The reason for which India has opted to spend such huge amounts of foreign exchange for the purchase of the MMRCA is to acquire, absorb and indigenise as much of the high technology that comes with the offset provisions of this landmark deal. India simply cannot afford to throw away this oncein-a-lifetime opportunity to stand on its own feet.

Havin g demystified a number of formulae in its quest for determining as to who should emerge as the ultimate winner of the MMRCA contract, the Indian Air Force (IAF) had, once again by burning the proverbial ‘midnight oil’, submitted its findings to the Ministry of Defence by early December last year. But the IAF, along with most of the defence fraternity in the country, waited in vain during the closing days of the year for the announcement to come as a ‘New Year Gift’. Year 2012 dawned with the ‘mother of all defence deals’ still shrouded in the fog of uncertainty. Some diehard doomsday pessimists went to the extent of prophesying that the deal may be called off in totality given the slowdown in India’s economy. But they were soon to lose to the rationalists who reasoned India had travelled too far to backtrack without losing face and credibility in the international arena.

Heading the realists was the Air Chief Marshal N.A.K. Browne himself who in an early January interaction with media optimistically predicted the ‘announcement’ by month end. And as usual, the Chief proved to be absolutely correct in his optimism. Even though the country was facing a tough political climate due to assembly elections in five different states, the UPA Government took a bold decision to announce the winner (L1) on January 31, in the closely fought contest between the two finalists French Dassault Rafale and the European Eurofighter Typhoon. As anticipated, the declaration of the winner elicited mixed initial responses ranging from utter joy in the winning camp on one hand, to dark despair and gloom from the side that lost out. For French President Nicolas Sarkozy, who was delighted to hear the news, it may come as a much needed political coup to soup up his chances of winning the shortly to be held next presidential elections. He was hopeful that contract negotiations will begin “very soon”. But while the Defence Ministry officials are actively engaged in fine-tuning the pricing details, including the cost of on-board weaponry and royalties for producing the aircraft in India; given the government’s present financial worries and less than anticipated revenue collections, any hope of signing the contract before the expiry of the present financial year on March 31, appears remote. Then, there are other issues which could prove to be ‘spoil sport’ in the fiercely contested deal. First, the reported $5 million ( Rs. 25 crore) difference per unit between the candidates to decide the L1 in favour of Rafale is exceptionally small indicating that this was a close race— practically a photo finish as per Jane’s Defence Weekly which cautioned, “This is just the first step—Rafale has been selected as the preferred bidder but any student of Indian procurement knows that this means nothing until the contract is physically signed.”

On its part, EADS was still hopeful of somehow turning the deal around in its favour. The British Prime Minister, David Cameron, was openly disappointed with the outcome and reacted, “I would request the Indian Government to reconsider the fighter jet deal.” But the French plane maker Dassault is so desperate to land its first export customer for the Rafale, that it will do everything possible not to lose the initiative of having been declared the ‘preferred bidder’. Welcoming India’s decision to buy the ‘Rafale’, President Sarkozy promised that France would meet all Indian requirements connected with the ‘deal’.

Be that as it may, from the IAF’s point of view, it is hoped that the deal is successfully negotiated during the initial months of the financial year 2012-13 for it to start receiving the aircraft in 2015-16 time frame.

In the present global financial scenario, the 126-aircraft deal may go much beyond the originally estimated cost of $10-12 billion ( Rs. 50,000- Rs. 60,000 crore). Further, India may eventually decide to exercise the option of acquiring the additional 63 aircraft which could take the overall cost of the MMRCA programme to exceed the $20 billion mark ( Rs. 1,00,000 crore). Given the current economic trends, this deal will always remain under the watchful eye of the Finance Ministry but ad hoc cuts would be disastrous. India would have to stay its course if the acquisition of badly needed fighters at a price tag of about $100 million ( Rs. 500 crore) a piece is to be accomplished. It may also be remembered that the MMRCA programme will extend well beyond the current decade and may go beyond the Thirteenth Five Year Plan period (2017-22) to fructify fully. Possible good news connected with the protracted programme could be that it would also spread out the expenditure making it easy for the government to absorb the financial burden. On the flip side though, it would prevent the IAF regaining its lost combat force levels, as quickly as possible.

However, having been drained to a record low level of combat squadrons, even with a full complement of 189 aircraft which will enable the IAF raise about 10 squadrons of MMRCA; it would find it difficult to fully regain its lost strength. Why? According to the IISS Military Balance as also other estimates, at the last count, there were around 290 MiG-21s still operating with the IAF. Of these, around 100 are of Bison variety which means that the IAF has no option but to replace at least 200 of the older fighters by 2017-18. The MiG-27 fleet would be the next in line for a phase out which means, close on the heels of the Bison version of the MiG-21 Bis aircraft, the MiG-27s may also head for retirement by the end of the Thirteenth Five Year Plan period—a staggering 400 aircraft over the next decade. The PAK-FA or T-50 fifth generation fighter known as the FGFA in India is also not expected to start getting inducted into the IAF before 2020-22.