[...] If the MoD committee that is currently benchmarking the MMRCA concludes that Rs 42,000 crore is a decade-old estimation that should be increased due to inflation by 50%, the benchmark for that contract will be pegged at Rs 63,000 crore. When the Eurofighter’s and Dassault’s bids are opened, if both turn out to be notably higher, the MoD will scrap the MMRCA tender. On the other hand, if the lower bid is less than or approximates the benchmark, that bid will be accepted.
Dassault’s quote for 126 MMRCAs could be as much as $20 billion, twice the initially estimated figure.
Aerospace industry estimations put the cost of the Eurofighter Typhoon about 25% higher than the Rafale. That would put the cost of 126 Typhoons at about $25 billion.
The Indian price bids, however, involve a different calculation. The South Block tender demands price quotes on a “life-cycle” basis, a complex and detailed format that factors in the cost of 126 fighters over their estimated service life of 40 years. Bids are broken down into seven heads --- M-1 to M-7 --- and include the fly-away cost of the fighter; cost of spare parts; operating costs; cost of inspections and maintenance; transfer of technology; and training expenses. The final figure, M-8, is the overall cost, reached by adding up M-1 to M-7.
Executives from Rafale and Eurofighter agree that Rs 42,000 crore is an outdated price and that the survival of the MMRCA contract now depends upon how much higher the MoD is willing to raise the benchmark.[...]
Read the full analyzis on Broadsword