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France offers 25% discount to India on purchase of 36 Rafale jets

Discussion in 'Indian Air Force' started by tusharm, May 6, 2015.

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  1. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    lets say MMRCA would be 16 billion on higher band of your assumption

    then 16billion for 126 comes to around 127 million for each rafale

    now this includes the initial pilot training + maintainance crew training + ToT costs + Mfg line costs + 50% ofsets costs = total for india

    now in this deal for 36 lets remove mfg Line costs & ToT costs & 50% offsets costs

    How much do you estimate for

    1
    Mfg Line costs = my estimate is 3 billion

    2.
    ToT costs = my estimate is 3 billion

    3.
    50% offsets costs = lets forget this for the moment


    so now 16 -6 =10 billion for 126 rafales = 79 million /rafale

    so for 36 = 36*79 = 2.844 = 2.85 billion $


    2.85

    now let us reduce this amount by 20% offsets difference ( the offsets in MMRCA 50% - under 36 deal 30% diff 20%)

    how much should we reduce this 2.85 billion by ? 20% no
    lets reduce it by 7%

    that comes to around 2.65 billion dollars

    so the flyawa costs for 36 rafales need to be lower than 2.65 billion dollars
    (if it was the same as 2.65 billion dollars which is same as under MMRCA equivalent then it makes sense to go for MMRCA )

    now add .025% as yearly maintinanace costs for 20 years of 2.65 billion dollars = 1.32 billion payable over 20 years
    (here instead of 5% 2.5% yearly maintainance has been applied due to low maintainance as claimed for rafale by all)
    2.65 +1.32 =3.97 billion dollars

    now the deal for 36 need to be lower than 3.97 billion dollars

    now lets add missiles etc for this

    it shouldnt costs more than 500 million in total should it ?

    so the deal for 36 rafales should lower than 4.5 billion including 20 years maintainance & missiles

    to be really called BETTER TERMS than those under MMRCA
     
    positron likes this.
  2. randomradio

    randomradio Colonel REGISTERED

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    I still don't think you get it. Production contracts are different from outright purchases. Most of the things in outright purchases are not available in production contracts.
     
  3. randomradio

    randomradio Colonel REGISTERED

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    You are the one bringing dollars in. The cost in Rupees is very clear and fixed. The cost of 40 aircraft was 40000 Cr and cost of MMRCA is said to be less than 100000 Cr. How you spin that is up to you.
     
  4. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    You will never know the correct price of this deal for 36 ac. No country will ever declare the actual sale price openly as the deals with each country have different contours and conditions. The actual price might be revealed by Indian and French govts to their parliament only that too with confidentiality attached. I am more inclined to accept the price of 36 ac to be about USD4.5B including weapons and training but not including maintenance.
     
  5. randomradio

    randomradio Colonel REGISTERED

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    It's not Doode. It's dude.

    Neither of us agree to that price because that wasn't the price. Just flyaway cost of Rafale in 2012 was $85M or total approx $11B. Cost of ToT, industrial production and misc would have added $5B more. This is what Picdel said and this is what Parrikar also said. That's less than $16B.

    Madmen assume weapons, maintenance, training etc will cost something like $35B more. They are smoking really strong stuff.

    Now it looks like fly away cost for IAF will be $63M or total approx $8B if they want 126 jets. Even if you believe Dassault will charge $1 or $2B for industrial production with partner, they actually won't charge so much, it will still be $9-10B, that's around 5 to 6B less than MMRCA deal. Weapons and other costs extra should easily cover the remaining.

    And the deal for 36 jets will also have 30% offsets, so Dassault will easily be reinvesting approx $2B back into the country. Plus Make in India means Dassault will also be producing Rafales for export to other countries. So the Indian partner will also make money by selling to other countries, not just IAF and IN. Then those countries will look to India for spares and support. And that's more money. When it comes to MLUs, both India and France will eventually share development costs and jointly sell that to other countries. More money will come from there. This deal is better than MMRCA deal now.
     
  6. randomradio

    randomradio Colonel REGISTERED

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    With all the media exposure on the deal, I'm pretty sure Modi will announce the price to the public.
     
