Air Chief expects Rafale contract by mid-2013 - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Thursday 7 February 2013

Air Chief expects Rafale contract by mid-2013

Dassault negotiates with MoD for larger role for Reliance Group

By Ajai Shukla
Yelahanka, Bangalore
Business Standard, 8th Feb 13

Air Chief Marshal NAK Browne, the IAF chief, declared today that the contract for buying 126 Rafale fighters from French aerospace major, Dassault, would not be signed during the visit of the French president, Francois Holland next month. However, he expects the deal to be signed by the middle of this year.

Referring to ongoing negotiations between the defence ministry’s (MoD’s) Contract Negotiation Committee (CNC) and Dassault, Brown said, “By April-May I expect that the CNC will be over. And then it moves to the other stages [of clearance]… it will go to the Ministry of Finance. And if all goes well, by the middle of the year I expect we will sign the contract.”

Terming the MMRCA “the mother of all projects,” Browne said it would be the IAF’s highest priority over the next financial year, irrespective of budget cuts.

Asserting that the “extremely complex project” remains “very much on track”, the air chief stated that current negotiations were not about price but about “work share between HAL (and) Dassault.”

Senior MoD sources tell Business Standard that in discussions in the CNC, Dassault objects to being responsible for the on-time delivery of all the contracted 126 Rafale fighters, even though Hindustan Aeronautics Ltd (HAL) will assemble all but the first 18.

Dassault’s concern is rooted in the three-way contract that New Delhi has mandated for the Rafale. The Government of India will sign a contract with Dassault for 18 fully built fighters; and for 108 more fighters that must be built in HAL. Dassault will sign a parallel contract with HAL, laying down the terms for building 108 fighters in HAL, and spelling out the responsibilities of either party.

This is a very different arrangement from the one that New Delhi implemented with BAE Systems for building the Hawk trainer in India. In that, BAE Systems signed a contract with HAL for building the Hawk in Bangalore; and HAL signed a contract with the Government of India for supplying the aircraft.

The French company fears that the new arrangement could hold Dassault responsibility for delays actually caused by HAL. For that reason Dassault is arguing in the CNC for doing as much manufacturing as possible in its joint venture (JV) with Reliance.

“Rafale would ideally like to build its entire fighter in the Dassault-Reliance JV with HAL’s role being reduced to a token screwdriver turn. But the MoD cannot accept that, since the Request for Proposals (RfP) mandates that the Rafale will be assembled in HAL. Negotiations are now about the maximum role permissible for the Dassault-Reliance JV,” says an official involved in the discussions.

Yesterday, the defence minister did not directly answer a question about a potentially larger role by the Dassault-Reliance JV in building the Rafale.

“(We will go by) whatever are the terms and conditions of the RfP,” said Antony, terming it “non-negotiable”.

Asked the same question today, Air Chief Marshal Browne answered in greater detail.

“The OEM (original equipment manufacturer, i.e. Dassault) has been given the full right to select any production partner that he wishes to have in India or abroad. We have no issues; if he has to supply certain kits, he can get it manufactured in Bangalore… or from Reliance or from anybody else. We have no issues, or we have no say in that matter. That’s a business relationship between Dassault and Reliance,” explained Browne.

“(But) the licensed manufacture part, it is very clear in the RfP that it has to be done by HAL…. Whatever else he (Dassault) gets manufactured here, there, wherever… the Indian government and the IAF have no issues there. As long as those kits and everything else are supplied and given to HAL at the instance of the OEM, for the licensed manufacture.”

The outcome of the CNC negotiations, say experts, will be crucial in determining the trajectory of Reliance’s emergence as an aerospace manufacturer in India.

Requested for comments, Dassault has declined to say anything.


  1. ambanis... they only know... sell... plunder... The Nation... Prime Ex: KG D6... another HDW deal... in the making...

  2. Why does reliance poke itself everywhere??

    We saw what happened with the Delhi airport express.....

    While private sector is the need of the hour, i dont think reliance will be RELIABLE.

  3. @Ajai sir

    i would say

    As per RfP HAL is the final assembler anyway its always been a screw driver player with regard to imported systems.

    It doesnt have a big R&D setup and whatever it makes like HTT40 are rejected outright.

    As for Dassualt-Reliance JV i will say certain parts could and should be sourced from the JV if it helps in faster completion a jet.

    Sometime back heard France wants India to use option of 63 more jets now itself, will that help bring down prices ? if they do then its the best that can happen.

