shalavI don’t think I am missing the point.
The point is the contract WILL NOT be signed without this guarantee.
What Dassault thinks or who this forum thinks is to blame is irrelevant. What is relevant is what the buyer is willing to pay, what the seller is willing to guarantee and what conditions the buyer and seller agree to. As of this time, one of the non-negotiable conditions insisted on by the seller is that ALL RFP clauses must be adhered to – including the so-called ‘guarantee’ clause/s. The seller says it cannot do so – and negotiations are at an impasse.
And that, my friend, is the point. One of these parties have to give in if they want the deal to move ahead. If both parties think they cannot give in, this deal will not happen.
You are stating the GoI should give in, I am stating the GoI will never be able to concede this clause to Dassault now – not after a Cabinet ranked minister has made public statements about it.
I am still hoping all will be right.
shalavIndeed. But a sane buyer knows that its terms have to be reasonable, or the seller won’t agree. That seems to be the sticking point here.
The condition as you & others have stated it is impossible for Dassault to comply with. It’s like a contract condition which says that Dassault has to guarantee fine weather. Whatever Dassault’s intentions, it does not have the power to make HAL perform. It can give HAL the means, but it can’t make HAL perform. The condition therefore makes no sense. It serves no point. Whether Dassault accepts or rejects it, it can not be enforced. It can not be used – only misused.
I’m sure Dassault read & understood the terms. But the terms posted here don’t say what is being claimed, i.e. that Dassault would be liable for the performance of HAL – & that’s reasonable, because that’s not possible. They say that the seller is responsible for its own performance. An interpretation has to match what is said. Even governments can’t make it up as they go along, in countries with the rule of law. That’s for N. Korea, not a democracy.
A clarification to start with: I’ve never stated the condition was impossible for Dassault to comply with. I have said Dassault has to decide if it can comply with the condition.
With that out of the way, I believe in this case the buyer is seeing different market conditions as opposed to the seller. One of them will have to give in.
There are two points to consider.
a) A cabinet ranked minister has publicly stated the RFP terms have to be complied with, including the guarantee.
b) The Rafale is not ir-replaceable to India. The IAF opinion does not count right now because the contract is still stuck in negotiations. They cannot even publicly state their opinion on contract negotiations. That – as in most democracies – would be considered as the armed forces interfering in a civilian jurisdiction.
At the end of it all, I don’t think anyone on this forum is in a position to change these two facts.
Endless discussion as to how logical or fair or whose fault it is, is not going to change these. If you think this clause was stupid and it was naive of the GoI to expect this from Dassault, please opine so. Dassault thinks almost exactly like you, but this (self-serving?) opinion has not helped them get this contract signed so far.
Dassault will have to consider points a) & b) as the reality it is. Lets see what happens.
shalavSwerve
At this moment, Dassault still thinks it can salvage the deal, another French delegation is in India to negotiate. Let’s see what happens. Right now it seems Dassault has to give in or walk away. This seems to be only choices. 🙁
Regarding rule of law 2 different govt. have arrived at the same conclusion that the RFP means what they understand it to mean, and not what Dassault wants it to mean. They are not moving goal posts, only insisting Dassault respect the goalposts as they see it (which is perfectly within their rights as a buyer).
No laws are being broken, and democracy in India will not collapse because of negotiations over one contract I am pretty sure.
shalavSwerve
Be that as it may, this is the situation Dassault has to work within.
Pontificating, huffing and name calling has had no effect on the GoI stance so far. The govt. has $20b to spend, and it wants to do what any sane buyer with lots of money to buy competitive products will do. It wants the seller to agree to it’s terms.
It is for Dassault to decide if they want to walk away from the sale. The govt. seems to be giving them every chance to work things out. In fact so far 2 different govt’s. have been patient with Dassault over 3 years of negotiations. Dassault was not forced to participate in the competition. Presumably it read and understood the RFI terms. Presumably it also understood that in case of disputes over interpretation, the GoI interpretation would stand. This is a standard clause in ALL GoI tenders – domestic or foreign. It now wants it’s interpretation of the clause to override the govt. interpretation. Why do you expect it would work? From the Dassault perspective fair or not, logical or not, this is the situation as it stands today.
