The past few days has seen a flurry of news items on the India-France, Government-to-Government Defense Deal for the purchase of 36 Dassault Rafale Fighter Jets at an estimated cost of Euro 7.87 Billion which is equivalent to approximately $9.00 Billion.
For starters:
- What is a Government to Government Defense Deal?
- What are the capabilities of a Dassault Rafale Fighter Jet?
- Why does India need to procure the same?
- Finally, is the deal viable and transparent which was not the case for any such single deal in the past 60 years since Independence?
Government-to-Government Deal:
India is still heavily dependent on the West for its critical Defense needs. India has about 52 State owned Ordinance Factories which cater to almost all the needs of the Indian Army. But Critical needs of the Air Force (Fighter Jets) & Navy (Warships & Submarines) still need to be addressed with overseas procurement specifically from the West & Russia.
All the companies in the West which are involved in the manufacture of these critical Defense Equipment are 100% Private. This means a country like India has to deal with these Companies directly.
The governments of these countries which house these companies are never involved in these deals. These Companies in turn involve Middle men to convince the Buyer of a better proposition as compared to a competitor. The Buyer in a case like India’s will involve 3 levels. A Technical Level, A Military Level and finally a Political Level.
Usually a requirement will always be 1st tendered by the Indian Government, Department of Defense, inviting bids from various competitors conveying an initial feeling of transparency.
Slowly, the various Manufacturers involved nudge their respective Middle Men into the scene.
Finally, the Middle Man with the best Political connections with the Government in Power helps in swinging the deal his way, by way of a better deal sweetener.
Almost every Defense Deal since Independence has been finalized this way, and every such deal has ended in a Scandal with little or no follow-up later. Except for 5 years it was the Congress which was in Power at the Centre since independence, and that is one of the main reasons.
To avoid all this, the present BJP Government has come out with an idea of a direct deal with the Government of France which houses the Manufacturer of the Rafale Fighter Jet Dassault Aviation.
Now, why would the French Government get involved in a Defense Deal which has never happened before?
The answer lies in Dassault Aviation having a poor order booking, which affects French jobs and is a big blow to French Defense Industry. Does that mean, the Rafale is being out priced or outsmarted technically by its competitors??
Well out priced or out maneuvered could be the reason, but definitely not outsmarted technically, since the Rafale is perhaps the best product of its kind.
The Rafale Deal itself-What it means for India.
The Basic price of the fighter jet approved in this deal is $91 Million which is around 680 crore per jet. This is less than the 710 crore per fighter approved by UPA then.
It should be a point worth noting that the tender price of $10.5 Billion for 126 fighters by the UPA was never approved by the MOD.
It was just a Budget figure conveyed by the UPA. It was a price just on paper and never proposed or accepted by Rafale. Meaning it was a non-negotiated price. It was a price mentioned on paper by the UPA to get the necessary MOD clearancs e to go ahead with the deal. And then as the deal progresses convey cost escalations as was the case for any Defense Deal during the UPA.
The $10.5 Billion Budget would have then escalated to beyond $20 Billion and to even perhaps $30 Billion as usual, as it has always been happening under the garb of cost escalations.
Secondly, The UPA budget of $10.50 Billion was just for the Basic Fighter itself. The signed NDA now consists of the following:
- The Basic Fighter.
- India specific variations (which is a huge plus)
- Each Fighter equipped with 150km ‘Beyond Visual Range’ Meteor Missiles & 300Km Air to Land Precision Missiles. This weapons package has never been procured for any Fighter before. All Fighters Jets are procured in their basic forms and are then retrofitted with our Missiles, which leads to many operational failures.
Finally, no country has procured more than 100 Fighters in a Single Deal. Not even the filthy rich Saudis. Fighter jets have always been purchased in batches of 30s and 40s.
This link below conveys the approximate budget for a similar deal proposed by Japan. As per this proposal, Japan proposes to procure 100 Fighter Jets at an approximate budget of $40.00 Billion. Which if compared with the Indian-Rafale deal makes the Japanese proposal $10-15 Billion costlier.
http://journal-neo.org/2016/07/19/japan-to-procure-100-new-jt-fighters/
There is another link below about the Saudi-BAE Euro Fighter Typhoon deal being priced at GBP 43 Billion for 72 Euro Fighters way back in 2005. The Euro Fighter Typhoon is among the top Western Jet Fighters still compares less than a Dassualt Rafale.
With the above facts and background it can be safely concluded that the government has indeed observed more than the necessary due diligence in finalizing this government-government deal. By doing so it has ensured that:
- It has got the best price keeping in mind Dassault low order booking.
- It has got the best service deal.
- It has ensured India specific variants, which has made the Chinese extremely jittery.
- It has also ensured that we gain enough time to induct the HAL Tejas which is already popping up in every single defense journal dedicated to Jet Fighters in the World. This is already being touted as the best Fighter in the world to be engaged in a ‘Dog Fight’. And, is also being technically compared with the Western Jet Fighters positively.
Verdict:
Getting the best Western Jet Fighter in the world at less than half the price of a F22 or F35 is a deal which will go down in history as perhaps the best ever. This can be achieved only by a hard-nosed Gujarati.