Modi’s Maths on the Rafale Deal – NDA’s deal is better than UPA’s

Modi's Maths on the Rafale Deal - NDA's deal is better than UPA's

Indian government  Maths on the Rafale Deal
NDA’s Rafale deal is better than UPA’s
Break-up of the Rafale deal

Since there was a lot of wrangling over Rafale deal yesterday at Defence Express, it prompted us to delve into the economics of purchasing 36 Rafales. After searching various sources and brainstorming over them we could come to terms with the fact that Rafale deal is not as exorbitant as it has been made out to be.

First and foremost, only a person totally ignorant with how Defence deals are structured thinks that cost of the deal divided by the number of aircraft is the cost per aircraft. The true cost of Rafale deal signed in 2016 has been reported in the ‘The Hindu’ as well as ‘The Business Standard’ (See the following links)

http://www.thehindu.com/…/India-France-…/article14995775.ece

http://smartinvestor.business-standard.com/…/Marketnews-414…

NDA’s Deal:

The break-up of the Euro 7.8 billion Euro deal is as follows:
1. Euro 91 million for every single seat and Euro 94 million for each twin-seat Rafale to totaling Euro 3.3 billion for 36 fighter jets. The remaining is for logistics, spares, and weaponry. Jane’s Defence Weekly gives a split of the remaining as :
2. Euro 1.8 billion for India-specific enhancements which include integration of things like “Israeli helmet-mounted display sights, assorted missiles, data-links, electronic warfare (EW), and identification friend-or-foe (IFF) systems.”
3. Euro 1.8 billion for the establishment of 2 maintenance and overhaul facilities and spares.
4. Euro 710 million for weaponry. (Each meteor costs 2 million Euros. Other than Meteors and MICAs, the contract also includes a stock of the million-dollar SCALP missile — a French acronym for General Purpose Long Range Standoff Cruise Missile — also known as the Storm Shadow. The SCALP, which can be fired from standoff ranges at ground targets 500 kilometers away, allows the Rafale to strike heavily-defended airfields, military headquarters, and strategic infrastructure)
5. Euro 353 million for performance-based logistics which guarantees 75 percent availability of Rafales.
These numbers roughly agree with the ones from Ajai Shukla of Business Standard too.

UPA’s Deal :

The old deal from UPA was substantially different. It included only 18 fly-away fighters with the rest 108 being available only as kits. Hindustan Aeronautics Limited (HAL) would have to spend additional money to set up an assembly facility, train workers and pay them to assemble the aircraft. It did not include any India-specific enhancements or performance-based logistics. The weaponry did not include long-range Air to surface cruise missile SCALP or Beyond Visual Range Air to Air Missiles (BVRAAMs).

COMPARISON :

It is simply preposterous to compare the two deals by using rudimentary tools like dividing the cost of the deal with the number of aircraft. Even if you agree to such a comparison, the deal negotiated by UPA still comes out as costly. The 10 billion US Dollar number quoted by Indian National Congress has converted from the estimate that Ministry of Defence came up with at the time of issue of Request for Proposal before any aircraft was chosen. It is nonsensical to treat it as the cost of a deal negotiated by UPA as Rafale was one of the two costliest fighter jets in MMRCA 1.0, the other being Eurofighter Typhoon. A more realistic figure can be obtained from checking the news reports of that time from ‘The Hindu’ and ‘DNA’ which says that the cost of the deal had escalated to 30 billion US Dollars. (See the following links)

http://www.thehindu.com/…/india-nears-de…/article6654976.ece

http://www.dnaindia.com/…/report-dna-exclusive-100-price-es…

Even after paying 30 billion dollars we would have been getting only 18 barebones fighters, and Indian Air Force would have to pay more money to HAL to assemble remaining 108 aircraft.

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