ANALYSIS: Rafale for MRFA: Direct Purchase from France vs. Make in India—Which is More Cost-Effective?
India is actively seeking to enhance its air defense capabilities by acquiring 114 multi-role fighter jets under the Multi-Role Fighter Aircraft (MRFA) tender. Dassault Aviation’s Rafale jets emerge as a prime candidate, following the successful acquisition of 36 Rafales for the Indian Air Force (IAF) in recent years. A critical question arises: is it more economical to purchase additional Rafale jets directly from France, or should India consider manufacturing them locally?
This article delves into the cost implications of both options, evaluating factors like inflation, upgrade costs, and long-term sustainability.
Direct Procurement from France in a phased manner
Purchasing Rafale fighter jets directly from Dassault Aviation involves acquiring fully assembled aircraft. The initial contract for 36 Rafales cost India approximately €7.87 billion ($8.7 billion), which included weapon systems, maintenance packages, and pilot training. The per-unit cost for these Rafales was around $241 million, accounting for logistics and support.
As inflation and production costs rise, the price for an additional 114 Rafale jets from France is expected to increase. A conservative estimate suggests an annual price inflation of about 5% due to rising raw material and labor costs in the defense sector. If a deal for the 114 jets is negotiated in the next five years, the cost per unit could reach approximately $308 million by 2028.
Thus, the total expenditure for 114 jets could amount to around $35 billion by 2028, encompassing weapons, infrastructure, and maintenance.
Manufacturing in India under Make-in-India Policy
Opting for domestic manufacturing under the “Make-in-India” initiative involves several cost considerations, including technology transfer, local assembly, supply chain establishment, and labor. While initial production costs may be higher due to setup expenses and technology adaptation, long-term costs could decrease as production stabilizes.
.png)
Dassault would need to transfer the necessary technology and expertise to Indian firms, a process that is both costly and time-consuming. Establishing production lines, training engineers, and creating a local supply chain would require substantial initial investments. However, as domestic production ramps up, costs could decline due to lower labor and logistics expenses.
It is essential to note that initial production runs might face cost overruns as Indian manufacturers adapt to the rigorous standards of defense manufacturing. Experts estimate that the initial cost per Rafale produced in India could be around 10-15% higher than purchasing directly from France, potentially translating to about $340 million per jet in the first production batch.
As manufacturing capabilities improve, the cost per unit could gradually decrease to around $300 million for subsequent batches, assuming the jets maintain the same configuration without new upgrades.
The overall cost for producing 114 Rafales in India could be approximately $36.5 billion, including technology transfer, infrastructure, and local labor costs.
A significant advantage of manufacturing Rafale jets in India is the long-term benefits related to upgrades and maintenance. Establishing local production and maintenance facilities could greatly reduce costs for avionics, weapon systems, and engine improvements. Having local expertise would allow the IAF to perform upgrades without relying solely on Dassault for every modification.
While domestic manufacturing might initially seem more expensive, it offers strategic benefits such as job creation, long-term maintenance, and reduced dependence on foreign suppliers. The price difference of around $1.5 billion is relatively minor when considering the long-term advantages of local production.
In terms of upgrades, the Make-in-India approach could lead to estimated savings of 20-30% on future modifications and maintenance costs, making it a more economical choice in the long run. Furthermore, local production would enable quicker turnaround times for repairs and upgrades, enhancing the operational readiness of the Indian Air Force.
NOTE : Article cannot be reproduced or no information from this article should be used without written permission of theigmp.org in any form even for YouTube Videos to avoid Copyright strikes, if we find same informations or the entire article without our permission, we will take necessary action.
No comments: