As Rafale Storm Rages, Offsets May Bring 2 Big Missile Lines To Indian Govt Firm


As a political storm rages over allegations that India’s state-owned Hindustan Aeronautics Ltd (HAL) was somehow ‘abandoned’ in favour of private sector beneficiaries in the 2016 contract for 36 Rafale jets, another Indian government-owned firm stands to gain big. Livefist has learned that two major proposals as part of the offsets plan involve moving the final assembly of major missile systems to India and the manufacture of substantial parts in country.

With much of the current political fire aimed at the Rafale offsets partnerships, the actual work of executing the billions of Euros in offsets has gathered pace. Not that the makers of the Rafale have a choice. The three big companies that make the Rafale — Dassault Aviation, Thales and Safran — have until 2023 (a seven year period from the time the contract was signed) to plough nearly €4 billion back into India in the form of offsets, half of the €7.87 billion value of the Rafale deal.

The fourth firm in the Rafale deal that also has major offsets commitments is European missile maker MBDA. Livefist learns that to complete offset obligations, the company is looking to transfer substantial manufacturing of missile parts to India, in addition to entire final assembly lines of certain missile systems. A major current proposal, sources say, is to build the rear portion of the MICA air-to-air missile in India at MBDA’s joint venture with Indian giant Larsen & Toubro. The MICA, currently built in Selles-Saint-Denis in France, is a weapon system that the Indian Air Force will receive both on its upgraded Mirage 2000 jets as well as on the new Rafales. Mechanical parts of the launcher of MBDA’s MICA missile are already built in India by L&T. A proposal currently exists for integration of the entire MICA at MBDA’s joint venture with L&T, formed last year.

MBDA has offsets obligations totaling over €1 billion from contracts that include the Rafale deal, the Mirage 2000 upgrade program and a contract for ASRAAM missiles for Indian Air Force Jaguar jets.

The other major proposal, of even greater possible significance, is to transfer final assembly of the ASRAAM air-to-air missile from MBDA’s facility in Bolton in the United Kingdom to Indian state-owned Bharat Dynamic Ltd’s Hyderabad facilities. Coupled with a standing offer to conduct final assembly of the Mistral air-to-air/air defence missile in Hyderabad, MBDA believes it has a powerful pair of proposals to transfer skilled workforce jobs to India on two current weapon systems.

While MBDA has managed to navigate the turbulent Indian defence procurement system to land major contracts in the last few years, its costliest campaign ever in the world is still hanging fire in India — a $5.8 billion order for very short range air defence systems (VSHORADS) for the Indian Army. MBDA’s Mistral system competes against Sweden’s Saab RBS 70NG and Russia’s Igla-S. After five years of trials and letters of protest shot off to the MoD earlier this year, the deal sits on a razor’s edge. After an unprecedented number of trial rounds, including a final round last year, a decision is awaited from the Indian MoD on final evaluations. Considering the ill-tempered, turbulent nature of the contest, which even included a no-show by the Russian competitor on a couple of occasions, it remains to be seen how and if the MoD will navigate this final stretch. Or if it will at all.

But MBDA has less reason for despondence than firms, including one of its own parent shareholders Airbus, considering that the missile maker has landed substantive contracts in India despite a chronic air of uncertainty, one that’s been amplified by the current political swirl over the Rafale deal. Apart from the vulnerable VSHORADS contest, MBDA’s future opportunities in India include the MMP ATGM 5 system for the Indian Army, the Sea Venom and Marte for the Indian Navy’s multirole helicopter procurements (as part of the MH-60R package) and the Sea Ceptor and VL MICA for the Indian Navy’s recently cleared acquisition of 10 short-range surface to air missile (SRSAM) systems.

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