The case for procurement of 126 multi-role combat aircraft (MRCA) was initiated by Air Headquarters in 2001 to arrest the alarming erosion in combat potential in the wake of the retirement of the largely obsolete fleet of the MiG-21 (Type 77) air defence aircraft whose induction into the Indian Air Force (IAF) had begun in the mid-1960s. As the time frame for the availability of the indigenous light combat aircraft (LCA) Tejas at that point in time was uncertain, the IAF projected the requirement of six squadrons of preferably single-engine, light-weight, air defence fighter aircraft in the 15- to 20-tonne weight category to fill the gap in the combat fleet till such time the Indian aerospace industry was able to supply the LCA Tejas in adequate numbers.

Before the proposal for 126 MRCA was acted upon by the Ministry of Defence, the proposal was modified by Air Headquarters to a long-range, preferably twin-engine, multi-role combat aircraft in the 20- to 25-tonne weight category. The combat platform in the new proposal was redefined as the medium multi-role combat aircraft (MMRCA).

Since its inception, the revised proposal for the MMRCA has been constantly plagued by impediments and procedural delays. The request for information (RFI), the very first step in the tendering process was issued in 2004, three years after the original proposal was initiated by Air Headquarters. Based on the response from the leading global aerospace majors, a request for proposal (RFP) was issued in August 2007. The RFP was a 211-page tender document inviting quotations for a fourth-generation combat aircraft.

The Preferred Platform

In all, six original equipment manufacturers (OEMs) entered the fray. Lockheed Martin of the US offered the single engine F-16 Fighting Falcon; Boeing entered the competition with offer of the twin-engine F/A-18 Super Hornet; RAC MiG fielded the twinengine MiG-35, successor to the MiG-29; the European Aeronautic Defence and Space Company showcased its new product, the twin-engine Eurofighter Typhoon; Saab of Sweden offered the single engine JAS-39 Gripen and Dassault of France showcased the twin-engine swing-role fighter Rafale. The value of the contract estimated at that point in time was $10.4 billion or Rs. 42,000 crore based on the rupee-dollar exchange rate prevailing then.

It took another four years to complete the rather elaborate and complex technical and flight evaluations, the latter having been undertaken by the test pilots of the IAF in a variety of terrain, altitude and weather conditions in different configurations of all the six aircraft in the fray. On completion of the process of evaluation, two of the contenders i.e. the Eurofighter Typhoon and the Dassault Rafale were shortlisted. Finally, on scrutiny of the commercial bids, on January 31, 2012, Dassault offering the Rafale swing-role fighter was found to be the lowest bidder and hence was selected as the combat aircraft to equip the IAF.

The Elusive Contract

Despite the fact that the Rafale twin-engine formidable fourthgeneration platform was selected two years ago and that it is urgently required by the IAF, the contract is yet to be awarded. Reports in the media indicate that contract negotiations are yet to be completed. As per the Minister of Defence, A.K. Antony, as this process involves a number of agencies and is extremely complex, it is not possible for the Ministry of Defence (MoD) to stipulate a timeline for the conclusion of contract negotiations. Antony went on to say that he was not in a position to intervene in the matter and that even after the contract negotiations were completed, there remained a number of other steps before the case is put up before the Cabinet Committee on Security for final approval. The contract can be awarded only after this final step.

The ongoing contract negotiations include not only a dialogue on the price but also on other related issues such as transfer of technology (ToT) and fulfilment of offset obligations by the selected vendor. Both these have cost implications. Also, as this is the first contract under the Defence Procurement Procedure that extends substantially into both these areas, for those handling the contract, it is akin to breaking new ground and treading unfamiliar territory. Besides, ToT is a technologically complex issue not easy to comprehend, and to ensure that the real benefit accrues to the Indian manufacturing industry is a challenging exercise.

The other somewhat difficult area to handle is fulfilment of offset obligations. This aspect has been built into the contract to ensure that the Indian industry benefits from the transaction through the mandatory investment by the selected vendor into the Indian aerospace industry in the private sector. For the MMRCA tender, offset has been pitched at 50 per cent of the value of the contract. The Indian side needs to exercise great caution as the vendor can find ways and means to circumvent this by investment in areas such as software that would not really benefit the manufacturing sector in India. All in all, the two areas are immensely complex and it is hardly surprising that negotiations over these are prolonged.

