You may be right about that, but then again it doesn’t do anything to alleviate the fact that such considerations have nothing to do with a technical evaluation. Rendering the “leak” very dubious to say the least.

Nic

I’d agree – that “leak” seems too fishy! So Rafale might not have all the commercial offsets that Saab may offer, but is Saab offering nuclear submarine technology too? Commercial propositions are one thing, but this deal has “strategic” written all over it. Embraer’s whining notwithstanding. JMT

USS.

Actually it seems a bit double-standardish to me that some of you are crying foul after doing the same in the PAF thread.

Is that supposed to be directed towards me? If so, please show the offending post. Gracias.

USS.

Y However Russia was using the SU-30 when IAF ordered.

Sorry, Russia never used the Su-30 afaik. MyAt best a few token Su-30s found their way into the VVS iirc.

point is I am surethis fact played a role in IAF selection. Maybe not the final deciding factor but a role.

No one would deny that a product well used by multiple airforces would find greater favor with a potential customer. But as seen from above there have always been exceptions. After all there is always the first customer for export who buys without any precedent.

But, what has this to do with the LCA? It is an indigenous product after all – surely you can’t expect it to find favor with other airforces before the IAF purchases it?

USS.

Hi Rahul

Thanks for your reply, and for treating my posts with courtesy.

Yes, as you admit, Gnat and Jag were used by others and IAF was not the sole operator. Glad we can finally agree with this.The time (70s) when IAF chose these types they were being used by others, although IAF did end up just recently being sole Jag operator.

There are many reasons Air Forces are much more comfortable using a plane chosen by others.

1) The act another Air Force has gone through extensive trails and evaluated every aspect of a aircraft and chosen it is a sense of reassurence to other prospective buers. You will, I am sure, notice that whoever wins the Indian MRCA order will stand a better chance in other international competitions.

2) Spares and support. Should foreign operators not take on board an aircraft it remains highly likely that spares and support may dry up should the orgncla manufacturer think it uneconomic contnueing production of spares.

I dont see how my debating certain points is a reflection on my honesty, but I will indulge you.

The USAF, it can be very falry argued, is almost in a unique position. Due to its size, budget and resources, it can well afford to be sole operator of a single type and is large enough to keep people like LM or Boeing in business almost on its own. No other Air Force can do this.

All fine and good but flies in the face of the fact that the IAF chose to operate the MKI, an entirely unique bird designed to tailor made specs. Until v. recently of course, when the RMAF and Algeria issued some small orders.

USS

and gents, while arguing over x thousand crores and so on, please remember that Rs of 1983 != Rs of 1990 != Rs of 2000 because Rs has undergone an annual inflation rate of anywhere between 3-10% from mid 80’s onwards.

if you have to compare the numbers, either convert to US $, whose value has stayed more or less stable OR consider inflation adjusted values of Rs.

remember, 10 crores in 1983 meant much more than 20 crores in 2000.

Precisely the point in my previous post in this thread Rahul. In in 1989 the exchange rate was Rs. 17 : $ 1; more recently (circa 2001-2009) it has fluctuated from Rs. 47-44 : $ 1. Can you imagine the purchasing power disparity!
For whatever reasons, the article that Yudhishtir posted only uses the latter rate, which gives off a completely skewed analysis.

USS.

which video ?

Oops! Its the video you linked to in the Jag thread. NDTV.

USS.

Sure – and I think you put your fingure on the crux of the problem – the difficulty of now finding a document that says what the initial envisaged budget was – and the closest I can come to it is an article linked from the LCA archives on BR – the forum that my learned friend Rahul M is a moderator on: http://www.statemaster.com/encyclopedia/HAL-Tejas It quotes government sources so its probably accurate.

