Dassault and HAL finalise work share for MMRCA

Nearly two years after they began formal negotiations, French Aerospace major Dassault Aviation and Indian government Company Hindustan Aeronautics Lit (HAL) have finalised and sealed the work share agreement for manufacturing 108 Rafael fighter jets in India meant for the Indian Air Force (IAF).

Sources familiar with the development in the mega Medium Multi-Role Combat Aircraft (MMRCA) deal said under the agreement, HAL will undertake 70 per cent of the workload and the remaining 30 will be done by Dassault Aviation. 

The first lot of 18 Rafael combat jets would coming in 'fly away' condition from France. The rest will be manufactured in India.

The final contract is still far from being signed though. For one, there is no money available with the Indian Ministry of Defence (MoD) to pay for the initial payment in the contract during the current financial year that ends in April. And two, the current government is in its last days before general elections are held starting mid-April. The final contract will therefore be done under the next government IF every thing else remains the same.

Dassault Aviation had emerged as the winner in the competition in 2012.

The contract, considered one of the biggest in recent times, is pegged anywhere between 12 to 15 billion dollars.

Dassault have had reservations over HAL's capacity to absorb complex technology and therefore wanted to rope in other private sector units for manufacture of the jets in India. The Ministry of Defence had however told Dassault that HAL will remain the lead player. 

Sources involved in the negotiations say that the deal requires careful understanding on both sides of commercial factors, logistics, and the ability of HAL's staff and equipment to assemble the Rafale.

An official shared this example. The radar on the Rafale jet is to be manufactured by Bharat-Electronics Ltd (BEL) at its facility in Bangalore. The Radome (the protruding snub nose on the aircraft) is, however, manufactured by HAL at its Hyderabad facility. Dassault wants clarity on how the two units will coordinate their activities.

Now, HAL has apparently agreed to put up a new facility close to the one that BEL has in Bangalore. 

Dassault officials are in fact simultaneously and together negotiating with all divisions of HAL located in various cities. So for example, officials of  HAL's Aeronautical Research and Development Complex, Engine division, accessories unit spread over locations like Lucknow, Nashik, Bangalore and Hyderabad  are constantly talking to Dassault officials to arrive at a mutually satisfactory result.

There are many such intricacies involved. However sources are hopeful that in another six months most of the wrinkles will be ironed out. Interestingly, French and Indian government officials are simultaneously working on an Inter-Government Agreement that will provide a sovereign guarantee that Dassault will continue to supply, service and maintain Rafael over the next 40 years. This provision, included in the Request for Proposal (RFP) is an important element in the Indian Defence Procurement Procedure (DPP), designed to ensure manufacturers don't renege on their commitment no matter what the circumstances.