Yep. And there has been stuff cropping up here and there, stating that the PAK-FA program for the VVS will end up costing considerably more then originally intended.
Indian Military Aviation; News, Updates & Discussions
- Thread starter Twinblade
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Perhaps the FGFA news ties in to the recent revelation that RAFALE has seemingly doubled in price from what was originally bid. Incredible to believe that the Indians accepted the French bid of $60-$65M per Rafale.
All the delays in signing the contract with the French had been attributed to issues pertaining to,ToT and finding qualified subcontractors but this news is a bombshell; can't wait to,see how MoD wiggles it's way out of this. From the IAF perspective, this may be perceived as a serious threat to their plans to recapitalize and modernize their fighter force.
dna exclusive: 100% price escalation on Rafale fighter aircraft to Rs 1.75 lakh crore likely to dent IAF's strike capability - India - DNA
India’s biggest deal of procuring 126 medium multi-role combat aircraft (MMRCA) for $18 billion (Rs90,000 crore) has hit rough weather. Two years after French aircraft maker Dassault Aviation bagged the deal for its Rafale fighter jets on account of being the lowest bidder, its cost has now shot up by 100 per cent.
In January 2012, when Rafale was declared the winner, its price was quoted between $60-65 million (Rs373-Rs400 crore). A top defence ministry official said the price of a fighter jet made by Dassault could now cost $120 million (Rs746 crore). The second bidder, Eurofighter, had quoted $80-85 million (Rs497-Rs528 crore).
The price hike would mean that the deal would cost India nothing less than $28-30 billion (Rs1.75 lakh crore-Rs1.86 lakh crore),” said an Indian Air Force (IAF) official, who is privy to discussions of the cost negotiation committee.
The defence ministry headed by AK Antony has developed cold feet after the cost doubled compared to the original estimate. With the general elections just months away, Antony is unsure about the fate of the deal, a defence ministry official said. “As the negotiations continue, the cost is spiralling out of hand. It is a major worry,” he said.
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All the delays in signing the contract with the French had been attributed to issues pertaining to,ToT and finding qualified subcontractors but this news is a bombshell; can't wait to,see how MoD wiggles it's way out of this. From the IAF perspective, this may be perceived as a serious threat to their plans to recapitalize and modernize their fighter force.
dna exclusive: 100% price escalation on Rafale fighter aircraft to Rs 1.75 lakh crore likely to dent IAF's strike capability - India - DNA
India’s biggest deal of procuring 126 medium multi-role combat aircraft (MMRCA) for $18 billion (Rs90,000 crore) has hit rough weather. Two years after French aircraft maker Dassault Aviation bagged the deal for its Rafale fighter jets on account of being the lowest bidder, its cost has now shot up by 100 per cent.
In January 2012, when Rafale was declared the winner, its price was quoted between $60-65 million (Rs373-Rs400 crore). A top defence ministry official said the price of a fighter jet made by Dassault could now cost $120 million (Rs746 crore). The second bidder, Eurofighter, had quoted $80-85 million (Rs497-Rs528 crore).
The price hike would mean that the deal would cost India nothing less than $28-30 billion (Rs1.75 lakh crore-Rs1.86 lakh crore),” said an Indian Air Force (IAF) official, who is privy to discussions of the cost negotiation committee.
The defence ministry headed by AK Antony has developed cold feet after the cost doubled compared to the original estimate. With the general elections just months away, Antony is unsure about the fate of the deal, a defence ministry official said. “As the negotiations continue, the cost is spiralling out of hand. It is a major worry,” he said.
More...
I'm baffled - we *knew* Rafale was always going to be more than $65m - any random internet spectator could have *told* them that - why did they seriously sign up at that expectation? It's like watching a terrier run straight into a glass door - it's kind of funny the first time they do it but you still wince. Second time it happened, you just wince...
No tech transfer = no sale. Unless they have a moment of clarity in the same vein as they did with the P8 buy, India's main driver for defence procurement appears to be ToT - and it's cost them in the past.
