Dassault Secures Multi-Billion Dollar Contract To Build Jets For India Air Force

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By the end of 2015, the Indian aerospace and defense market is expected to be valued at nearly $45 billion. (Image: Stock.xchng)
By the end of 2015, the Indian aerospace and defense market is expected to be valued at nearly $45 billion. (Image: Stock.xchng)

BUSINESS

  • Dassault wins a near $11 billion deal to build 126 India aircraft vehicles
  • Lower pricing and India’s familiarity with French warplanes said to be contributing factors in France’s win
  • Britain disappointed by India’s offer to Dassault, asks them to reconsider

In what is being dubbed the biggest fighter deal in the world since the early 1990s, French air craft manufacturer Dassault has won a contract to build 126 Medium Multi-Role Combat Aircraft (MMRCA) Rafale fighter jets for the Indian air force, totaling nearly $11 billion.

However, a defense ministry source indicated that with the necessary training and maintenance the entire deal could reach at least $15 billion. In a statement from an Indian government source: "France's Dassault has emerged as the lowest bidder, and further commercial negotiations will take place with the company before signing a formal deal.”

Besides the Dassault Rafale being preferred over the Eurofighter Typhoon aircraft due to lower costs, government sources indicated that the Indian air force’s familiarity with French warplanes such as the Mirage also played a key role.

Planes that were previously dropped from consideration include those from Boeing Co. and Lockheed Martin of the United States as well as others from Russian and Swedish makers.

British Prime Minister David Cameron publicly announced his disdain for India’s selection of Dassault. Mr. Cameron as well as MPs and members of the British media accused New Delhi of being ungrateful, arguing that Britain gave millions of pounds in aid to India.

He further assured MPs that he would diligently try to persuade India to reconsider its offer to France’s aviation company, insisting that a contract to Dassault had not yet been granted.

Upon the announcement of the recent contract with India, Dassault’s stock soared almost 21% earlier this week.

Dassault Previously Struggled to Sell Rafale

This recent deal with India bodes well for Dassault, which has struggled to find a foreign buyer for the multi-role Rafale due to pricing, despite being touted as one of the most effective fighters in the world.

In fact, late last year Dassault lost out to Saab in a deal with the Swiss government, who was looking to purchase 22 fighter jets to replace its ageing Northrop F-5E/F Tiger fighters, which were purchased back in 1976 and 1981.

Key Statistics - Aerospace & Defense in India (source: MarketLine)

  • Between 2006 and 2010, the Indian aerospace & defense market reported a compound annual growth rate (CAGR) of more than 16%, equating to $24 billion in revenue by 2010.
  • By the end of 2015, the Indian aerospace and defense market is expected to be valued at nearly $45 billion with the market being forecast to decelerate with just over a 13% CAGR between 2010 and 2015.
  • In 2010, over 73% of the Indian aerospace and defense market was attributed to the defense segment, with total revenue of over $17 billion.

By Laurie Juliano-Bachara for
Laurie Juliano-Bachara is a Chicago-based writer who covers the latest topics in professional services, entertainment and business news.

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