2016-01-27 By Richard Weitz
During his three day visit to India, French President François Hollande had the honor of attending India’s Republic Day parade.
The military sent a contingent to participate in the parade and this was the first time a foreign military contingent has done so.
The French delegation engaged in wide-ranging discussions with the host country’s political and economic leaders during the visit which began January 24, 2016.
The two governments signed more than a dozen agreements on energy, economics, and counterterrorism.
Their joint statement spoke of their common values, French support for India’s entry into various nuclear export control bodies, and other cooperation.
Indians consider France a very reliable ally that stood by New Delhi against Pakistan even after its nuclear weapons tests and alignment with Moscow.[i]
The two militaries conduct frequent joint drills—most recently their 2014 Garuda air and 2015 Varuna naval exercises–and collaborate on regional security issues such as countering terrorism and maintaining security in the Indian Ocean region.[ii]
The French Navy agreed to participate in next month’s International Fleet Review at Visakhapatnam.
Hollande and Modi also extended the original ten-year bilateral Agreement on Defence Cooperation another decade.[iii]
However, the centerpiece of the trip was Hollande’s efforts to finalize the Indian purchase of the 36 made Dassault Rafale multi-role fighter planes that Modi agreed to purchase when he visited Paris last April.
The visit was seen by both sides as a means to accelerate progress on the issue despite bureaucratic delays.
The Indian air force desperately must renew its fleet since it is well below its authorized strength and faces a massive Chinese air force as well as a growing Pakistani fleet.
Its planned co-development of a 5th-generation stealth fighter with Russia remains well behind schedule.
The twin-engine Rafale can perform several roles well, including air defense, reconnaissance, electronic jamming, ground support, and deep strike missions.[iv]
The French Air Force and Navy have more than a decade of operational experience with the fighter and have clearly demonstrated its performance for the missions which India envisages for the plane.
In previous years, the Indian government had been conducting an extensive tender to purchase 126 medium multi-role combat aircraft (MMRCA). This tender, dubbed the combat aviation “deal of the century,” was supposed to have been one of the most lucrative aviation contracts in history.
In January 2012, the Indian government announced that Dassault Rafale had won the competition, but the negotiations to finalize the sale dragged on for years due to disputes over price, technology transfer, and other issues.[v]
Last year, the French and Indian governments decided to launch direct government-to-government talks to break the commercial logjam between Dassault and Hindustan Aeronautics Ltd (HAL), which was to produce a growing share of the plane in India after an initial delivery of 18 planes.[vi]
Modi decided to purchase three dozen planes (for two 18-plane squadrons) “in flyaway condition”—as India did with the Mirage 2000 in the 1980s, which Dassault and Thales are upgrading under another contract–rather than await the transfer of assembly and production facilities to India.
According to media reports, this week Modi and Holland signed a memorandum of understanding on the inter-governmental agreement on the technical aspects of the deal that will provide a modified version of the aircraft with indigenous systems and technology.
The French President said that the intergovernmental MOU represented “a decisive step,” and that the remaining financial issues “will be sorted out in a couple of days.”[vii]
But the weight of the Indian defense bureaucracy and political imperatives cannot be so easily overcome.
They both are pressing the Modi government to lower the planned purchase price of the planes – which cost more than the planes India has bought from Russia [viii]– and keep a hefty offset requirement to promote the national defense industry as part of Modi’s popular “make in India” program.
According to the terms, Dassault and its partners like Safran and Thales will share technology with India’s Defence Research and Development Organisation and Indian private companies.[ix]
However, Indian firms do not have the capabilities to produce many critical defense items at home, while the offset policy has proved ineffective at remedying this deficiency due to the limited absorption capacity of the Indian defense industry.[x]
The Indian government could better achieve its goal of reducing the costs of the planes if it were to lower these offset requirements and shape a more effective way forward.
Dassault issued a statement that it “supports the French authorities in finalising a full accord within four weeks,” but it could well take much longer to finalize the accord.[xi]
Another unresolved issue is whether Dassault Aviation could accelerate the delivery of the planes, which are all supposed to be supplied within seven years of signing the deal.[xii]
The company has already committed to sell many planes this year to other foreign customers as well as the French military.[xiii]
The total number of planes India will buy also remains undecided; there has been speculation that India wants to order another 18 planes soon but there is no sign of this issue being discussed during Holland’s visit.[xiv]
Dassault is expected to try to leverage the deal to induce the Indian Navy to buy its planes rather than more MiG-29K for its future aircraft carriers.[xv]
India needs to be able to match a PLA Navy that is aiming to deploy its own carriers in the Indian Ocean
Further French sales are possible since India has become the largest arms importer in the world and the government has launched a $150 billion defense modernization program.[xvi]
NOTES
[i]www.europarl.europa.eu/RegData/etudes/STUD/2015/534987/EXPO_STU%282015%29534987_EN.pdf
[ii]http://thediplomat.com/2015/06/india-france-relations-look-to-the-indian-ocean/
[iii] http://www.thehindu.com/news/resources/full-text-of-joint-statement-issued-by-india-france/article8151255.ece
[iv] http://www.upi.com/Business_News/Security-Industry/2016/01/08/India-France-to-finalize-Rafale-deal-ahead-of-Hollande-visit/6111452269789/.
[v] http://www.hindustantimes.com/india/rafale-jet-deal-could-take-more-time-francois-hollande/story-qCFkElxUz9zWyizdii1KXI.html
[vi] http://www.upi.com/Business_News/Security-Industry/2016/01/08/India-France-to-finalize-Rafale-deal-ahead-of-Hollande-visit/6111452269789/.
[vii] http://www.reuters.com/article/india-france-rafale-modi-hollande-idUSKCN0V311N
[viii]http://www.thehindu.com/news/national/indiafrance-talks-on-for-rafale-pact/article8141907.ece
[ix]http://www.ndtv.com/india-news/india-confirms-order-for-air-forces-rafale-deal-with-france-1262447.
[x]http://www.dw.com/en/deterrence-and-power-projection-why-india-remains-a-major-arms-importer/a-18474790.
[xi]http://www.dw.com/en/france-and-india-agree-on-rafale-fighter-jet-pact-but-debate-price/a-19003097
[xii]http://www.financialexpress.com/article/economy/india-gears-up-to-ink-rafale-deal-with-france/188849/
[xiii] http://thediplomat.com/2016/01/india-to-consider-french-fighter-jets-for-navys-newest-aircraft-carrier/#disqus_thread
[xiv] http://www.english.rfi.fr/asia-pacific/20160125-france-india-sign-rafale-deal-price-not-yet-fixed
[xv] http://thediplomat.com/2016/01/india-to-consider-french-fighter-jets-for-navys-newest-aircraft-carrier/#disqus_thread
[xvi] http://www.asianage.com/india/india-france-haggle-over-9-billion-rafale-deal-run-hollande-visit-415
The photos in the slideshow above show the French Air Force Rafales participating in the Trilateral Exercise at Langley AFB in December 2015. Credit Photos: USAF