One major impediment in the completion of contract negotiations is reluctance on the part of Dassault Aviation to partner not with the defence public sector undertaking (DPSU) the Hindustan Aeronautics Limited (HAL) but with a private entity is India, believed to be Reliance. Apparently, Dassault does not have the requisite level of confidence in the capability of HAL to handle a project related to manufacture of a fourthgeneration combat aircraft. The OEM also held the view that in case the Indian side insisted on partnership with only HAL, the OEM would not be able to guarantee quality and delivery schedule. The Indian position is that HAL has been specified in the RFP as the lead integrator and that partnership with HAL is mandatory as per the RFP. Also, as this precondition had been accepted by the OEM while bidding for the contract, no other option was therefore available at this stage.

Plight of the IAF

The IAF today is in a precarious state. As against the newly authorised strength of 42 squadrons for the combat fleet, the IAF is left with 34 squadrons. Of these, 23 squadrons consisting of the MiG-29, Mirage 2000, MiG-27, Jaguar and the MiG-21 Bison are over three decades old. Despite the midlife upgrade already undertaken on some and under way on others, these aircraft can at best be employed as the “second line of defence”. The only true frontline combat aircraft with the IAF today is the Su-30MKI of which it has nine squadrons and by the end of next year, expects to receive all 272 aircraft ordered taking the strength to 14 squadrons. The IAF will still be short of the sanctioned strength of 42 squadrons by five. This strength of the fleet does not provide the IAF true capability to fight a war effectively even on a single front.

If there are no fresh inductions, with every passing year, the strength as well as operational potential of the IAF will progressively reduce owing to attrition and difficulties in the maintenance of the older fleets. In December 2013, the LCA Tejas was granted initial operational clearance (IOC). The Minister of Defence has now stipulated December 2014 as deadline for final operational clearance (FOC).

successive IAF Chiefs that the contract for the MMRCA would be inked in this fiscal, given the political and economic environment prevailing in the country, this may not be easy to accomplish. National elections are due in May this year and given the shaky political situation, the UPA Government may not be in a position to finalise the contract before elections. In any case, once the dates of the national elections are announced, the Election Code of Conduct will preclude any such step by the government in power.

As per the OEM, delivery of the Rafale can begin only three years after signing of the contract. As things stand today, it appears the contract may be signed only by March 31, 2015, provided adequate financial resources are made available and that there are no further hiccups. This means that the first aircraft will arrive only three years later i.e. in 2018. While the OEM will provide the first 18 aircraft in a flyaway condition, the balance 108 will be manufactured by HAL for which the required infrastructure would have to be set up from scratch. The dates for commencement and completion of the production of 108 Rafale aircraft which is HAL’s share of the fleet, cannot at this point in time, be stated with any degree of certainty.

Alternatives for the IAF

The real problem is that the IAF does not appear to have a credible alternative to the Rafale. While addressing the media in the first week of October last year, ahead of the 81st anniversary of the IAF, Air Chief Marshal N.A.K. Browne, Chief of the Air Staff, had said, “We have no back-up plan. We need to get the deal going or we will face a big shortfall of fighters in the 2017-22 period. The deal has to work. There is no other option.”

Chasing the Rafale, the IAF appears to have manoeuvred itself into an untenable situation from which it may find difficult to extricate itself. The IAF certainly needs a Plan B. The MMRCA proposal has been under processing for nearly 13 years since its inception in 2001 and for seven years since the issue of request for proposal (RFP). Yet there is no certainty of its fructification. It is true that some deals have taken longer to mature such as the one for Hawk advanced jet trainer from the British Aerospace that took over two decades. But there are instances of deals that have moved on fast track such as those for the C-130 Super Hercules and the C-17 Globemaster III. Even a mega deal for 140 Su-30MKI materialised in a very short time. The deal for the Su-30MKI was signed in the year 2000 and the first Russian made fighter arrived two years later followed by the entry of the HAL made version in 2004. HAL plans to complete the existing order by 2014.

Where then is the problem? Perhaps with the Defence Procurement Procedure (DPP) introduced in 2005, for wider choice, best value for money, better accountability, enhanced levels of transparency, and minimising time frame for acquisitions. Unfortunately, in the case of the IAF, no major proposal for acquisition through the DPP has gone through successfully so far whereas government-to-government deals, in the US known as foreign military sales (FMS) programme, have been completed speedily and without a hitch or scam. The DPP appears to have been reduced to a clerical exercise with national security imperatives having been lost sight of. With uncertainties surrounding the time frame for the Rafale contract at this juncture, the IAF must plan to order at least another six squadrons of the Su-30MKI, possibly with upgrade to fifth-generation capability. The IAF must also vigorously pursue the LCA Tejas option with primary focus on the Mark I while continuing development of the LCA Tejas Mk II. It goes without saying that the IAF must also continue to vigorously pursue the procurement of the MMRCA.