Rafale's India Success Could Help Dassault Sweeten Malaysian Deal

Dassault’s success in selling the Rafale fighter jet to India could lift its chances in Malaysia where it has been shortlisted along with the Eurofighter.

The French aircraft manufacturer could leverage its offsets deal in India along with the spares and support it is to provide the Indian Air Force(IAF) for the lifetime of the aircraft to achieve economies of scale in Malaysia.

What could help Dassault is the excellent relation between India and Malaysia when it comes to defence. India last year signed a bilateral defence cooperation deal with Malaysia which focused on the setting of a Su-30 forum to exchange information on maintenance, technical support and training. It is not unlikely if a similar or a more intensive engagement happens between the Indian and Malaysian Air Forces for the mutual benefit of all three parties.

The Indian contract would give an advantage to Dassault like none other. A French diplomat was quoted as saying in a French publication, Le Maghreb in September last year, "the Indians are downright formidable as negotiators," meaning that the aircraft and the terms of purchase are the only issues that mattered in the negotiations. Unlike in many other defence deals all around the world where bilateral relations and political groups (NATO countries buying only from fellow NATO countries) matter more than the technical merits of the equipment.

“The Malaysians could learn from the Indians in squeezing the best possible terms with Dassault and the latter would be forced to play an easier hand as the prospect of a second sale in Asia is too tempting to let go easily,” a source familiar with the development said.

Dassault had offered a 10 year financial package to Malaysia from a French bank guaranteed by the government of France for procurement of its Rafale fighter jet during the last Langkawi International Maritime and Aerospace (LIMA) exhibition in 2015. This is similar to a package along the lines of what sealed the deal with Egypt might tempt Kuala Lumpur which needs new aircraft to serve as deterrence against Chinese aggressive maneuvers in the South China Sea.

“By the year 2020 we have to make a decision on the [purchase of the] MRCAs. It's an open secret that we are looking at either the [Dassault] Rafale, or the [BAE Systems'] Typhoon from the UK, but we don't have to make the decision now. What we need to do is look at the affordability, and that depends on [the state of] our economy,” Minister of Defence Datuk Seri Hishammuddin Hussein was quoted as saying in the Malay media in October last year.

“The technical side of it...the compatibility of the Rafale or the Typhoon...let the end-users decide. Let the air force decide which model they want. The affordability issue is for the MoF (Ministry of Finance) to decide, and then [there is the issue of] the offset agreement [by the vendor]. What does the industry get from such a major contract?” he said.