BTW I started this round of discussion by stating that perhaps both parties should step back and move on. Perhaps it would be for the best.
shalavSwerve,
Politics is about optics – not logic!
This clause has been a sticking point since the previous govt., and any backtrack will be politically dangerous. I can’t see the GoI deferring to Dassault on this. Unfortunately, it has to operate within these constraints. If Dassault cannot agree, it does look like an impasse.
Times have changed, and as mentioned by Toan, the Rafale is not ir-replaceable. If India did not have other options, it would have swallowed its bile and probably just agreed to the purchase. However when you have $20b to spend and with the ability to purchase the best airframes from both the “east” and the “west”, you really are in a position to try and force the seller to agree to your terms.
Dassault may be screaming “murder” now, but when the shoe was in the other foot 25/30 years ago during the M2K purchase, it was happy to force its own terms and prices down the GoI’s throat. I don’t think there is any malice towards Dassault or France. Indeed I know the IAF and the GoI were probably rooting for a French win in this competition. I think this is just a case of a buyer who can spend a lot of money, and who has choices, enforcing their will on the seller.
Regarding prices – Prices can go up, and even when competition was ongoing, there was talk of spending up to $20b. So as far as I can see, $20b can be easily justified with the fall of Rupee value, the built in price escalation clause of 5% / annum and fudging the number of airframes purchased along with cost of support services. W.R.T. defence purchases, prices probably never will be a constraint, so long as they seem even faintly affordable. The number of units purchased, cost of support services, spares, even lifecycle costs can be played around with to achieve a mutually satisfactory number.
shalavSo . . . the GoI would throw away the purchase because of a demand which no sane seller would agree to. That’s crazy. It’s blindingly obvious that it’s not possible for Dassault to guarantee HAL’s performance, so why insist on it? Why ask the impossible?
Unfortunately for Rafale fans (me included, even though you may think otherwise) dark thoughts are thinking this.
As regards the “blindingly obvious”, it may be so, but the clause is interpreted as it is by the GoI, and politically it seems to be written in stone. The RFP was agreed to by all participants, and if the EF had won this competition, it too would have faced the same interpretation.
shalavHalloweene,
That’s one interpretation of what the GoI thinks. Cussing HAL will not put Rafale in IAF colours.
The GoI has in principal already agreed on the price increase, the sticking point (by all public accounts) seems to be the interpretation of the said clause. Based on all public statements the GoI is sticking to its interpretation, which apparently is no different from the previous Govt. The present RM’s public statements have not moved away from this.
shalavDassault says it’s not in the RFP, the Govt. of India says it is. They don’t agree on the interpretation of the clause.
It is very clear the GoI will not concede it’s interpretation of said clause to Dassault’s, and vice-versa. The RM is already dropping hints about moving on. It is not looking good! Dassault may be thinking lets negotiate the clause maybe, but it’s stance seems to be exasperating the buyer based on the RM’s public statements. Endless rounds of negotiations leading nowhere, while the prices go up.
It is foolish of Dassault to expect the GoI to concede to Dassault’s RFP clause interpretation AND pay ~1.8x the original price which won the tender. Politically I cannot see this happening without corruption and malfeasance allegations being leveled against the present GoI! It just seems to me the GoI is in the “my way or the highway” mode right now, and from the GoI perspective Dassault’s negotiating position is not helping close the sale.
shalavThe Govt. of India cannot dilute clauses of the RFP – it would invite lawsuits from other competitors and allegations of corruption.
Dassault will not guarantee the work of HAL.
It looks like an impasse. Perhaps the India deal is lost?! 🙁
I think both parties should step back and move on.
shalavThere is a severe financial crunch. The new govt. will need time to recover from previous follies.
I say stop all non-essential purchases and de-fund every foreign venture, except the PAK-FA and perhaps more MKI’s. Obviously there are more important things to fund domestically. I hope the new govt. takes it time and prioritizes around local manufacture for defense equipment.
The Rafale is non-essential, as are more C130’s! They should both be de-funded. I have a strong suspicion this may just happen. A new govt. means new policies, it’s just tough luck for these suppliers I suppose.
shalavIt is a roadmap only with regard to the present govt. which will dissolve by May 26, a new govt. has to be sworn in by the same day. New govts. have no obligation to follow this particular map.
