NEW DELHI – India is rethinking its long-delayed 126-aircraft Medium-Multi-Role Combat Aircraft (MMRCA) deal, and may opt to scrap the fighter purchase in favor of government-to-government sales, since negotiations under the existing request for proposals (RFP) had “gone into a loop with no solution in sight,” according to India’s defense minister.

Barely two days after India’s Prime Minister Narendra Modi, during his visit to Paris, negotiated with the French government to buy 36 Dassault Rafale fighter jets in flyaway condition under a separate deal, Indian Defense Minister Manohar Parrikar on April 13 categorically stated that “if India goes in for additional Rafale fighters, it will also be through government-to-government deals.”

India has already signed deals worth more than $6 billion with the U.S. for 12 C-130J and 10 C-17 airlifters without any open tender or competition.

The “government-to-government route is better than the RFP path for acquisition of strategic platforms,” Parrikar says.
The defense minister refrained from saying the original deal had been scrapped altogether, but quipped that “a car can not run on two paths simultaneously ... The other road [MMRCA] had a lot of problems.”

The final negotiations for the MMRCA project with Dassault have been deadlocked for more than a year due to the company’s refusal to accept liability for the 108 jets to be made in India by state-owned Hindustan Aeronautics Limited (HAL).

India also maintains the French firm raised the price of the fighter. Under the original plan, 18 MMRCAs were to be bought off the shelf, with the remaining 108 manufactured by HAL in India. India has been insisting that it will not accept a hike in the L-1 (lowest bidder) price provided by Dassault since it had led Rafale to defeat the Eurofighter Typhoon in commercial evaluation in January 2012.

Dassault Chairman and CEO Eric Trappier has repeatedly denied any change in the value of the MMRCA deal, asserting the price and terms are well known.

However, New Delhi’s insistence that Dassault back the quality of aircraft produced locally under the tender risks increasing the cost of manufacturing the combat jets in India, where a lack of technical know-how could increase the time needed to build a Rafale to the same standard as that of one coming off of Dassault’s Merignac production line.

Parrikar says the 36 Rafale fighter jets will be inducted into the Indian air force (IAF) in a span of two years. He did not specify how many additional Rafales would be acquired.

“All options are being kept open,” including the “Make in India” component for additional Rafales, if required, the minister says.
India is also trying to improve the serviceability of the 272 Su-30MKIs contracted from Russia for more than $12 billion. And India’s Defense Research and Development Organization (DRDO) and HAL are being pushed for faster addition of 120 indigenous Tejas light combat aircraft to the fleet. “The gap can be filled,” Parrikar adds.
“We have not purchased any new aircraft of the latest technology in the past 15 years. IAF desperately needs fourth-generation aircraft. The fifth generation that we are working on will take 10-15 years,” he says.
Air Marshal Matheswaran (ret.), former deputy chief at integrated defense staff headquarters and currently an advisor to HAL, says, “By delaying it endlessly, the 126-aircraft deal has become a question mark on its financial viability. Besides, there have been serious questions on Dassault’s willingness to comply with technology requirements and cost control. In the current context of [the] ‘Make in India’ strategy, it may need to be dealt with outside the limits imposed by the request for proposals. ... Effectively, the intergovernmental agreement has sealed the fate of the RFP process.”
Matheswaran also thinks the MMRCA experience clearly indicates that it would be better for such procurements to be done through an intergovernmental process where strategic interests are unambiguously stated, negotiated without compromise, and rapidly set into motion. “It is important that in such a decision-making, professionals and technocrats rather than a generalist bureaucracy aid the political leadership,” he says.
In the meantime, France is still basking in the glow of Modi’s state visit last week, with French Foreign Minister Laurent Fabius suggesting during a visit to Riyadh on April 12 that negotiations for the sale of Rafales to the United Arab Emirates (UAE) have progressed.
Citing a proverb that says good news comes in threes, Fabius told Agence France Press he “strongly believes” in the saying, a remark made following a meeting with UAE’s Crown Prince Sheikh Mohammed bin Zayed bin Sultan, who was on a visit to the Saudi capital.
Fabius was referring to the Indian order for 36 aircraft as well as a contract agreed to in February with Cairo for the sale of 24 Rafale fighters to the Egyptian armed forces, marking Dassault’s first export of the combat jet.