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Modi’s Rafale deal is a billion-dollar loss to India’s public sector


The latest aircraft contract with France is hardly the way to upgrade the Indian Air Force.


President Francois Hollande is in town. Negotiations are on about the French fighter aircraft. The Rafale costs $9 million per aircraft; with advanced avionics, it can cost up to $50 million. Earlier, the Indian Air Force was armed largely with Soviet/Russian aircraft like MIGs and Sukhois. They served the IAF well in 1965 and 1971/72. The technology was transferred and the initial assembly and later construction was done in the public sector Hindustan Aeronautics  Limited (HAL).

The competitors were the Rafale and the Sukhoi Su 30, which costs $4 million. This could also go up by a multiple, but it would still be a fraction of the cost of the Rafale and is a top-of-the-line Russian fighter. The Modi government has made it a point to reduce the cost of the Rafale. But the Sukhoi Su 30 is more powerful and has a larger but cheaper missile with greater range. The smaller Rafale is considered in aeronautical literature to be more manoeuverable in a dog fight.

But the decision, one of several, to have the chosen aircraft built by the private sector, means that the vast experience of the HAL will be given the go-by. This is in keeping with PM Modi‘s preference for pro-corporate decisions in many fields. But profits made by HAL will go to the public sector, contributing to the public exchequer, unlike the corporate who do not have the experience and will make profits with relatively meagre amounts going to the public accounts. Of course, making HAL “sick” will also mean a lay-off of a crucial segment of technologists, etc.

Moreover, if the idea is to improve the quality and the striking power of the IAF, purchasing 36 Rafale planes is not enough. The total cost of the French planes would be $324 million. Yet, in the same category, 72 Russian Sukhoi Su 30 planes can be purchased for $288 million with $36 million left over. Even BJP leaders like Subramaniam Swamy criticised the Rafale deal and threatened to go to court. So militarily, this deal doesn’t make sense. The IAF wanted to have around 124 aircraft, but it is getting only 36, obviously because of the cost. This is hardly the way to upgrade India’s Air Force, and that too at such a high cost. What is more worrying is the diverse nature of the sources of the arms deals. India has bought large amounts of arms from Israel, Russia and France. It is better to have a compatibility in arms deals. Also it is important to remember that during the India-Pakistan hostilities, the US had stopped arms supplies to India.

Earlier regimes, in keeping with India’s historical position, did not have any deals with Israel. But Modi is not too perturbed with the occupation of Palestine or the massacre of Palestinians. There has never been any concern on this issue by the Sangh Parivar. But the quality and price of arms and their indigenisation is critical. The way Modi has approached this important, but difficult challenge doesn’t appear to be in the nation’s interest.

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Comment (1)


    The deal is not only loss to public sector but the governments plans of indigious development of ‘ make in india’ will be severely affected. The defence industry in India, especially PSUs , must be encouraged to participate in development of defence equipment.

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