France to reduce Rafale order, programme depends upon Indian defense deal

Screenshot_1France government has decided to cut back its orders for Rafale fighter jets from the current 11 per year to just 26 over the next six years. The move is likely to de-stabilize the entire Rafale programme unless Dassault Aviation is able to ink the India contract for the sale of 126 fighters for over €10 billion.

How the French decision to reduce the order can impact the Rafael programme?

France, in its new Defence Review, known in French as the Draft Military Programme (LPM),for French forces from 2014 to 2019, has announced to make savings particularly  through a Reduction in Force (RIF) exercise, through the sale of immovable assets belonging to the country’s armed services and by limiting its orders for the Rafale. Earlier, Dassault Aviation, who is running the Rafael programme, had obtained the purchase by the military of 11 jets a year from the French government. But now the government has decided to cut back the order to 26 fighters in next six years creating a shortfall of €4 billion for Dassault. Now, the position is such that Dassault Aviation should count only on exports to support the production of the multirole combat aircraft. Dassault Aviation will have to sell some 40 planes to France’s commercial partners if it is to juggle production costs, the army’s requirements and the minimum number of aircraft it must build to maintain the commercial validity of the Rafale programme.

However, the French government is still optimistic that the planes would be sold abroad. India is yet to sign the order for the purchase of 126 fighters for over €10 billion and beyond October 2013, with elections looming large on the horizon, it is difficult to think of a quick signature on the biggest defence tender ever floated by India.



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