Here are a few quotes from there:

The LCA was originally expected to fly in 1993, and in May 1989 the program was projected by the government’s review committee to cost Rs. 5,600 crores (56 billion rupees or about US$1.2 billion at the time) At that time the exchange rate was around Rs. 30 to $ 1. [38] FSED Phases 1 and 2 were projected to cost, respectively, Rs. 2,188 crores (US$467 million) and Rs. 2,340 crores (US$499 million). 2188+2340 adds up to 4500 crore NOT 5600 crore. In any case, going by the exchange rate that prevailed in those days, this was equivalent to about $ 730 + $ 780 million or about $ 1.5 billion. The $ figures above are wrong because they use the current exchange rate of about Rs. 46 to $ 1. [32] According to the 1999 Comptroller and Auditor General (CAG) report, the first phase of the project had by the end of 1998 consumed Rs. 2,500 crores; by the end of 2000, the total Phase 1 cost had risen to about Rs. 3,000 crores.[5] The delays have also led to further indirect costs. For instance, the unavailability of the Tejas compelled the Indian Air Force to upgrade its MiG-21bis aircraft at a cost of Rs. 2,135 crores.
So Phase 1 was budgeted at 2188 crores and by the end of 2000 had risen to 3000 crores. Never mind the additional 2135 crores to upgrade the MiGs – and if you’ve done any budgeting, any indirect costs are part of the project cost – but lets be magnanimous to Rahul and conveniently ignore those – Phase 1 about 900 crores over budget in 2000!!
Here’s another:

When FSED Phase 2 was launched in November 2001, it was authorised under a budget of Rs. 3,302 crores (about US$704 million). This financing covered not only the manufacture of the five prototypes (PV-1 to PV-5), but also eight limited series production (LSP) planes.[39] In July 2001 it was reported that beyond the FSED, HAL would require a further Rs. 400-600 crores to set up facilities for the manufacture of 12 to 14 LCAs a year.[40]

So Phase 2 was initially budgeted at 2340 crores and when launched the budget had increased to 3302 crores plus the 600 crores to set up the manufacturing facilities. Overbudget by about 1600 crores?

Thanks, that is interesting. Problem is, it does not take into consideration inflation and the devaluation of the Rupee. If seen in purely dollar amounts, you will notice that the LCA program is hardly over budget. For instance, 3000 crores that you mention as the actual cost of Phase I is $ 187 crores or $ 1.8 billion @ 1989 exchange rate of Rs. 16 : $ 1 OR at more current rates (46:1), the cost equals $ 650 million.

Also, the MiG-21 upg. really can’t be blamed on the Tejas, irrespective of what budgeting includes or does not – were they realistically expecting a fully operation a/c (mig-21 replacement) to pop up by the late 90s when funding was really sanctioned only in 1993? That is a bit ridiculous knowing the kind of obstacles ADA/HAL would have to overcome. Then of course the cash crunch and american sanctions also caused delays.

Like I said, to get a better perspective, you must take into consideration the devaluation of the rupee. In real terms what was its purchasing power? In light of this, lets look at the figures above again:

Phase I
Rs. 2188 crore (1992, exch rate ~ Rs. 30: 1) = $ 73 crore/ $ 730 million NOT the $ 467 million put forth by the source, which assumes an exchange rate of about Rs. 46: $ 1 (current rate). Ever wonder why the source does this?

Phase II
Rs. 2340 crore (1992, exch rate ~ Rs. 30: $ 1) = $ 78 crore/ $. 780 million.

TOTAL Budget according to then prevalent exchange rate for Phase I & 2 = $ 1510 million or $ 1.5 billion NOT the $ 960 million that the stated source racks up. If I go by 1989 exchange rates ( Rs. 17 : $ 1), the allotted budget for phase I & 2 is $ 1280 million and $ 1370 million, totaling about $ 2.6 billion!

Now let us look at the actual (incldg. “overruns”) costs that the source suggests at more recent exchange rates – Rs. 3000 crore (phase I) + Rs. 4000 crores (including mfg. setup and LSPs) = Rs. 7000 crore. Rs. 7000 crore is about $ 155 million or $ 1.5 billion @ at 2001 exchange rate of around Rs. 46: $ 1.. Perfectly within budget don’t you think? In fact, one could argue that the US Dollar itself has lost some purchasing power since 1989 (inflation), which means that the current $ 1.5 billion is probably markedly less than the $ 1.5 billion budget of 1989-90.

