Going by the most optimistic estimates, the Rafale can be inducted by the beginning of 2018 at the earliest. This implies that the Rafale fleet of the IAF will require mid-life upgrade within four to five years of induction, entailing sizeable investment. In the fourth article of the five-part series on MMRCA, read how further delay in the finalisation of the contract will place overwhelming demands on the already overburdened exchequer.

On the eve of the 80th anniversary of the Indian Air Force (IAF) last year, in an interview, Air Chief Marshal N.A.K. Browne, Chief of the Air Staff, had stated, “The $20 billion medium multirole combat aircraft (MMRCA) deal, in which the French Rafale has emerged as the winner, looks set for contract finalisation in the early part of the next financial year (2013-14). As per the plan, the first Rafale squadron comprising 18 aircraft will be inducted in three to four years after signing of the contract. The remaining 108 aircraft will be manufactured by HAL under the transfer of technology agreement with France and will be inducted in the following seven years.” While Air Headquarters has been pursuing the case with vigour since 2001 and despite the impediments that have been cropping up with almost predictable and disconcerting regularity, the IAF has managed to sustain a remarkable level of optimism about the prospects of a successful execution of the deal.

Protracted Negotiations

The case for the 126 fourth-generation plus MMRCA to equip six squadrons in the IAF was conceived at Air Headquarters in 1999. It was projected to the Ministry of Defence (MoD) in 2001, over 12 years ago. However, the request for proposal (RFP) was issued by the MoD only in August 2007, six years later. After intimate scrutiny of the technical bids, the IAF undertook an elaborate and complex evaluation procedure that left only two of the six contenders in the race. Of these, on opening of the commercial bids on January 31, 2012, the Rafale offered by Dassault Aviation of France was found to be the lowest bidder (L1) and hence was the preferred platform over the Eurofighter, the only other competitor in the race. But even after 18 months, the contract negotiations that include three important areas namely life cycle cost, transfer of technology and offset obligations on the part of the vendor are yet to be concluded. The first two stipulations lie in a zone with which the establishment is not totally au fait and hence the protracted negotiations. Another issue of contention between Dassault Aviation and the MoD was related to the selection of the Indian partner over which as per reports, there were differing perceptions. Collectively, these issues have led to the delay in the finalisation of the contract, something that is proving to be a cause for deep anxiety in the IAF.

Despite periodic assurance from the highest echelons of the establishment and the general mood prevailing in the country, at this point in time, it appears as if the contract is very far from being signed in the near future. In a written reply in the Parliament recently, A.K. Antony, the Minister of Defence, stated, “Given the complexity of the proposal, no definite time frame can be fixed at this stage for signing the deal.” These are ominous signs that the procurement of the six squadrons of the Rafale for the IAF cannot be regarded as a “done deal” as yet. Delay in the finalisation of the MMRCA contract that is beginning to appear interminable, could well undermine the 12 years of effort by the IAF and would militate seriously against national security interests.

What then are the implications of inordinate delay in the finalisation of the MMRCA contract?

Increasing Hostility in the Region

The structure of the combat fleet of the IAF has and is influenced to a large extent by the need to maintain a favourable equation with hostile forces in the neighbourhood. In recent times, there has been growing tension and conflict on the borders with both the possible adversaries China and Pakistan. The situation is set to aggravate especially with the withdrawal of the US and the North Atlantic Treaty Organisation (NATO) forces from Afghanistan. There is also a strong possibility of covert or even overt collusion between China and Pakistan in their designs against India. As such, it is incumbent upon the leadership to ensure that the nation is prepared for the worst case scenario—that of a twofront war and is not caught off-guard.

In the interest of national security, it is of vital importance that as a first step, the combat fleet of the IAF is suitably equipped to confront the challenges of a two-front war in the future. Tragically, today the IAF is woefully short of this capability. Currently, its combat fleet has whittled down to 34 squadrons as against 39.5 squadrons, the force level authorised for war on a single front. Of these, five squadrons of the venerable MiG-21 fleet are scheduled to be phased out by 2017 and replaced by the Su-30MKI. Mercifully, the government has approved the combat fleet of the IAF to be progressively enhanced to 42 squadrons by 2022. However, this is still short of a force level of 45 squadrons that would be required to conduct offensive operations on one front and fight holding action on the other. For a full-fledged two-front war, the IAF would clearly need a combat fleet of about 60 squadrons.

Combat Capability of the IAF

As things stand, five squadrons of the MiG-21 fleet of the IAF that are to be phased out by 2017 are to be replaced by the HAL-built light combat aircraft Tejas. Unfortunately, even after being under development for three decades, the Tejas has not been able to get even its initial operational clearance. As final operational clearance continues to remain a distant dream, it would not be prudent on the part of the IAF to bank on the Tejas to arrest the erosion in the strength of the combat fleet. As a matter of partial relief, however, the IAF expects to receive up to four squadrons of the Su-30MKI aircraft by 2017. Even if the contract with Dassault for the Rafale is signed by the end of the financial year 2013-14, since delivery of the Rafale can only commence not before 2018, there is no possibility of increase in the strength of the combat fleet till 2017-18.

In fact, with the phasing out of the other ageing fleets such as the MiG-27, the strength of the combat fleet will only fall below the current level of 34 squadrons. Further delay in the finalisation of the contract with Dassault will only result in erosion of combat capability of the IAF, a situation completely undesirable and unacceptable in the context of the rapidly deteriorating security situation in the region. In this context, the imperatives of national security may leave no option for the IAF other than to postpone the retirement of the obsolete and difficult to maintain fleet of the MiG-21 till such time the induction of the MMRCA becomes a certainty. In this situation, apart from reduced size of the combat fleet, the IAF will be left to operate at a much lower level of technological sophistication with largely third-generation aircraft in sharp contrast to the potential adversaries who are currently embarked on rapid modernisation of the combat fleets of their respective air forces with modern and more capable platforms.

Cost-Penalty on Account of Delay

At the RFP stage, the value of the MMRCA contract was estimated at $10.4 billion based on the exchange rate prevailing then. Last year, the CAS revealed the value to have gone up to $20 billion, double of that originally estimated. The escalation is believed to be on account of detailed reassessment of life-cycle costs and transfer of technology commitments, aspects that were not comprehensively enunciated in the RFP. By the time the contract negotiations are completed, it is well nigh possible that the value of the contract could go up to $30 billion which at the prevailing exchange rate, will be in the region of Rs. 2,00,000 crore, a threefold escalation in terms of the US dollars and five times in terms of the Indian rupee. The cost of delay has already been high and could well be higher with further delay in the finalisation of the contract. Given the state of the Indian economy, finding the resources even at the current value of the contract may be a challenging exercise for the government. Any further delay is only likely to make matters far more difficult. The real danger is that delay may make the deal unaffordable.

Cost of Technological Obsolescence

The life of a combat fleet is normally in the region of 40 to 50 years. With technology galloping at a frenetic pace, even a modern fleet of combat aircraft is likely to be overtaken by obsolescence in around 20 years and would require mid-life upgrade, especially in respect of avionics and weapon systems. Having become operational in 2001, the Rafale would definitely need mid-life upgrade by 2021. Going by the most optimistic estimates, the Rafale can be inducted by the beginning of 2018 at the earliest. This implies that the Rafale fleet of the IAF will require mid-life upgrade within four to five years of induction entailing sizeable investment. Further delay in the finalisation of the contract will, therefore, significantly enhance the capital cost of the project and place overwhelming demands on the already overburdened exchequer.