squadrons
operational as old aircraft have been retired. M/s Dassault Aviation of
France, the Original Equipment Manufacturer (OEM) of Rafale aircraft,
emerged as L-1 bidder for procurement of Medium Multi Role Combat
Aircraft (MMRCA) based on its quotation. Sources also said the Dassault
India representatives have repeatedly denied meeting with the ministry
officials, including Verma.

Source : Rafale Deal Nosedives in Negotiation Combat | idrw.org

 

[anant_s]

Any idea if there is any other stumbling block besides, Dassault having to be responsible for 108 HAL make birds.
I'm not sure what French side's reservations are, but considering HAL has done quite fine with Su 30 MKI production plan, i can't understand why this is becoming a roadblock.
@DrSomnath999 Sir, your views, info?

 

[PurpleButcher]

 

[halupridol]

Enough of this drama,,,,cancel it.
fund hal/ada/drdo instead,,,,they will surely come up with a similar aircraft in 50yrs.

 

[Beast]

Any idea if there is any other stumbling block besides, Dassault having to be responsible for 108 HAL make birds.
I'm not sure what French side's reservations are, but considering HAL has done quite fine with Su 30 MKI production plan, i can't understand why this is becoming a roadblock.
@DrSomnath999 Sir, your views, info?

Why is it so difficult to understand?Nobody wants to take responsible for India made stuff. And I do not know why India insist on French to take responsible for India made Rafale if you think HAL manufacturing capabilities is so superior.

 

[OrionHunter]

Why is it so difficult to understand?Nobody wants to take responsible for India made stuff. And I do not know why India insist on French to take responsible for India made Rafale if you think HAL manufacturing capabilities is so superior.

Dassault has to accept commitment mentioned in the RFP (Request for proposal), to be responsible for the manufacture of 108 jets by HAL. How can they unilaterally alter the contract?

I think we should cancel this project and ask for the MiG-35s instead or the Eurofighters, though far more expensive.

 

[gslv]

Go for euro fighter. Enough of this nonsense.

 

[anant_s]

Nobody wants to take responsible for India made stuff. And I do not know why India insist on French to take responsible for India made Rafale if you think HAL manufacturing capabilities is so superior.

Well you are questioning the whole philosophy behind Offset Clause.
See, from the beginning, the tender was quite clear that the contract winner will have to make 108 fighters in India and invest back half the money in Indian industry. It was also amply clear that the responsibility of domestically manufactured machines would be that of primary contractor.
These conditions existing from initial phases and not something new that has cropped up. Any bidder had ample time to work out his strategy before quoting, so if Dassault has an objection towards these clauses, it is French co that is back tracking, not India.
One of the founding stones of Offset Clause, is that in any large defence deal, the contractor has to invest back money and technology in India industry and that is an in-direct way of encouraging/nurturing domestic industry.
In modern aviation industry, we donot have the most cutting edge technology and nobody makes bones about it and government in its own way is trying to rectify the situation (Offset clauses, Make in India, FDI in defence etc).
Lastly, i quote again the examples of MKI and BAe Hawk manufacturing at HAL, which has gone pretty smoothly and HAL has adapted manufacturing technology quite well. I don't think Dassault has any reason to worry about either the Quality or the Time schedules for Rafale either.

Dassault has to accept commitment mentioned in the RFP (Request for proposal), to be responsible for the manufacture of 108 jets by HAL. How can they unilaterally alter the contract?

I think we should cancel this project and ask for the MiG-35s instead or the Eurofighters, though far more expensive.

Sir, if this goes too far, EFT may just sneak in. it was technically qualified bid and EADS and some European leaders have already expressed their desire, to talk about pricing in case India wishes. In either case, hope some sort of contract gets signed shortly.

 

[SrNair]

Scrap it if Dassault interested in a Cooperation.Develop a new fighter on par with MMRCA .

 

[greatone]

We should have parallel negotiations with both L1 and L2 at the time they were were finalized to avoid such a scenario.

Anyway I am glad govt. is taking a firm stand wrt Rafale because it is a luxury not a necessity for the IAF (Imported Air Force )

We already have few 4th and 4.5 gen platforms in our inventory, no need for Rafale unless it brings significant tech and manufacturing know how.

France is just trying to screw us like US screwed its European allies in the F 16 deal in 1970s

 

[DrSomnath999]

i dont want to comment anything now .

if the deadlock did persists for long MoD may ran out of patience .The french government should intervene to sort this matter out before things get out of hand

really that chutiya antony should have made it clear within 1year after selecting the winner regarding binding terms & condition regarding MMRCA deal & should have scrapped the deal if french didnot agreed to our demands.Now this thing has stretched too much time .

the squadron level are in ICU condition if more delay happens then IAF would barely retain the required squadron level

whatever do they rather hurry up !!


CHEERS

 

[sathya]

Negotiating with L2 ,EFT , will take even longer and no ones what problem might come up.

It is better to negotiate in parallel with both L1 and L2
And seal the deal earlier with whoever agrees terms.

Seriously I am fed up, now I don't care who wins... Just STFU ( S = sign )

 

[Oldman1]

Advanced Hornets!

 

[anant_s]

i dont want to comment anything now .

if the deadlock did persists for long MoD may ran out of patience .The french government should intervene to sort this matter out before things get out of hand

really that chutiya antony should have made it clear within 1year after selecting the winner regarding binding terms & condition regarding MMRCA deal & should have scrapped the deal if french didnot agreed to our demands.Now this thing has stretched too much time .

the squadron level are in ICU condition if more delay happens then IAF would barely retain the required squadron level

whatever do they rather hurry up !!


CHEERS

It has become a case of who blinks first.
India knows Dassault won't let go the deal and France knows India can ill afford to let the efforts and time put in concluding the deal thus far, go away.
Something must give now!

 

[Oldman1]

It has become a case of who blinks first.
India knows Dassault won't let go the deal and France knows India can ill afford to let the efforts and time put in concluding the deal thus far, go away.
Something must give now!

Cancel the deal, its your money and there are other fighters besides the Rafale. Lets see if France blinks.