  7. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    both are intrinsically linked by the MMRCA quote
     
  8. Ezco

    Ezco Captain FULL MEMBER

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    Just to relativized what you say, Modi is a politician, and so he will published "a price" and a good communication plan to convinced people the price is better than the MRCA deal.
    The recent Indian news are all focused on the price, there an article that mentioned 25 % discount without explaining on which reference exactly, another article mentioned the price will be the same than for Indian airforce but mentioned in the same article that the final price will depends on the options and specific requirements. So the price will not be the same than the French air force.

    What I mean is there is nowhere mentioned about contract timing, delivery delay, nothing concerning what could happen after the first order of 36, nothing related to offset. All the press play their role and relay the official good news that is the price.

    Air fan know the acquisition cost by itself is not representing the overall value of the fighter along the 30 or 40 years of service. That make me thinking what we are seeing now in the press is nothing else than lobbying from Indian Gov to convince internal opposition and people. That doesn't mean the new deal is not better than the MRCA, but if it is it will not be only due to the price.

    To be complete I am not saying there will not be discount or lets say an effort from French on this contract. But on another side I don't have the feeling that for 36 fighters only, France will sacrifice anything. In the situation where the Rafale export was 6 months ago I would not say the same thing, but the "first one to negociate" slot was taken by Egyptian, and the second by the Qatari. Moreover what will happen if we send a signal to the first two export client that they were first but they paid more than India...

    The other interesting debate is what is the real point or justification than Modi can now put in the balance to negociate a discount. I see only two:
    - 1 there will be more fighter than 36 and the agreement for the additional fighter will be committed really soon, because seeing the difficulty to make a contract progressing I guess France will not rely on promises.
    - 2 continue to develop a strong partnership with India, and France will bet the first 36 effort to drive much more contract in future and not only for war fighter.
     
  9. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    that is where you are worng

    the rupee costs in not fixed it cant be fixed when the deal is in Dollars or Euro

    The deal can be fixed in dollars or Euro

    the rupe costs will vary with variation in exchange rate

    or are you saying that the exchange rate fluctution / variation will be absorbed by Dasault ?

    also pl reread the article

    it clearly says 40000crores for 126 rafales deal

    also look up the articles from 2010-2012

    those articles clearly mention the deal value in rupees estimated at 40000 crores for 126 rafales

    even as late as last year end 2014

    Manohar parriker mentioned that the rafale under MMRCA will costs twice that of Su30MKI & Su30MKi costs 358 cocres

    so how come Rafale began to costs 1000 crore each in 2010 they dont even costs the same under MMRCA in nov 2014 and then this 36 is supposed to be lesser than MMRCA
     
  10. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    @Picdelamirand-oil

    Both of you quoting one article after misunderstanding it and spreading wilfull disinformation

    read this below article from this same forum link here

    MRCA Updates and Discussions | Page 14 | Indian Defence Forum

    First eliminations in MRCA expected this month

    07 Jul 2010 8ak (Manu Sood's article also published on Military.com's Dodbuzz here): While it’s too soon to predict a likely winner for India’s huge competition for 126 Medium Multi-Role Combat Aircraft (MMRCA), the first indicators should be out as early as the next week when the technical evaluation committee’s report comes out.

    Reports state that this deal for 126 fighters will cost $10 billion, but there exist huge price variances between the offered fighters of varying capability. And this figure is a lifecycle cost – not an acquisition cost — so it is not clear if the number of fighters is fixed or whether the budget figure is. Half the fighters would not qualify even before going in to trials depending on the answer.

    This is the first indication of the general confusion in the competition. The second is why a single engine aircraft with a 1970’s airframe is in the same competition as the most modern and expensive twin engine heavy hitter. The Indian Ministry of Defense has drafted the tender so broadly that most fighters would qualify. But this lackadaisical attitude will cost competitors hundreds of millions of dollars when they compete but fail. One competitor told 8ak that the competition could cost each bidder an average of $180 million given costs such as each bomb drop in live weapons’ trials could cost up to US$1 million. In addition, most companies would have spent many hundreds of millions more to adapt their offering for the competition, for example developing the AESA radars.

