PARIS --- French Defense Minister Jean-Yves Le Drian is to shortly travel to India to iron out the details of the direct sale of 36 Rafale fighters for the Indian Air Force, with a view to signing the contract during the Paris air show in mid-June.
Negotiations will continue in parallel for the local production of at least 108 Rafale in India, although it can no longer be assumed that state-owned Hindustan Aeronautics Ltd (HAL) will be automatically involved. Dassault had originally planned to team with India’s privately-owned Reliance group and, in the wake of the April 10 announcement of a direct purchase, HAL officials made remarkably lackadaisical statements to Indian media.
“We did not initiate any concrete step at the HAL for manufacturing the planes here”, one HAL official told the India Tribune, adding that “After all, there was never much clarity on whether the deal with Rafale would be finally signed.” The official also revealed that HAL had done remarkably little to prepare for Rafale production: “There was never any question of acquiring land or bring together a team for MMRCA”, he said.
Given that Egypt, which has just ordered 24 Rafales, and India are both in a hurry to receive their aircraft, France will turn over to them its next 49 delivery slots, and will resume its own deliveries after 2019. Dassault currently builds Rafales at a rate of 11 a year, and needs about three years to double it.
Indian Defense Minister Manohar Parrikar told reporters in New Delhi on Saturday that "It may take two to two-and-a-half years to get the first plane……Fly-away means not tomorrow, it has to be designed as per India's need, plus there is a requirement of working out the price” which he also said would be about 4 billion euros.
The production bottleneck could tighten over those three years if, as implied April 12 by French Foreign Minister Laurent Fabius, talks with the United Arab Emirates -- which are progressing well, he said – lead to a third Rafale export contract this year.
This is the passage of the French-India joint communiqué issued on April 10, after visiting Indian Prime Minister Narendra Modi met with French President François Hollande:
“14. Government of India conveyed to the Government of France that in view of the critical operational necessity for Multirole Combat Aircraft for Indian Air Force, Government of India would like to acquire  Rafale jets in fly-away condition as quickly as possible.
“The two leaders agreed to conclude an Inter-Governmental Agreement for supply of the aircraft on terms that would be better than conveyed by Dassault Aviation as part of a separate process underway (Emphasis added—Ed.); the delivery would be in time-frame that would be compatible with the operational requirement of IAF; and that the aircraft and associated systems and weapons would be delivered on the same configuration as had been tested and approved by Indian Air Force, and with a longer maintenance responsibility by France.”
As we noted on Friday, a direct purchase will resolve most of the bottlenecks that have blocked the MMRCA contract negotiations over the past three years, and which mostly focus on the price of the 108 Indian-made aircraft and on who would provide their contractual warranty.
The fundamental problem, however, is that by codifying and closely regulating as many aspects of defense procurement as it could, India’s previous government created a web of red tape so complex and so arcane that mutually-acceptable defense deals have become virtually impossible.
Another – and so far unsaid - factor is that HAL’s work-force is not yet capable of assembling aircraft as advanced as Rafale, and the Indian government appears to have realized that it was insisting on an expensive and time-consuming industrial fantasy that it would probably be unable to implement in the short term.
Finally, a direct purchase would elegantly sidestep thorny coproduction issues, give India fixed, firm prices guaranteed by the French government, and relieve the current pressure to conclude a license production agreement that suits neither side.
Here is some of our coverage of India’s Rafale saga:
Time Plays Against India in Rafale MMRCA Program (Feb 13, 2015)
The Real Reasons for Rafale’s Indian Victory (Feb. 1, 2012)