09 May 2015

The French Finally Start Making Foreign Sales for the Rafale

For a number of years now, the Rafale has been the bridesmaid, and never the bride, on foreign sales.

The logjam broke when India selected the Dassault aircraft as the winner of its MMRCA competition.

The contract was for 126 aircraft, with the first 18 being delivered by Dassault, and the remainder being locally manufactured by state owned Hindustan Aeronautics Limited (HAL).

At this point contract negotiations because Dassault was unwilling to offer performance guarantees for the aircraft manufactured by HAL:
After months of seeing Dassault Aviation being browbeaten in the Indian press, French arms procurement agency DGA defended its contractor, asserting that a 2012 agreement to provide India with Rafale fighter jets never committed the company to guarantee aircraft manufactured in India at state-owned Hindustan Aeronautics Ltd. (HAL). However, a recent senior adviser to HAL’s management tells Aviation Week that guaranteeing HAL’s work is not the issue, but that the French are being “rigid” and refusing to stand behind the integrity of the design.

“Dassault will not be responsible for the whole contract. It is a co-management setup,” says French defense procurement chief Laurent Collet-Billon, who was clear that France will not assume full liability for HAL-built Rafales. “It cannot be a problem, because it was not in the request for proposals [RFP].”

Speaking to reporters during an annual media address Feb. 9, France’s arms procurement chief said the €10.2 billion ($12 billion) agreement—which has been under negotiation for more than three years—calls for the first 18 of 126 Rafale jets to be built in France. After that, HAL would take over production of the remaining 108 aircraft.


Moreover, a retired senior Indian military officer who was involved in the drafting of the original RFP and has been a senior advisor to HAL, tells Aviation Week that “the French don’t want to be accountable in any way. The original equipment manufacturer [OEM] has to stand guarantee with respect to design and integrity of design. The French are trying to get away from the OEM’s responsibility.” He added that the defense ministry would eventually have to choose between the Rafale and the Fifth-Generation Fighter Aircraft (FGFA), a HAL-developed variant of the Sukhoi T-50.


Dassault’s response to the RFP was influenced by a planned partnership with Reliance Industries, a $75 billion private-sector energy-based conglomerate that planned to expand into aerospace and defense. Reliance would have performed much of the manufacturing work on the locally built Rafales in new-build facilities. However, the Indian government has insisted that HAL build the aircraft. The original manufacturers of the Su-30MKI and Jaguar were not asked for similar guarantees.
The subtext here is that Dassault has absolutely no confidence in the ability of HAL to make Rafales in a timely or competent manner.

After much negotiation, it was offered that HAL be upgraded to co-contractor status, which would have the effect of increasing technical transfer at the cost of HAL being responsible for any guarantees on the aircraft that they build.

While all of this was going on, an actual sales deal was signed with Egypt, which would have 24 jets pulled out of the current pipeline for the French AF, and modified slightly. (Basically pulling wiring for nuclear weapons and going with a non-NATO communications system)

The fact that Rafael finally had some export orders, along with the fact that India has a desperate need for new airframes, (it's aging fleet of MiG-21s are crashing with alarming regularity) India and France cut a deal for a government to government transfer of 36 of the fighter jets:
India will now negotiate direct purchase of 36 Rafale jets from France through a government-to-government deal worth around $4 billion, without any "Make in India" or technology transfer component, to meet IAF's urgent "critical operational necessity" for new fighters.

After Modi held extensive talks with French President Francois Hollande in Paris on Friday, it was announced that fresh commercial negotiations will now be held for the direct acquisition of two Rafale squadrons (each has 18 jets) in "flyaway" condition.

"France has agreed to fast-track the deliveries and give us better terms for the outright purchase and longer maintenance support for the jets. Finding the money for this contract should not be a problem since it will have to be paid in installments linked to deliveries," said a source.
Basically, the French came away with the upside of an Indian deal, it removed uncertainty in other nations about being a "first mover" on the export front, which led to the Egypt deal, and they did not have to hitch their wagon to the famously f%$#ed up HAL, which, as evidenced by the 30+ year and counting development of the Tejas lightweight fighter, is something that would have bitten Dassult in the butt at a later date.

And now there is the announcement of the sale of an additional 24 aircraft to Qatar.

After what must have been over a decade of uncertainty, it appears that Dassault will stay in the fighter business.


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