Unrest is brewing in New Delhi’s defense sector following reports by Doordarshan News and ANI about the Indian Navy’s plans to purchase 26 Rafale Marine Fighter Jets for nearly Rs 50,000 crore. A French delegation is set to negotiate the deal with the Defence Ministry, involving officials from the defence acquisition wing and the Indian Navy. However, the cost of the deal has raised significant concerns.
The projected Rs 50,000 crore for 26 jets is in a sharp contrast to the 2016 deal where the Indian Air Force (IAF) paid nearly 50% less for a similar acquisition. Experts now suggest that the cost analysis of this new deal indicates potential overpricing by Dassault Aviation.
In 2016, each Rafale aircraft under the Intergovernmental Agreement (IGA) cost approximately Rs 670 crore. Yet, the current deal, sans offsets and additional logistics, sees the base price more than double for the Indian Navy. The new procurement policy likely excludes offsets, which previously constituted a significant portion of the contract’s total cost. The new deal’s cost appears disproportionately high despite accounting for a 15-50% range in offset obligations.
Experts argue that the Indian Navy should benefit from existing infrastructure and maintenance arrangements established for the IAF’s Rafale jets. With two Rafale squadrons already operational in Hasimara and Ambala, training facilities and simulators are in place, reducing potential ancillary costs. The Indian Navy’s personnel could easily train at these Air Force bases, potentially lowering the overall contract cost.
Moreover, the previous IAF contract demanded 50% offsets, but actual implementation has lagged, with Dassault paying penalties for underperformance. With no offsets in the current procurement policy, the Navy’s deal should theoretically be less expensive. Given the interoperability of maintenance and logistics between the Navy and Air Force, experts assert that the cost for the Navy should not spike significantly.
Despite this, the IAF paid extra for India-specific enhancements, spares, and training, which should not apply to the Navy’s purchase, given these enhancements have already been funded. Consequently, the Navy’s order should not be 100% higher than the IAF’s.
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