When PM Narendra Modi nearly finalized the Rafale aircraft deal in Paris last week, it looked much different deal from the original MMRCA (medium multi-role combat aircraft) project for 126 fighters which india has made tenders to Rafale in 2007.
The original MMRCA tender and the later prilimiary deal with Dasault Aviation has involved domestic production of the aircraft with Transfer of Technology clauses. The new deal is direct purchase and in flyway mode means quick delivery.
The deal in its new look is a striking one as it is a Government to government deal without having participation of domestic companies in producing even a component of the aircraft. Indications are that Make in India progrmme is not going to work in the case of the Rafale deal.
Direct delivery eliminates any scope for domestic participation in the production of the aircrafts. This means that India has to set aside the well built offset policies and defence procurement policies which embraces Make in India message.
Many factors have produced the new agreement of direct purchase of the aircraft rather than with domestic participation.
Firstly, Dassault was not impressed with competitiveness of HAL Bangluru, the PSU firm proposed to associate with the French company in the manufacture of the original quantity.
Second, defense establishment has made a pressing demand for the immediate delivery of the aircrafts because of the increasing security risks from beyond borders. Consolidation of China-Pakistan alliance has made the government to opt for the immediate delivery.
Thirdly, as per the original plan, it would have taken at least ten to fifteen years to transfer the aircraft to the IAF. This is a long period as the fast depleting stock of aircrafts with the Airforce.
Another development is that more countries are putting orders for Rafael. Egypt has withstood it traditional ally- the US’s pressure to go for 24 Rafales. Similarly, Quatar has ordered another 24 to strengthen the Arab region against the rising Iran. All these will make a queue for Rafales. India’s security needs are more pressing and a direct purchase is the best option for the country.
Circumstances necessitates the country to not to risk with security. So a compromise on Make in India seems to be unavoidable.