I think the issue here is that they're keen to get HAL working doing stuff, but HAL's output and quality has been problematic in the past. So, in effect, they're loading on large costs related to building things in small runs locally, then finding they are delivered not to spec, behind schedule and over budget.
I think the issue here is that they're keen to get HAL working doing stuff, but HAL's output and quality has been problematic in the past. So, in effect, they're loading on large costs related to building things in small runs locally, then finding they are delivered not to spec, behind schedule and over budget.
There was workshare with the Indian P8's but some of it wasn't directly related to the plane, I remember seeing a power point discussing this and it mentioned some SHornet wiring harnesses being farmed out to Indian companies as part of the deal.
I'd say that was more offsets - and that's fine - it's pretty standard for a lot of contracts - the Canadians I think insist on over 100% offsets, and certainly a lot of Brazilian deals have resulted in good news for Embraer etc.
I'm just baffled by this desire to have everything done locally, no matter how inappropriate it can get.I dunno, I should stop reading Indian procurement stories as it gets my blood pressure up - on the flip side, it makes the UK MOD look total stars
I'm just baffled by this desire to have everything done locally, no matter how inappropriate it can get.I dunno, I should stop reading Indian procurement stories as it gets my blood pressure up - on the flip side, it makes the UK MOD look total stars
I'd say that was more offsets - and that's fine - it's pretty standard for a lot of contracts - the Canadians I think insist on over 100% offsets, and certainly a lot of Brazilian deals have resulted in good news for Embraer etc.
I'm just baffled by this desire to have everything done locally, no matter how inappropriate it can get.I dunno, I should stop reading Indian procurement stories as it gets my blood pressure up - on the flip side, it makes the UK MOD look total stars
I've dealt with GoI on a few issues and have also dealt with Indian primes on some projects and tech issues.
They seriously don't get it and just revert to the tech independence line - when I point out that long term allies such as UK, Canada, Aus don't even try it on under their FMS provisions (and UK and OZ have accelerated FMS purchase under US Pres triggered changes) they still see it as a "right"
There are things that we all don;t give to the US in entirety, but you don't see the US stamping their feet either.
the road runner
Active Member
Think the devaluation of the Rupee compared to the US/Euro dollar is the reason why the cost has doubled in price.India's purchasing power is taking a hammering on international markets.If the Rupee keeps dropping the way it is ,the Rafale may end up costing close to $180 million a plane.
http://articles.economictimes.india...pee-american-currency-continued-dollar-demand
When Australia purchased some of our superhornet's ,the Aussie dollar was close to $1.10 US dollars.We basically got a 25% discount on the cost of the planes.Now our exchange rate is sitting at 0.86 US dollars.
Its funny how exchange rates can benefit or hinder the purchase of equipment on the international market.I don't see the value of the rupee going up in the near future.
I think the Indian fighter squadrons will keep going down in number due to the issue of devaluation of the Rupee.
Couldn't possibly have been a company desperate to make it's first (and still only) international sale, deliberately under-bidding and then jacking up the price and support costs once the contracts are signed and enough money paid that makes the customer think twice about backing out of the deal entirely?
No. No European defence company would ever do that (cough, Eurocopter, cough EADS, cough...)
Ironically I also read about Dassault pressuring Canada to choose the Rafale just the other day because their aircraft is so cheap.
Excellent timing...
The decline in the rupee does not affect the dollar price. It puts up the rupee price.
If the price of something imported into India is $1, & there are 50 rupees to the dollar, it costs 50 rupees. If the rupee declines to 100 to the dollar overnight, the price goes up to 100 rupees - but it's still $1.
the road runner
Active Member
Point taken.. i assumed the exchange rate of the Rupee was the cause of the rise in price.
Just curious as to the forums POV regarding the number of aircraft the IAF will receive. Do you guys think the IAF 30 Squadrons will decline over time, or will the squadron number rise?