    Already there are reports that some competitors have failed to meet requirements in the early stages of the competition. On Mar 26, Shiv Aroor reported that four contenders failed their high altitude tests in Leh. This has not been since confirmed. Certainly, no contender has given signs of withdrawing from the competition.

    For all its drawbacks, the competition is transparent. If any vendor is kicked out, India will have to give explicit reasons for which part of the tests it failed. So even if the IAF did not want a particular aircraft, if all the tick boxes were checked, no company can be eliminated at this stage even if they have no chance of eventually winning.

    The threat driving the competition is a two-front war with Pakistan and China. With both states having nuclear weapons a deep-penetration strike is virtually ruled-out as per Brig Kanwal of CLAWS (Centre for Land Warfare Studies) since it would risk over-flying an enemy’s secret nuclear installations. He further says that there is an 80 percent to 90 percent probability that the next war will break out in the mountains and at least a 60 percent probability that the next war will remain limited to the mountains. In this scenario, the requirement of extended range is minimal.

    With advances in technology, the fighter itself is losing importance and fast becoming a carrier for equipment such as AESA radars, sophisticated missiles and electronic warfare equipment. With miniaturization similar capabilities can be built in to smaller, lighter planes.

    At the top-end, India has already made a choice, the Sukhois for which no tender is required. With delays in the indigenous Light Combat Aircraft Tejas project, buying another top-end fighter would mean that the IAF would be too top-heavy. Facing the prospect of a two-front war, large coverage area and the dwindling fleet (32 squadrons of 12 to 18 fighters versus a minimum of 39.5 sanctioned by the government) it is clear that the IAF needs a high number of planes to cover more areas and to deliver more sorties.

    Given the above it looks as if a cheaper fighter will best suit India’s limited budget. This bends the odds in favor of single-engine competitors or the Russians, who are expected to offer the MiG-35 at a cheap price.

    Things to note. This is the first IAF tender where life cycle costs will be considered, but MoD officials complain that this may not be possible for some of the players whose aircraft have very short service histories. With limited skills to evaluate such technically complex calculations, MoD may put a higher weight back to the initial price though this may just be a negotiating tactic.

    It is common in Indian procurement programs for the services role to be limited to conducting tests. For the most part, the Ministry of Defense makes the decision. The bigger the deal, the more likely it is that Parliament and the government will weigh in. One source told 8ak that it would be best for the IAF to tell MoD which fighters they do not want and then let the government make a political decision.

    Nobody can read the mind of the Indian government when it comes to politics. But here is our analysis.

    The continuing strength of the Russian-India relationship has repeatedly surprised everyone. In a pure political face-off it is unlikely that any country would be able to outmaneuver Russia. If the past is Russian and the future (limited joint-development of Fifth Generation Fighter Aircraft) is Russian, then from a training, spares, infrastructure and familiarity perspective it makes sense to stay with the Russians.

    The U.S. often has the best technologies but arms export restrictions can counterbalance the technology advantages. In a war with either Pakistan or China India cannot risk a situation where the U.S. might withhold support of spares or otherwise try to influence India’s behavior. However, the lure of U.S. backing India for a UN Security Council seat is quite lucrative and in a July 2010 report by senior Pentagon official Michele Flournoy made it clear that the U.S. is putting a lot of strategic value on the fighter aircraft deal and has made it clear that they would like to see a U.S. choice. This was backed by an earlier US Navy statement putting its support behind the Super Hornet for India.

    France has recently, virtually given up on sales to Pakistan and thereby made a strong commitment to India that will not go unnoticed. While they are a more reliable defense partner than the US, they are prone to mind-numbing price increases as witnessed in the Scorpene, Mirage upgrade and more recent Turbomeca/HAL deals. EADS has pointed out that it is actually supported by a consortium of four countries plus France but Indian analysts believe that India would have little influence over a consortium and hence their political value is diminished.