Like I said, it may go up. It may go down even lower, or if the third alternative is elected, no-one knows what will happen.
Better not to make too many predictions based on this very narrow roadmap. It doesn’t present any sort of picture you could depend on.
It will be interesting times for defense suppliers.
shalavInterim budget = to tide over till next govt. is sworn in. Not meant to last the entire FY. Thats why its called interim budget.
If one of the opposition parties form the govt., then chances are they would increase the budget from the current IIRC ~1.7% of GDP to something higher; perhaps 2%? It was ~2.2/2.4% of GDP just a couple of years ago.
If it is still the present set, who knows how far it will fall as a percentage of GDP!
If its the third set of people; no one knows what they will do!
So its good fun to wait and see where the cards fall.
Good luck to all foreign suppliers!
shalavTomcatVIP
I really don’t blame everyone in Europe or elsewhere at all, just telling RKumar that gutter-inspectors need not be responded to.
India’s situation is what it is, and sanctimonious individuals will always find ways to write gutter inspection reports. We well know the problems we have, and are working on solving them. It does not mean science and knowledge priorities should be forgotten either.
Back to topic. I was rooting for the Rafale all along and was very happy they made it through. The French are acknowledged to have helped India in the past, but it does not mean the keys to the treasury is there for Dassault’s taking.
India’s procurement process is the not easiest or the fastest, and a Raksha Mantri more concerned with his clean image than upgrading the forces does not help move things along. You don’t get to be called “St. Anthony” for nothing! Moreover Dassault has not moved on from the 80’s when they last sold to India. At that time the M2K’s were a priority for India and they got asking price. They even added an up-charge for removing refueling probes, which India reluctantly agreed to. Obviously; given todays situation; the Rafale is not that high a priority, and there is price haggling. Its all part of recognizing and adjusting to the circumstances as they exist. India is doing everything to help, it even agreed to a ridiculously expensive $45 m / plane M2K upgrade.
AFAIK the following are presently held up for funding issues although approved for purchase
a. Rafale
b. AH64
c. Additional C130’s
d. Additional C17’s
If a new government comes in after the elections in May, there is absolutely no guarantee any of these will be funded immediately or even at a later date.
All of these are western system’s – they are naturally more expensive. Though you do get better equipment reliability from them. The forces really want western equipment, but even they do not step out on a limb and guarantee western supplier reliability and flexibility.
The PAK-FA’s $5 b(?) Indian contribution was approved & funded without hiccup, and an IAF team having watched the general flight testing. The question to ask is why is it easier for the Russians to do defence business in India? One of the answers should be they have proved their re/supply reliability and flexibility.
Price and supply reliability is what is holding this deal up. If price is adjusted, there will be little objections to supply reliability, if supply reliability is provided (perhaps with iron-clad un-sanctionable money backed escrows?) prices will be agreed to. As it stands now, together these 2 barriers are proving insurmountable for Dassault.
shalavNot quite, try again… I’m in agreement Dassault needs to fix how they do things, however the door swings both ways, India are pretty notorious for taking a very long time to get things done with regards to deals. They’re not without faults too.
India’s procurement process is what it is. It was clear when invitations to enter the bidding process were sent out. All potential suppliers entered into it with their eyes open. No point complaining about how long it is taking now.
Sure about that?…
Of course I’m sure, they will either succeed or fail – is there any other outcome you think can happen?
There’s just other things in the world that are that bit more important to life.
Like science, remote medicine, Earth observation, mapping, geographic data, erosion patterns, mass education, cyclone prediction, weather forecasts, distance learning, telecommunications for remote areas, internet to the masses, radio, TV? These are things for which India does not depend on anyone, and in the process ISRO earns its keep (IIRC the Mars mission cost less than last years earnings of Antrix Corp. ISRO’s commercial arm).
These happened because science was done as technology was researched and experimented with, all the while ignoring the sarcastic comments of gutter-inspectors.
Whom are these Gutter Inspectors I wonder… Dyno-Rod, maybe…
Quite plainly it’s not you. 😉
shalavGoing alone, are you?…
Apparently India is going it alone. It may or may not succeed.
Either way there’ll be snide comments from self-appointed gutter inspectors. Just water off a duck’s back my friend. 😀
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