MoD raises objections over Rafale's lifecycle cost

Date by which contract could be signed may be pushed back

Less than two months after the Indian Air Force (IAF) chose the French Rafale fighter jet for its medium multi-role combat aircraft (MMRCA) project, the Ministry of Defence (MoD) has raised objections over its lifecycle cost, thereby pushing back the date by which the contract could be signed with the manufacturers, Dassault Aviation.

Top IAF sources said the two MoD members on the Contract Negotiations Committee (CNC) have questioned the low lifecycle cost that was earlier worked out in respect of the Rafale which was chosen over the Eurofighter Typhoon for the Air Force’s MMRCA programme that envisages supply from Dassault 126 aircraft for a massive $20 billion, the largest open tender military aviation deal in the world.

The sources said that the “differences” that have cropped up among the CNC members are centred around the Rafale’s lifecycle cost which the MoD representatives have declared to be far less than what it should be.

“There is no unanimity among the CNC members... and failing a unanimous decision, the Rafale acquisition could well get pushed back,” sources said. While the maintenance cost of a Saab-Gripen single engine aircraft is over $3,000 per hour, that of the far superior Rafale could be estimated to be much higher.

The MoD representatives’ assessment that a Rafale’s lifecycle cost should be higher appears to have stemmed from the defence establishment’s historical reliance on Russian aircraft. According  to sources, the MoD officials on the CNC are “not satisfied” with the lower assessment of the lifecycle cost.

The MoD’s disagreement with other CNC members comes at a time when the committee will also have to review other “items” involving the Rafale, including the cost of air frame, engine, avionics, weapons system and spare parts support among others. It is learnt that the MoD representatives raised their objections some time after the commercial bids were opened and continued to object to the low computation of a Rafale aircraft’s lifecycle cost in some recent meetings of the CNC.

The MoD’s maximalist stand is baffling especially after the government recently advised the armed forces to prioritise their capital acquisitions because 70 per cent of funds remain committed to approved purchases. In a situation where only 30 per cent of the available funds are left for purchases, the armed forces have been told “not to push for every deal.”

In this context, IAF sources said that with the Air Force’s immediate requirements for jet trainers, new engines for its fleet of Jaguar fighters and heavy and light helicopters as support for ground troops, to pay for the Rafale deal, if the contract has to be signed four to five months from now, “would be a tall order.”

Dassault is in the process starting discussions with the vendors to get more clarity on the various offset possibilities and a final proposal on the same is expected to be completed by April-May. The company expects the finalisation of the award by the end of this year.

But a less optimistic senior defence ministry source said that “the 30 per cent funds corpus will not allow accommodating the MMRCA and the funds constraint will leave a big question mark over the fate of the deal,” adding that the contract signing stage with Dassault Aviation is “far away”.

When contacted over phone, MoD official spoke­sman Sitangshu Kar said, “Everything is progressing smoothly. However, I do not have an update over the developments related to the MMRCA over the last fortnight or so.”