    The key drawback with the Gripen is that Sweden is seen as the least politically influential country. But there is a catch! What is and should be most important to India, possibly even more than international politics is to build indigenous capabilities. Saab’s Asia Pacific head Jan Widerstrom has pointed out that for a large US military supplier $10 billion spread out over decades is not a very big contract. But for Saab, with Euro 3 billion in annual sales, this would shift the company’s interests to India. This is supported by Par Rohmann, the head of the technology transfer programs, who says Saab would co-develop critical technologies with India. But the Gripen uses a U.S. engine and many other components, which could allow the U.S. to play spoilsport.

    Corruption continues to be a huge problem in military deals here. Despite both Defense Minister A.K. Antony and the Prime Minister having squeaky clean images, but corruption in India has reached very serious levels.

    It is 8ak’s expectation that the final selection will be purely politics and will not be based on cost. Russia may have been eased out with the Sukhoi deal and US is in danger that its restrictive policies may become unpalatable in India (transport planes restrictions are different from fighters). Eurofighter and Rafale are great platforms and if cost was not an issue, then these would win. But budget and numbers are an issue so, if Saab pushes hard enough, you never know. And that is the current prediction 'you never know...'

    8ak - Indian Defence News
    hotstud69, Jul 7, 2010 Report
    #196 Like + Quote Reply




    read this

    Reports state that this deal for 126 fighters will cost $10 billion,

    now you urself have said rupee dollar exchange rate was 45 in 2010

    so

    10Billion *45 = 45000 crores

    126 rafale for 45000 crores

    this was the first article from this same forum i quoted to support my claim

    you want more
     
  11. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    Another article here

    US hopes to clinch $11-bn aircraft deal

    Even as six contenders for the $11 billion 126 medium multi-role combat aircraft (MMRCAs) await verdict on the recently-concluded trials, the US administration has sought a bigger share for hi-tech American products in a bid to boost bilateral defence, commercial and trade relations with India.

    In a meeting with minister of commerce and industry Anand Sharma on the sidelines of the Indo-US CEO Forum, US commerce secretary Gary Locke urged India to favourably consider the bids by Boeing and Lockheed, two contenders for the Indian Air Force’s MMRCA deal.

    “The Indian government’s aircraft deal is very important to the US with vital implications for our bilateral defence, commercial and trade relations,†the US commerce department said. To further expand its footprints in India, defence major Boeing Company last week announced an agreement to acquire Narus Networks, a provider of real-time network traffic and analytics software based in California. Narus also has a strong presence in Bangalore.

    “This acquisition is another step forward in our strategy to develop integrated solutions for better network visibility, threat detection, and cybersecurity,†said Roger Krone, president of Boeing Network & Space Systems.


    MRCA Updates and Discussions | Page 18 | Indian Defence Forum

    even this says 11billion at 45 ruppes to a dollar for 126 rafale and not 40 rafales
     
  12. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    3rd one here which speel out clearly both values in dollars as well as Rupees

    IAF fighter deal shortlist unlikely before December

    The Indian Air Force (IAF) is likely to submit its assessment report on field trials for a $10.4 billion (around Rs48,760 crore) fighter aircraft deal to the defence ministry within the next few days, according to officials familiar with the development.

    Six manufacturers--European Aeronautic Defence and Space Co. (EADS), Lockheed Martin Corp., Boeing Co., Dassault Systemes SA, Saab AB and RSK MiG--are in contention for the deal involving the purchase of 126 medium multi-role combat aircraft (MMRCA).

    The ministry may draw up a shortlist of three or four by December or January, industry sources indicated. Ministry officials declined to comment on this. "Whichever player meets the technical requirements will remain in the fray," said an official requesting anonymity. "We cannot put a definite number to it."

    The first batch of fully built 18 aircraft are expected to enter service between 2014 and 2017. Subsequently, semi-knocked down versions are likely to be inducted in batches of 18 each year till 2024. These dates could change depending on when the actual deal is signed.

    "Usually, it takes about four-six months after the shortlist, but at the end of the day it is a political decision, so the deal could face delays and in the worst-case scenario, might even drag on till the end of 2012," a defence analyst told Mint.

