Stuck projects cloud French defence minister Le Drian’s India visit

The Scorpene submarine project, now running four years late, is being executed in this yard at Mazagon Docks Ltd, Mumbai

By Ajai Shukla

Business Standard, 26th July 13

The French defence minister, Jean-Yves Le Drian, who visits India from July 25-27, arrives at a delicate moment in a longstanding defence relationship, with several crucial Indo-French projects hanging in the balance.

Although French diplomatic sources downplay the delay, unusually extended negotiations for 126 Rafale fighters, being bought from French company Dassault, are causing growing concern. Dassault officials and other stakeholders are worried that impending Indian general elections due before May 2014, could disrupt, or even derail, the estimated $17-20 billion deal.

The French side has on a brave face, insisting that the Rafale contract involves complex negotiations but will eventually go through.

“I don’t think there is any delay, per se, in the negotiations,” says a reliable source that has requested anonymity. “A delay would suggest that a target date has been laid down for completing the contract, which is not the case.”

In fact, target dates for completing negotiations and signing the Rafale deal have been laid down and violated repeatedly since Rafale was declared the lowest bidder on Jan 31, 2012. At the Aero India 2013 air show in Bengaluru in Feb, Browne stated that he expected the contract to be signed by mid-2013, terming it “the mother of all contracts” and “the IAF’s highest priority”. Earlier, defence minister Antony had said that he expected the deal to be concluded in financial year 2012-13. Also, the Defence Procurement Procedure (DPP) lays down a time-line of three months for cost negotiations to be completed, which got over in April.

As Business Standard has reported, a key stumbling block in the negotiations is Dassault’s reluctance to assume responsibility for the on-time delivery of all the contracted 126 Rafale fighters, given New Delhi’s insistence that Hindustan Aeronautics Ltd (HAL) must build 108 Rafale’s after Dassault supplies the first 18 in fly-away condition. Dassault fears that it could be held responsible for delays actually caused by HAL. It is negotiating for more of the production to be carried out in a joint venture with the Reliance group.

The visiting French defence minister will also face questions about continuing delays in the production of six Scorpene submarines at Mazagon Dock Ltd, Mumbai (MDL). Originally slated to begin delivery in 2012, persistent delays pushed the target date back by three years to 2015. Last fortnight, MDL revealed that the first submarine would be delivered only in 2016.

That too is being downplayed. “Delays are normal in the defence business; they happen elsewhere too. Part of the reason is that MDL has not built any submarines for the last ten years,” says the reliable source, effectively putting the onus on the Indian company.

Faced with this gloomy present, Le Drian will take solace in the past. Instead of visiting MDL, as he had done in February, Le Drian will go to Gwalior on Saturday, where the IAF has three squadrons of French-supplied Mirage 2000 fighters. This visit is “for a briefing on the Indian Mirage 2000 squadrons and interaction with pilots, officers and technicians who fly and maintain the fleet,” says the French embassy in New Delhi.

Reaching back even further into history, Le Drian will visit the famed historical sites of Gwalior, including the Jai Vilas Palace, which is reputedly modelled after the French Palace of Versailles. He will also visit sites in Gwalior “which keeps alive the memory of French officers who, 200 years ago, contributed to the development of the armed forces of Gwalior’s erstwhile rulers,” says the embassy.

On the positive side, Le Drian will derive satisfaction from New Delhi’s selection in January of the Airbus A330 as the multi-role tanker transport (MRTT) aircraft that will refuel IAF fighters in mid-air. Negotiations are underway for the IAF’s purchase of six Airbus A330 tankers, worth an estimated $2 billion.

France is also co-developing a Short Range Surface-to-Air Missile (SR-SAM) with the DRDO, which could eventually yield orders worth thousands of crore, given the crippling shortfall of air defence systems with the IAF.