They seem to be just maintaining 30 Squadrons
Cheers
Yes it would be interesting to compare the real final costs of the Tiger, MRH90 and MU90 to the US equivalents through FMC or even with local manufacture or assembly. Considering all of the above were also considerably delayed into service due to being developmental rather then true MOTS you can also factor in the cost of measures required to maintain capability and personnel skills while waiting.
Well remember, for decades they bought lots and lots of Russian/Soviet gear, with very high levels of ToT. They're also one of the largest arms importers in the world; a very desirable marketplace. So they can push for, and get things, that other countries can't. At the end of the day, Canada won't be buying 200+ fighter jets from a single manufacturer. So there is some reason to it, it's not just stubbornness.
I'm sure it's made a big difference to the price in rupees.
I wonder if the Indian press is a bit confused between the rupee price rise due to exchange rate changes, & price rises in euros or dollars.
Exchange rates do
factor in but not at the simplistic X:Y currency level. Factors such as interest rates & inflation rates in the supplier country need to be seen. Plus in international trade as the usual case is, the exchange takes place in a 3rd currency (the US $), here something called Fisher's Equilibrium comes into play. The increase in price is basically a mix of
1-The usual jack up by the French
2-The Indians taking ages to negotiate the contract terms which allowed the 3rd factor, Fisher's equilibrium to coke into play massively.
Fisher is a bit difficult to explain but as the USD gains against other currencies, the suppliers costing in their own currency will seek to safeguard their real profit levels, will drive their prices up which will drive up the dollar value of their wares. The chartered accountant in me needs to take a breather.
factor in but not at the simplistic X:Y currency level. Factors such as interest rates & inflation rates in the supplier country need to be seen. Plus in international trade as the usual case is, the exchange takes place in a 3rd currency (the US $), here something called Fisher's Equilibrium comes into play. The increase in price is basically a mix of
1-The usual jack up by the French
2-The Indians taking ages to negotiate the contract terms which allowed the 3rd factor, Fisher's equilibrium to coke into play massively.
Fisher is a bit difficult to explain but as the USD gains against other currencies, the suppliers costing in their own currency will seek to safeguard their real profit levels, will drive their prices up which will drive up the dollar value of their wares. The chartered accountant in me needs to take a breather.
I wonder how much of this is also part of India rather terrible contract issue were external defence company is the one penalised for it 'Given India’s proposed deal that would give HAL control over the project, but penalize Dassault for failures (q.v. April 5/13)'
More MMRCA weirdness... the IAF justify the selection of Rafale because it's cheaper to operate than F-22s and B-2s??? LOL.
Well, they really are having to do some creative explaining to rationalize the Rafale which apparently is costing much more than expected.
IAF's take on bid for medium multi-role combat aircraft - The Economic Times on Mobile
NEW DELHI: The Air Force has told a parliamentary committee that it could have bid for F-22 or B-2 aircraft in its quest for Medium Multi-Role Combat Aircraft (MMRCA) but decided against them as both are among the costliest planes which they did not need.
"We do not spend much money in getting what we want. Currently, we could have bid for F-22 or B-2 which are one of the costliest aircraft. We do not need that," a representative of Air Force told the Standing Committee on Defence, according to the committee's report...
Well, they really are having to do some creative explaining to rationalize the Rafale which apparently is costing much more than expected.
IAF's take on bid for medium multi-role combat aircraft - The Economic Times on Mobile
NEW DELHI: The Air Force has told a parliamentary committee that it could have bid for F-22 or B-2 aircraft in its quest for Medium Multi-Role Combat Aircraft (MMRCA) but decided against them as both are among the costliest planes which they did not need.
"We do not spend much money in getting what we want. Currently, we could have bid for F-22 or B-2 which are one of the costliest aircraft. We do not need that," a representative of Air Force told the Standing Committee on Defence, according to the committee's report...
the concerned
Active Member
I really don't understand what the rafale can provide what the su-30 can't. Wouldn't it be better to order more su's and then try to bring the amount of different types down rather than increase .