    Sometime back i heard the Rafale jet deal will touch 99000 cr, if so it easily means no. of Rafales will touch 220 atleast. the more the better.

    lets keep our fingures crossed and hope for best


    Joydeep Ghosh

  4. look at the above pic. LCA belongs to another era. It is a jet of the 1970s...comparable to mirage IIIs, no wonder IAF in their right mind do not want to touch this with a barge pole. IAF are better off ordering another 100 su-30s.

  5. Isn't he the same guy who expected the contract before the end of 2012. What a joke.

  6. @8 February 2013 19:48...
    remember 1962 iaf... ???... same planning... continuing... have assets... in showcases...

  7. Arre shukla....kab contract sign hoga...kab humari dukan par meethe ka order aayega? Humne special kesar ke pede aur moti ke ladoo bana kar rakhhe hain bhai....

  8. Wrong, dubious, mallicious reporting everywhere....Vested interests at play everywhere....When has IAF chief said that MMRCA deal is expected to be signed by May/June this year...Read the first para of the below article take from the blog of reputed defense journalist Shiv Aroors' blog...Incidentally Shiv Aroor is a good friend of Ajai....

    My analysis: Forget about mid/end 2013, this deal will NEVER be signed...To sign a deal of such magnitude needs backbone and vertebrae which the current government does not have....Instead it will wait till end 2013 somehow delaying the deal which it has been doing for the last 5 years and then it will say that the election code of conduct has come into force and so we can't take any decissions. They know they will loose in 2014, so probably NDA will come and try to sign it but since they are no different, ADA/DRDO will be able to sell their dreams about Tejas/AMCA to them successfully and MMRCA will be sent to coffin....

    But, isn't it the same person(IAF chief) who 'expected' the dealto be signed in 2012? By the way, haven't we heard many air chiefs preceeding Mr.Browne who badly wanted these 126 jets to become part of IAF????

  9. There is a simple solution - Give the manufacturing and TOT for engines and avoinics to Reliance/Dassault with Reliance being the major stakeholder and the final assembly to HAL. All critical components should be made by the joint venture, ensuring the rise of a new defense company and HAL gets its due as well.

  10. Unbelievable! Dassault couldn't find any other company! Reliance is a 'chor' company. It should've been Tata or Mahindra.

  11. It is a crying shame that after 65 years of independence (and over 75 years of HAL's existence), India still has to import fighter jets, like a banana republic.

    It is hoped that Rafale and PAK-FA are the last purchases of fighter jets that India ever makes. The ball is in the IAF's court. It must decide between taking the easy way out of imports, or flying the turbulent patch of indigenization.

  12. @Abhiman...
    with phorein deals... AM's get their... share of... fat juicy cuts... that why... PV was so pushy... to sign... he was around... don't belive... ask deepak... he got... adrarsh flat also...

  13. Sign it before the Lok sabha Elections.

  14. @Abhiman,

    you forgot Pakfa-50 or FGFA, and with the current status of Sitara-36, Looks like we will be buying another trainer too. so probably no other purchase after 25-30 years,may be

  15. Reliance is new to manufacturing which is a different ball game. Tata and Mahindra are not prepared. Dessault has been given to understand that in this country reliance can manipulate any deal so this tie up. This shows that home work of Dessault is not good.

  16. @Abhiman

    Then how everyone will get their cut if they buy from HAL?

  17. everyone who talks of HAL/DRDO failures some how talk of getting cuts from elsewhere? Well buy what from HAL? A Trainer that they denied the IAF and got dozens killed because of their usurping IAF money? Or the INSAS that jams more than it firs and is outmatched by terrorists. The kaveri engine fiasco,the arjun tank fiasco. I was seing a programe on which Dr Saraswat said something about spiraling performance where in buy mark 1 and mark 2 onwards things will imprve.

    Now when mark 1 is outdated how do you fight with it or do you ask the enemy to only fight with machinery at par with us? It shows lack of concern for those getting killed, it shows arrogance as this attitude expects soldiers to get killed for you for free and with your negligence.
    The IAF did not get cuts NOR A PlANE ...either from HAL nor did the iAF get a plane from elsewhere due to HALS/DRDO cheating that they will deliver...BUT GOT ITS PILOTS KILLED DUE TO HALS FAILURE.Apart frm it , the IAF had to use fighters as trainers,causing losses and bad name to the fighter a/c


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