Looked at this way, the LCA is well within budget.

What most media outlets, esp. ones such as TOI and R. Pandit forget (probably deliberately) are these critical details. Thereafter, they go on a rampage doing hit jobs wherever possible. Thats what I call yellow journalism.

What was the inflation during this period? If we look at it from an exchange rate point of view, the INR devalued from about Rs. 17 to $ 1 to about Rs. 45 since 1989 to 2001. IOWs, the real value purchasing power of the Rupee had severely deteriorated in the 90s.

Another issue is that of manufacturing. When the program (phase 2) was initially envisaged was any manufacturing really considered or were they mainly looking at TDs and PVs? Naturally, if mfg. and LSPs were an afterthought, it is quite likely that the cost would increase.

Phases 1 and 2 were overbudget by 2500 crores in 2001!!

Again, how much of it was really a part of the planning process and increase in the number of demands? Does inflation need to be considered? Irrespective, it is still well below similar programs elsewhere, and that is the larger point.

Can you realistically expect a country that has little experience in developing aircraft to suddenly pop up with an aircraft that competes well against an F-16/Mirage 2000/MiG-29 with a peanuts budget and that too in 10-15 years? It is a ridiculous demand and people who pooh pooh the program based on such garbage assumptions need to have a reality check. Look at the Gripen or any other a/c with similar tech, and you’ll see what was achieved is pretty spectacular not only in terms of price, but perhaps even in terms of time.

Lets then move on to the budget for the engine – Kaveri. Here’s what the article says:

Development of the Kaveri engine was projected in 1989 to cost Rs. 382.81 crores (nearly US$82 million), Again, they use an exchange rate of about Rs.46.5; in reality the exchange rate in 1989 was less than Rs. 30: $. 1 iirc, which would give you a projected figure of $. 127 million . In December 2004, it was revealed that the GTRE had spent over Rs. 1,300 crores (around US$295 million) on developing the Kaveri. Furthermore, the Cabinet Committee on Security judged that the Kaveri would not be installed on the LCA before 2012, and revised its estimate for the projected total development cost to Rs. 2,839 crores (more than US$640 million).[4][18] The DRDO, however, currently hopes to have the Kaveri engine ready for use on the Tejas by 2009-10.

So initial budget 383 crore – subsequently revised to 2,839 crore in 2004 – i.e overbudget by 2450 crore.

Admittedly, the Kaveri situation was a bit of a fiasco. But still not by as much as the source above states. Figuring the correct exchange rates – Rs. 17: $ 1 (circa 1990) and Rs. 44: $ 1 (circa 2004).

If I stop now at 2004 without addressing all the subsequent problems that have emerged – the weight, the engines, the radar etc. etc. – we were overbudget then by 5000 crore. And Rahul’s predicatable response is going to be to deride this source because it doesn’t conform to his opinion!

The only reason to deride this source, and it is a good reason, is that it simply does not take into consideration inflation and exchange rates. Either it does so deliberately (which makes you wonder about their integrity) or out of ignorance (which makes you realize it is not really worthwhile). If you go by $ amounts, you will notice the program cost for the LCA is decent, even under budget. Admittedly the Kaveri issue is a mess.

In light of that fact – was the TOI really that much out of line in contemplating a figure of 10000 crore? Its probably much more than that by now – but who’s telling us all the details and who’s counting?

In light of what I point out, the TOI is actually quite incompetent or deliberately dishonorable or both.

Rahul M? He started his response by being sarcastic, then called me a pakistani provocateur, then a troll and most recently a moron. In doing so he’s probably in breach of the rules for this forum and certainly gives you an indication of what BR has become – where he is a moderator. It used to be a forum until Rahul and his appendages turned it into their private cesspool – stifling any debate or differences of opinion by calling people names or preemptorily and capriciously deleting their posts.

As far as Rahul is concerned, I’ll leave it to him to fend for himself; i am sure he can manage. Personally, I thought Rahul was one of the saner heads at BR and appreciated his moderation there. Still differences in opinion are only natural.

USS.