    The fourth largest air force in the world is targeting a combat aircraft squadron strength of 42 by 2022. It has only 30-32 such operational squadrons at any given time, against an officially mandated 39.

    IAF fighter deal shortlist unlikely before December | TradingMarkets.com

    MRCA Updates and Discussions | Page 19 | Indian Defence Forum


    I Hope this clears the confuion about what was supposed to be available for 40000 crores -40 rafales or 126 rafales
     
  13. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    4th one here

    India may ink MMRCA project of Rs 42K cr by mid-2011

    Even as the Americans, Europeans and Russians jostle to bag the “mother of all defence dealsâ€, India too is now pressing the throttle to ensure the contract to acquire 126 new fighters under the Rs 42,000-crore medium multi-role combat aircraft (MMRCA) project is inked by mid-2011.

    IAF, after all, wants to induct the first lot of these 126 fighters by 2014 to retain its combat edge. It is left with just 32 fighter squadrons (each has 12 to 18 jets) at present, down from the “sanctioned†strength of 39.5 squadrons. This when Pakistan is getting new American F-16s and Chinese fighters, while China assiduously builds new airbases in Tibet and south China.

    “We are ready with the flight evaluation trials (FET) report of the six foreign fighters in contention. Based on it, we are right now generating the staff evaluation report. Both will be submitted to defence ministry by this month-end,†said IAF chief Air Chief Marshal P V Naik, in an exclusive interview to TOI on Thursday.

    The eagerly-awaited reports, which have evaluated the fighters on as many as 643 technical attributes after the gruelling field trials, will be followed by evaluation of offset proposals, opening of commercial bids and the final complex negotiations.

    The hotly-contested race to bag the lucrative MMRCA project, the largest such programme around the globe, is among F/A-18 `Super Hornet’ and F-16 `Falcon’ (both US), Gripen (Swedish), Rafale (French), MiG-35 (Russian) and Eurofighter Typhoon jets.

    “We definitely need the MMRCA, LCA (the indigenous Tejas light combat aircraft) and FGFA (the fifth-generation fighter aircraft to be developed with Russia) without any delays to retain our combat edge,†said ACM Naik.

    “We also have signed deals for 230 Sukhoi-30MKI fighters (over 110 have been inducted) with Russia. Another 42 Sukhois will be ordered soon. We want at least 42 fighter squadrons by 2022,†he added.

    All eyes, of course, are on the MMRCA project. “The trials have been conducted in an exemplary, fair and professional manner. We have to be very transparent because the deal is very large,†said the IAF chief.

    “The amount of data collated in our voluminous and exhaustive reports is phenomenal. They, in fact, can serve as a template to evaluate aircraft by any country,†he added.

    As reported earlier, India is also likely to factor in its geo-strategic interests while deciding the MMRCA winner, with PM Manmohan Singh himself holding large defence deals must be leveraged to serve the country’s larger diplomatic ends.

    This will be the first time that India will take into account “life-cycle costs†— the cost of operating the fighters over a 40-year period, with 6,000 hours of flying — rather than just pitching for the lowest bidder in a defence contract. While 18 jets will be bought off-the-shelf, the rest will be manufactured in India under transfer of technology to Hindustan Aeronautics Ltd.

    India may ink MMRCA project of Rs 42K cr by mid-2011

    MRCA Updates and Discussions | Page 19 | Indian Defence Forum
     
  14. Paliwal Warrior

    Paliwal Warrior Lt. Colonel ELITE MEMBER

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    so

    @randomradio
    @Picdelamirand-oil

    go thru the MMRCA thread on this forum from pages 16 onwards

    and you wil find that costs of 126 was pegged at 10 billion dollars or 45000 crores not for 40 rafales

    If you like & prefer rafale that is ok but please dont spread lies that the price of each rafale in 2010 was 1000 crore each and

    40 rafales were offered at 40000 crores
     
  15. randomradio

    randomradio Colonel REGISTERED

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    No man. How the heck are they linked when the price of the first 36 is already lower than MMRCA cost. MMRCA deal has been junked. It's closed. Over. Now a new deal is in place where the costs will be the same as what the French are paying for their jets. There is no link.
     
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