The announcement on Wednesday by Indian Prime Minister Narendra Modi that his government had agreed to buy 36 Dassault-built Rafale fighter jets from France, at a cost of 8 million euros, ended almost four years of protracted negotiations which first began over a much larger contract.
Modi formally gave his agreement to the deal during a meeting of the Indian government’s security council meeting and, wasting no time, French defence minister Jean-Yves Le Drian arrived in New Delhi on Friday, flanked by Dassault Aviation chairman and CEO Éric Trappier, to ink the deal. "You can only ever be completely sure once [the deal] has been signed and that's what happened today," Le Drian told French news agency AFP after the signing ceremony.
The Indian Air Force’s call for tenders dates from 2005 when then-president Jacques Chirac encouraged his old friend Serge Dassault, head of the Dassault Group, to put in a bid. The seemingly interminable discussions that followed came close to losing the patience of both the French aeronautics firm and current French president François Hollande, who had on several previous occasions spoke in vain of an “imminent” conclusion of a deal.
Enlargement : Illustration 1
The 8-billion-euro cost of the contract is but a drop of water in the vast ocean that is the programme of military equipment acquisitions announced by Modi after he came to power in the spring of 2014. His government plans to spend about 134 billion euros (150 billion dollars) over the coming years, essentially to reinforce its capacity for military intervention in the regions surrounding India’s borders with neighbours Pakistan and China with who it has tense relations.
India proved to be a hard negotiator in its dealings with the French, and the difference between the final agreed cost of the Rafale sale differs considerably with that of a larger deal first envisaged in 2012, when discussions centred on India’s acquisition of 126 of the fighter jets . According to Mohan Guruswami, chairman of the New Delhi-based think tank Centre for Policy Alternatives, the contract was re-evaluated at 19.7 billion euros (12 billion dollars) in 2014, due to specific demands of the Indian Air Force, which represented a price per jet of 156 million euros. A former senior civil servant with the Indian finance ministry, Guruswami questioned why the cost of the deal became so high and why India appeared so determined to buy the Rafale when the Indian-built HAL Tejas light combat aircraft cost considerably less, at 27 million euros per unit.
In the end, according to the contract signed on Friday, the Rafale cost 218 million euros per unit, much more than was planned in 2014. But that is an optical illusion, for in reality the planes cost India just half that price. A source within the Indian defence ministry told Mediapart that the final cost includes a 750-million-euro discount agreed by Dassault on the original price fixed in January this year, during President François Hollande’s last visit to India. Dassault also agreed to reinvest in India almost half the total cost of the deal for the local production of items such as the software used by the planes. The defence ministry source said this would create 3 billion euros of activity and hundreds of jobs in India.
But even then France will pocket still less, because the Indian military plan to buy some of the weapons carried by the Rafales from Israel, to the tune of 1.7 billion euros, while it is also mulling to buy in other items from third-party countries, all to the expense of French suppliers. All of this means that the cost per plane comes in at about 111 million euros.
The Rafales will most likely be equipped with French-built hardware from MBDA Missile Systems, a France-based corporation jointly controlled by Airbus Group and BAE systems, French engine and weapons manufacturer SAFRAN, and electronic defence systems group Thales. The MBDA Meteor air-to-air missile, with a target range of 150 kilometres, and the its air-launched cruise missile Scalp (called Storm Shadow in its British version) with a range of 300 kilometres provide the Indian Air Force with the capability of targeting territory inside Pakistan and countries on India’s north-east borders, including China, without leaving Indian airspace.
“India is keen on inducting the fighter jets in the Indian Air Force for their strategic role to deliver nuclear weapons,” reported The Indian Express on Wednesday, and according to several participants in the recent negotiations, the main reason Prime Minister Modi agreed to the deal was the military’s decision to make the Rafale the vehicle of its nuclear dissuasion force. In the same manner, France is reportedly transferring the role of nuclear weapons carrier from its veteran Dassault Mirage fighters to the Rafale.
'Israel weighed enormously on the Rafale affair'
“The transport of nuclear weapons is an altogether new argument which didn’t appear in the [Indian] negotiations with Dassault until a very recent period,” said Jean-Joseph Boillot, a French economist and a recognised specialist on India and emerging Asian nations. “The pertinence of this choice is quite questionable, because the top specialists on the subject all say the current fleets of [Indian] air force fighters already give India a superiority over Pakistan.”
Which begs the question of why India appeared to be so intent on buying the Dassault Rafales. “The Indian government decided to sign [the deal] for diplomatic reasons, because after having had its eyes fixed for decades on Pakistan, India is now obsessed by China,” argued Boillot. “Clearly, the Rafale contract confirms that Delhi wants to place itself in opposition to Beijing which is in the process of equipping itself with the latest generation Sukhoï [fighter jets] which will give it a large superiority in the air over the scope of the next five years. It is a true tactical switch.”
Boillot said India no longer believes Pakistan is a significant threat to its security. Despite the attack near Uri, in the Indian-controlled part of Kashmir, on September 18th, which left 18 Indian soldiers dead and which New Delhi has blamed on Pakistan, Boillot argues that there appears to be little fear of a new war erupting between the two countries.
But there is concern over the Chinese overtures to Pakistan and also its island and maritime claims in the South China Sea. China is financing a 46-billion-dollar ‘China-Pakistan Economic Corridor’, a series of industrial and infrastructure development projects, while the two countries jointly build the JF-17 Thunder fighter jet, developed by the Chengdu Aircraft Corporation and the Pakistan Aeronautical Complex. “It’s for that reason that the Indian Air Force, which represents a very powerful lobby, wanted to acquire dozens of Rafales,” said Boillot.
The 36 Rafales that finally make up the deal will provide the basis for just two squadrons, although the Indian defence ministry has an option for another 18 aircraft. India currently has 35 operational squadrons, while it estimates that, with regard to the threat from China, it requires 42 squadrons.
An epilogue to the deal signed on Friday is the victory of India’s air force over its navy. “In India, the armed forces resemble Shiva, the god with many arms,” said Boillot. “The different branches quarrel between themselves, to the backdrop of a restricted budget. Until now, the politicians gave advantage to the navy, as demonstrated by the imminent order for a new aircraft carrier, which Russia, France, the United Kingdom and the United States are competing over.”
The Indian government has set into the deal a financial compensation guarantee in case of any problems with the manufacturing or scheduled delivery dates for the Rafales (due to begin in 2019), placing a not insignificant risk for the French public purse. “It’s the first time that France has had to sign such a document [for military equipment], but India is used to doing this, for it demanded the same thing from [French nuclear plant construction firm] Areva concerning the six EPR reactors for the future nuclear power plant in Jaitapur,” added Boillot.
The French presidency and prime minister’s office have trumpeted the fighter deal as a major coup. The sale, said President François Hollande, “marks the recognition by a major military and strategic power of the operational performance, technological quality and competiveness of the French aeronautical industry”.
But in fact, the French negotiators - the ambassador to India and the team sent to support him from the Direction générale de l’armement, the French national weapons procurement and sales agency - were forced to compromise. “It is all the more regrettable because one of India’s most solid allies remains Russia, and that Modi strengthened the links with a country, Israel, which is in the process of becoming the foremost supplier of weapons to India, and which, as such, weighed enormously on the Rafale affair,” said Boillot. In short, the sale appears to have been sealed more because France agreed to significant discounts on a high-end product, and less because of its standing on the international stage.
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- The French version of this article can be found here.
English version by Graham Tearse