EXCLUSIVE: 1st Full Details Of Rafale’s €4-billion Make-in-India & Offsets Plan

As a political storm intensifies around India’s €7.87 billion deal for 36 Rafale fighter jets from France, and substantial fire focused through allegations of preferential corporate partnerships for the €4 billion in offsets that Dassault Aviation and its partners need to execute, the Narendra Modi government today pushed out more information by way of an answer in Parliament.

The answer not only republished cost figures, with the important disclaimer that these figures didn’t take into account the cost of India-specific modifications, weapons and other services, but also cleared the air on allegations over whether India’s apex Cabinet Committee on Security was in the loop on the Rafale deal.

But as the government prepares to fight off in Parliament what appears to be a dogged opposition attack on the deal, Livefist has obtained access to the first comprehensive details of France’s plans on what will easily be the most challenging component of the Rafale deal: the offsets. Offsets involve investments and sourcing that companies manufacturing the Rafale must make in India amounting to half of the deal’s €7.87 billion value. The offsets are to be executed within seven years from the time the deal was signed — by 2023, that is.

In a series of slides accessed by Livefist, the contours of the ‘Make in India’ elements of the Rafale deal stand revealed for the first time. The details that follow pertain principally to the Rafale platform itself, and doesn’t include the $1-billion partnership between France’s SAFRAN and India’s DRDO for the Kaveri turbofan engine, a major thrust area for both countries that will also count in the offsets program.

The details below reveal that Rafale has so far forged partnerships with at least 72 firms for industrial sourcing areas that span, among other Dassault platforms, the Rafale’s airframe, its Snecma M88 engines, radar, electronic warfare and avionics, aeronautical components, engineering and software. The slides below indicate that Dassault and its partners are in negotiations with tens more firms for offsets opportunities. This, in effect, is the first specific and overall sense of what Indian firms will bring to the table on the Rafale.

This first overview of an offsets execution plan is especially of interest, given that India’s offsets policies are widely regarded by international vendors and governments as convoluted, self-defeating, or, in the words of one prominent CEO, “a godawful mess”.

In Parliament yesterday, India’s junior defence minister Subhash Bhamre said, “The quantum of offsets in the Inter-Governmental Agreement (IGA) for 36 Rafale fighter jets is 50 per cent, which includes investments in terms of Transfer of Technology (ToT) for manufacture and maintenance of eligible products and services. The current offsets policy of the Defence Procurement permits the vendors to provide details of their Indian Offset Partners (IOP) either at the time of seeking offset credits or one year prior to discharge of offset obligations. Vendor/Original Equipment Manufacturers (OEM) is free to select his Indian Offset Partner.”

The first slide, pertaining to airframe offsets and sourcing, lists the Dassault-Reliance joint venture firm (DRAL) as being part of a group of companies that will produce mechanical parts and sub-assemblies. Other companies in this list include Indian majors like L&T, the Mahindra Group, the Kalyani Group and Godrej & Boyce:

Marked in red are joint venture companies that Dassault and its partners have already incorporated in India, in part, to execute the Rafale deal offsets. Apart from the Dassault Reliance JV, the others include Snecma HAL Aerospace Ltd (SHAe) for aero-engine components and Thales’s joint ventures with India’s SAMTEL for multifunction cockpit displays. The new Thales-Reliance joint venture, named Thales Reliance Defence Systems (TRDS), not only plans to build technologies for Rafales in India and worldwide, but also says it will ‘develop Indian capabilities to integrate and maintain radar and electronic warfare sensors’.

The details revealed today by Livefist add substantially to the level of detail of a conversation that has so far involved much political cloak and dagger from both the government as well as the opposition. The French president departed yesterday after a four-day visit deemed mostly successful on the strategic front, though India notably declined a specific request from the highest levels of the French government to send out a message, while President Macron was in Delhi, that the two countries were in discussions for 36 more Rafale  jets.

Here’s more from the Rafale offsets plan and the Indian companies that will be part of it. Rafale deliveries to the Indian Air Force begin in September 2019.

 

 

 

6 thoughts on “EXCLUSIVE: 1st Full Details Of Rafale’s €4-billion Make-in-India & Offsets Plan”

  1. This one if true makes sense. We should not think HAL = make in india.
    Maybe this way, we creating far more jobs in india.
    The world works this way. Not everything is made very where, but everyplace makes subs systems with critical mass, this one develops the skillsets.
    This technology transfer is bogus. No one will ever transfer knowledge we need to learn how to build things the hard way. Look at chinese , they built everything on their from mobile phone to passenger jets. Learn from them.

  2. Given the circumstances, its seems pretty reasonable deal. India gets half of its purchase consideration ploughed back in creating an industrial ecosystem, which can lead to future endeavors of building own jets and fighters. if we learn the hard way, we won’t have to rely on foreign powers who can arm twist us in time of crisis. HAL has done a good job buts own plate is so full that relying on a single supplier will kill the prospect of military-industrial complex, a primordial soup for creation of next gen technology.

  3. Nrupan Sudhakaran

    It is high time we stopped depending on Public Sector to do everything. The Indian Work Culture, thanks to Politicians and Trade Unions, is once employed in the Public Sector / Government Dept to forget the work and working hours.

  4. Venkat, Chinese learnt most of the technologies with a long term program that included-
    1. Placing highly qualified Chinese to work in US and European companies and stealing the secrets.
    2. By buying clandestinely materials and information, data
    3. Placing highly educated Chinese in research units and then getting them to work in Chinese enterprises established in China.

    So personally Chinese methods for gaining technology is not a preferred option.
    India needs and has, tech mind but institutions are built to serve the undeserved and hence these institutions lacks purpose and performance.

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