26 July 2017

The Rafale mirage

M. Matheswaran

The signing of the Inter-Governmental Agreement (IGA) between India and France for the off-the-shelf purchase of 36 Rafale MMRCA fighter jets for the Indian Air Force has finally brought the curtains down on the long-drawn-out negotiations between the two countries. To the IAF, deeply worried by its depleting force structure, the conclusion of the Rafale deal will bring welcome, albeit insufficient, relief. The air force is already at a low of 32 squadrons, as against its requirement of 45 squadrons. The mismatch between obsolescence and modernisation, created by India's archaic acquisition process, has plagued the Indian Air Force for the past three decades. 

Till the 1990s, the IAF had been the critical factor in the Indian military, maintaining a qualitative edge over the military forces of Pakistan and China. This was set to change as China embarked on a rapid modernisation of its forces, the PLAAF in particular, with a consequent impact on the PAF as well. On the other hand, by the late 1990s, the IAF was struggling with huge operational issues stemming from factors such as technological obsolescence, ageing fleets, poor reliability and high maintenance costs.

Since the 1990s, the IAF's modernisation plan has sought to optimise its force structure by reducing the range of aircraft types in use and enhancing operational capability with a focus on technological relevance and force multipliers. The Medium Multi-Role Combat Aircraft (MMRCA) was to have been the lynchpin of the IAF's envisaged operational capability for the 21st century. In broad terms, the IAF should have been re-equipped with its force structure rationalised mainly to three types of aircraft. The indigenous Light Combat Aircraft (LCA), filling in for the lower/lighter end of the fighter fleet, was to have entered service by the late 1990s to replace all the older versions of the MiG-21 fleet. The heavier fleet, focused on air superiority, is the Su-30 MKI. The workhorse and the backbone of the IAF's operational capability was to have been the MMRCA, which should have replaced all the MiG-21 Bis/MiG-23/27 fleets. As it turned out, the IAF's three/four fleet force structure has remained a dream. The LCA is still stuck in its initial operating capability stage. The IAF's order of 120 LCAs will take nearly a decade to deliver. The consequence of this delay is that the MiG-21 replacement problem will continue. If the Indian procurement process had been efficient and focused, the first MMRCA squadron would have been operational by 2014-15. 

So what of the crisis of operational gaps that will continue to afflict the IAF for another decade? Can the 36-aircraft deal be extended to address the IAF's shortfalls? This is a difficult question given major issues of cost and technology acquisition, particularly in the context of 'Make in India'. The original 'acceptance of necessity' (AON) for 126 MMRCAs was benchmarked at $10.5 billion. This was not too far off the mark, given official data available now. The Rafale C unit prices, as paid for by the French air force and the French navy, are 51.8 million euros and 56.6 million euros respectively. The programme cost of the Rafale for a production run of 286 aircraft is 43.6 billion euros. The unit programme cost of the Rafale works out to 154.9 million euros. As shown below, India is pretty much paying the unit programme cost. However, the offset at 50 per cent, if utilised intelligently, could be a significant benefit. 

India's acquisition of 36 Rafale at 7.8 billion euros is certainly an expensive deal (216.66 million euros per aircraft). The basic cost for 36 aircraft is 3,402 million euros (94.5 million euros). India-specific enhancements, which would involve costly design changes, will cost 1,700 million euros. Together, these increase the basic unit price to 141.72 million euros. This is important because any further orders will be at this minimum price plus escalation. The fact that this is an off-the-shelf buy at a significantly high cost pretty much rules out any possibility of further orders. Future orders in small batches do not provide any options for manufacture, besides shooting up the cost. How then will the IAF address its force structure problem? 

It is obvious that the government is looking at the relatively cheaper option of producing more than 200 MMRCAs under Make in India. A quick decision would not only address the IAF's immediate worries but would also help put our own indigenous Advanced Medium Combat Aircraft programme on a surer footing. Until then, in the short term, the IAF's search for its elusive modernisation and force structure solutions will continue.

No comments: