Manufacturing Details Stall Franco-Indian MMCRA Negotiations

 - December 14, 2012, 12:40 PM
Negotiations for the sale of 126 Rafale combat aircraft to India have run into obstacles related to offsets and the role of Hindustan Aeronautics (HAL). (Photo: Dassault Aviation)

More than 10 months after India chose the French Rafale to meet its $15 billion medium multi-role combat aircraft (MMRCA) requirement, contract negotiations are mired in issues related to offsets, the transfer of technology and the role of Hindustan Aeronautics (HAL). The Press Trust of India quoted industry sources as saying that Dassault has requested from the Indian Ministry of Defence the freedom to decide the proportion of work to be done by HAL, versus private Indian companies. Last February, Dassault signed an MoU with Reliance Industry, India’s largest private-sector company, for collaboration in manufacturing.

At a French parliamentary hearing on December 4, Dassault Aviation CEO Charles Edelstenne expressed “relative optimism” about the progress of talks. “It’s a complicated country, the negotiations are tough, but there is a desire to wrap up on both sides,” he added. Of the 126 aircraft envisioned, 18 are to be delivered as flyaways and the rest to be manufactured in India, with final assembly by HAL.

An official told AIN that HAL needs to define a partner that will facilitate Tier 2 and 3 suppliers, or assume that responsibility itself. Proponents of HAL say that the government-owned company has far more experience in selecting suppliers for high-technology defense projects than private companies such as Reliance or Tata.

One vendor noted that since India lacks the appropriate level of avionics and engine production capability, “there is no clarity on how value can be added by Indian industry and 50-percent offsets absorbed.” The MMRCA project does not fall within the new and more liberal defense offsets policy that permits them to be sourced from adjacent sectors such as homeland security and commercial aviation.

Elections are looming in 2014, and while reports have indicated the contract could be signed early next year, the government, fearing reprisals from opposition parties, is unlikely to proceed unless matters are ironed out in the next few months. One defense official suggested to AIN that if decisions are deferred beyond the election, the MMRCA requirement might be cut to around 60 aircraft as newer solutions–such as the Indo-Russian fifth-generation fighter aircraft, and unmanned combat air vehicles–become available.

Comments

Concerned Indian's picture

Seriously indian bureaucrats, civil servants and leadership in general are thir own worst enemies and the enemies of india. That is why the country has been invaded continously by foreigners. For god's sake just sign the contract now. There is no time.

powerpack's picture

That's not true in this context. India is paying high price for ToT but Rafale is not happy to transfer tech to HAL which is a major reason for stalling talks. Instead Rafale is happy to partner with RIL(Reliance), as RIL can do anything about money. Rafale want to use RIL as a proxy to deny tech transfer. Instead India has planned to improve HAL Technology Base by using it as a manufacturing partner. Rafale is forgetting that EuroFighter is just behind to grab the deal as well as yankees. Instead, for India it is good to carry on with Russian Fighters such as Super SU30MKI while developing FGFA. Neither pak or china has Rafale or EuroFighter so India need not worry on this front.

Concerned Indian's picture

Everyone knows that HAL is incapable to absorb the avionics of MMRCA.By asking HAL to do bulk of the work u are only delaying this contract. The ministry should have thought of this earlier but as usual the jugaad mentality. And which other aircraft is an alternative. Euroshit is now as good as dead as its partner nations are no longer funding the costly modifications to enable it to do ground attack roles. Yankees will not give you the radar source codes and will only transfer Tech if you sign CISMOA, LSA and BECA for a F16 which is forty year old tech. LCA is in its nth test flight and will remain in test flight only. AMCA is on paper. PAKFA,goodluck if u think that russians will not do a gorshkov.
As for china, sirthey will have 2 stealth fighters by 2018-20. Granted they will still be inferior to F35 or PAKFA but they will be faaaar ahead of anything we have got.

Aks's picture

Hal may not be perfect but neither is dassault -power pack is right, this is just a brazen attempt by dassault to rewrite the rules of the game to suit their own agenda, which is to sell planes to India but not transfer any technology. We're they unaware of the procurement procedure nd Hals role before they entered the competitition? Don't assume Indian procurement officials are fools and will fall for these games. What rubbish when they claim that India is unable to absorb technology- at least six Indian companies are involved in the manufacture of aesa radars already and as if thale the h on the rbe radar is something from mars.similarly many Indian companies are into manufacture of avionics. Simply put a lot of dassault a claims sound like sour grapes and the usual French attempt to rework the deal after winning it. Scorpene anyone?

zion's picture

Sir, Its easier to purchase thing rather than developing........
for example if you want create a BOLT
you need to have
raw material , trained man power, machines , facilities, testing facilities, infrastructure & most importantly a DESIGN.
But when you purchase a BOLT you just need to pay & take it....
The same difference is n between TEJAS (LCA) & F-35 JSF.
So with above discussion I may conclude that producing TEJAS is definitely going to take time but a far more better option rather buying a foriegn machinery .

Gus's picture

SAAB would have a easy buy with 7-8 Billion dollors, and India would have got the latest technologies. India should attempt to buy Dassault's share so that it gets everything without hssle.

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