Friday, February 17, 2012
Dassault Rafale deal: New fighter is good but price is worrying
At one level, there is nothing surprising about the decision of the government to begin price negotiations with the Dassault company to purchase their Rafale to fulfill the Indian Air Force's requirement a Medium Multirole Combat Aircraft (MMRCA).
Once the IAF decided that it wanted the best fighter, not necessarily the most economical, it was clear that choice would be between Eurofighter Typhoon and Rafale.
According to analysts, it is the better multi-role fighter than its nearest competitor, the Eurofighter, and slightly cheaper. So following the "L1" criterion that the government usually follows, of accepting the lowest bid, the Rafale has been chosen.
Given the stringent technical criteria that the IAF insisted on, there should be no doubt that the Rafale will be a first-class fighter and that it is as good as the Eurofighter in the air-to-air role, and somewhat superior to it in the air-to-ground role. The issue, rather, will relate to costs.
Already the original MMRCA deal, which was supposed to be for $ 10.4 billion, has ballooned to $ 20 billion- plus for 126 aircrafts. The final bill will only be known after the price negotiation process is done.
The MMRCA competition was a somewhat peculiar one. How do you reconcile putting aircraft like the small single engined Jas 39 Gripen and the F-16 against the heavy twin engined Eurofighter and Rafale? Initially, the requirement seemed to be to meet the needs of the Light Combat Aircraft, which had been delayed.
But clearly, including the heavy multi-role fighters changed that mission. From the outset, the air force had been talking about the need to worry about 'life cycle costs' (LCC) of the fighter they were going to buy.
But how could they compare the LCC of the light fighters with that of the heavy ones? Only in the end did the IAF decide that they wanted a heavy, twin-engined fighter and they shortlisted the latter two aircraft last year. And now they have decided in favour of the Rafale.
The issue of life cycle costs will not go away even now. When the Rafale comes in, it will be in addition to an existing fleet of Su-30MKIs, MiG-29s, Mirage 2000s, Jaguars and other aircraft. Over the years, the IAF has realised the high price they have had to pay for this multiplicity of types.
This is an era when air forces have been sharply reducing their aircraft types to keep costs down.
It is no secret that India will be the first country, after France, to have decided to operate this fighter. This means that a substantial part of the development costs of the aircraft will be borne by us. The Rafale is still in the beginning stage of its development cycle.
Three countries have considered acquiring the Rafale, come close to it, and then backed out - Brazil, UAE and Switzerland. The parsimonious Swiss decided that the Rafale was too expensive and are looking for a cheaper alternative.
As for the UAE, last November, Sheikh Mohammed, deputy of the UAE's armed forces, said that the Dassault offer was "uncompetitive and unworkable [in] commercial terms". The UAE was angered by the French demands of Euro 2 billion to develop the fighter.
Now, the French have the rich Indians to do what the poor Arabs and the Swiss could not afford.
What India needs to worry about is the cost of running its air force. It already has a large number of twin engine fighters and will get more in the form of the Fifth Generation Fighter Aircraft (FGFA) from Russia.
Indeed, with the Rafale joining squadron service, the air force will be top- heavy because there will not be enough light fighters which can carry out combat air patrols on the cheap.
The air force is making its bed, but it is the taxpayer of the country that has to sleep on it.