2013-08-01 According to an article in The Business Standard:
A day after the chief of French aerospace giant, Dassault Aviation, emphasised the criticality of an early Rafale contract with India, French Defence Minister Jean-Yves Le Drian on Friday highlighted the hard strategic decisions imposed by his country’s declining defence budget — which made India’s early purchase of the Rafale so crucial for Dassault.
Le Drian, on a two-day visit to India, was speaking in New Delhi on the French White Paper on Defence and National Security, issued by Paris two months ago.
The 2013 White Paper recognises that France has neither the means, nor the strategic will after Afghanistan, to exert influence across the globe. Defence spending has been cut to well below the North Atlantic Treaty Organization (NATO)-recommended level of two per cent of Gross domestic product (GDP), potentially irking France’s NATO allies. The 2,80,000-strong military will be slashed by 34,000 personnel.
Rather than a fringe role in the US “Pivot to Asia”, Paris is adopting a “Euro-Atlantic-African Pivot”, focusing military attention on Europe, West Asia and the African Sahel, its old colonial stomping ground just south of the Sahara.
No major weapons programmes have been cancelled, but several have been pared down, including the French fighter force.
Instead of 300 Rafale and Mirage 2000-D fighters envisioned in the 2008 White Paper, France must make do with just 225 fighters. For Dassault, this means fewer orders for the Rafale.
The fleet of 294 Rafales originally planned is now a distant memory. The French army and navy have actually ordered only 180 Rafales, of which about 120 have been delivered. The French government says it will not order more Rafales and that Dassault’s manufacturing line would continues running only if foreign orders came in. For Dassault, the challenge is to bag at least one big foreign contract — India would be ideal — before the line shuts down on completion of the French order. Paris has obliged Dassault by accepting just 11 Rafales per year, which is the minimum number needed to keep the production line rolling.
In 2009, production was cut from 14 Rafales per year to just 11, to keep the line open for longer.
Paris knows that the survival of France’s defence industry — some 4,000 companies — increasingly depends on exports, given declining defence budgets. Rafale export orders are crucial for giants Dassault, Thales and Snecma and for 500 smaller sub-contractors.
The Rafale generates 7,000 French jobs, directly or indirectly. Besides 126 fighters to India, Dassault hopes to sell Brazil 36 Rafales, Kuwait 28, Qatar 24-36, and the United Arab Emirates (UAE) 60 fighters.
The company has lost procurement contests in Algeria, Greece, Morocco, The Netherlands, Norway, Oman, Saudi Arabia, Singapore, South Korea, Switzerland and the UAE (where it could still win a subsequent order).
See the French defense minister’s presentation earlier this summer at the IISS Asian strategic summit: