After prolonged cost analysis of two competing offers from the four-nation European industry consortium Eurofighter and French company Dassault, the French offer was determined the ‘lowest bidder’, coming US$4-5 million below the Eurofighter bid. Therefore, it is expected the Rafale will be announced the Indian Air Force preferred choice for the Medium Multi-Role Combat fighter Aircraft (MMRCA). Dassault is expected to enter exclusive negotiations with the Indian MOD within two weeks, to discuss the financial terms, in anticipation to reach an agreement by the next fiscal year beginning in April. While this road could bumpy, it is expected that the two sides will reach an agreement, as the program is critically important for both, and has won strong support from the French highest levels.
France has also a good track record in India – the Indian Air Force has been equipped with several generations of French made fighter planes, including the Mirage 2000 and Jaguar. Moreover, the newly contracted upgrade of these fighters, and adoption of latest generation MICA air/air missiles will also provide cost saving commonality if the same missiles will equip the Rafale.
According to the plans, Dassault will manufacture the initial 18 aircraft in France and deliver them within 36 months (2015). The remaining 108 Rafales as well as future orders, will be built in India, by the Hindustan Aeronautics Ltd (HAL).
This prospect breathes new life into Dassault’s production line, after suffering successive setbacks failing to secure orders in Morocco, Switzerland, Brazil and the UAE (the last two are still pending decision). Securing this important contract means the French fighter will strengthen its position in forthcoming international competitions, in Latin America and the Middle East. While current production of 180 fighters for the French Air Force is expected to continue through 2018, the French defense industry is committed to sustain the Rafale at least until the 2030’s, which means Dassault desperately needs export orders to maintain future costs at reasonable levels.
Back in 2007, when the MOD first entered the process, the projected acquisition of 126 aircraft was set at about 80 million a piece, totals around US$11 billion. Back then it was considered one of the biggest military export programs in history. Nowadays it is assumed the contract will cover $15 billion, and may or may not include options for additional 80 fighters. Its position as ‘mother of defense deals’ was also lost, the recently signed Saudi procurement of 84 Boeing F-15SE fighters and upgrade of 70 existing fighters for nearly US$30 billion is definitely more expensive and extensive.
While the principal manufacturer of the aircraft is Dassault Aviation, a large number of subcontractors contribute subsystems. Among the leading suppliers is the Safran Group, responsible for the two M88 engines that will power each of the fighter, the landing gear systems, provided by Messier-Bugatti-Dowty, and, most likely, the guided bombs that the new fighter will carry. Electronics giant Thales will also benefit from the win, providing its latest RBY-2 Active Electronic Scanning Array (AESA) radar and much of the avionic systems on board. Missile producer MBDA is also positioned to benefit from supplying much of the weaponry and defensive electronics. Among the international suppliers sharing the win is Martin Baker of the U.K. is the provider of the ejection seat system.
As the Indian program moves into practical terms, Indian manufacturers are also expected to join the Rafale program. Most likely among these are aerostructure manufacturers and components manufacturers, electronic systems and avionic display providers. Nevertheless, the sheer amount of offsets required by the Indian law will pose a major challenge for Dassault, to source enough aerospace products in India to sustain over five US$ billion in direct offset buys mandated by the Indian Defence Procurement Procedure (DPP) of 2006. DPP requires the winner of a program of this size to reinvest half the contract amount in the Indian defense industry in terms of direct investment or export orders.
