Long in negotiations, the contract is in the final stages of price fixing, the official said. According to him, the CNC will arrive at two prices at the end of talks. One will be ‘direct’ price, which will be actual cost of whole 126 aircraft the IAF plans to get – 18 in flyaway condition directly from Dassault, and 108 produced under licence by Hindustan Aeronautics Ltd (HAL).
The other is Life Cycle Costing (LCC), which will cover the whole life of the aircraft in service with the IAF. This would include maintenance cost, overhauling costs among others.
The IAF sources complained about efforts by some Indians to sow doubts and make the IAF leadership ‘weak-kneed’ by publicising wrong information in sections of the media ‘at the behest of a foreign competitor’.
The other key element of the deal is the licence manufacture deal between Dassault and the HAL. There were large number of issues that were technology related. A senior HAL source stated: ‘Now those issues have been boiled down to two or three. They would also be taken care of soon.’
One gets a sense from all these conversations, that the IAF has got a signal from the political leadership of the government that it is now on more than ‘a wing and a prayer’. In other words, the force has got a green signal from the government to go ahead with the deal.
The senior official said that since the LCC has been in negotiation for the MMRCA, the same formula has been applied to 19 other vendors, including the Russians, and none of them had complained about the sanctity of the LCC. ‘Any of them could have taken us to court, if we were in the wrong.’
The first air assets that have been delivered under the LCC formula have been the Basic Trainer Aircraft (BTA), the Pilatus PC 7. They are already flying in large numbers. ‘We were sure that we were in the right track when ministry of finance cleared our pricing, and it was sent to the Cabinet Committee on Security,’ the official said.