SOURCE: AFI
The Indian Air Force (IAF) has been actively pursuing the acquisition of 114 multi-role fighter aircraft (MRFA) under a tender to bolster its dwindling squadron strength, currently at 31 against a sanctioned 42. The Dassault Rafale, a 4.5-generation fighter already in service with the IAF, is a leading contender for this contract. However, the financial implications of purchasing 110 additional Rafale F4 jets could significantly strain the IAF’s budget, potentially consuming its capital allocation for years.
This article examines the estimated cost of acquiring 110 Rafale jets, compares it to the IAF’s yearly budget, and calculates how long the capital budget might be tied up, drawing on available data and historical spending patterns.
The cost of acquiring Rafale jets varies depending on the configuration, weapons packages, training, spares, and infrastructure requirements. In 2016, India signed a €7.87 billion (approximately $8.7 billion at the time) deal for 36 Rafale jets, equating to about $242 million per jet, including India-specific enhancements, weapons, and support [Web ID: 1]. However, more recent analyses provide updated figures for the Rafale F4 variant, which the IAF is likely to procure under the MRFA tender.
According to a 2025 estimate, the acquisition cost for 110 Rafale F4 jets is approximately $14.3 billion, based on a per-unit cost of $130 million [Web ID: 1]. This figure includes basic spares and training but excludes weapons and additional infrastructure, which could push costs higher. A more comprehensive estimate from the Ministry of Defence (MoD) suggests that opting for the advanced Rafale F4 configuration could drive the total cost to $27 billion for 110 jets, factoring in inflation, technology transfer, and additional equipment [Web ID: 2]. For this analysis, we’ll consider both figures to provide a range:
- Low-End Estimate: $14.3 billion for 110 Rafale F4 jets
- High-End Estimate: $27 billion for 110 Rafale F4 jets .
The IAF’s budget comprises revenue expenditure (salaries, pensions, and operational costs) and capital expenditure (for acquiring new equipment, aircraft, and infrastructure). Historical data provides insight into the IAF’s capital budget, though exact figures for 2025 are unavailable. In 2018, the IAF was allocated ?35,755 crore ($4.88 billion at 2018 exchange rates) for capital expenditure, significantly less than the ?62,049 crore ($8.47 billion) it had requested to cover payments for past purchases like Rafale jets, Apache helicopters, and Chinook helicopters .
More recently, India’s overall defense spending for 2023-24 was ?5.94 trillion ($71.2 billion at 2023 exchange rates), a 13% increase from the previous year . Assuming the IAF receives about 20% of the total defense budget for capital expenditure—a rough estimate based on historical trends—the IAF’s capital budget in 2023-24 would be approximately $14.24 billion. Adjusting for inflation and assuming a modest 5% annual increase, the IAF’s capital budget in 2025 could be around $15.7 billion. However, this is an optimistic estimate, as the IAF has consistently faced budgetary constraints, with capital allocations often falling short of committed payments .
For this analysis, let’s assume the IAF’s 2025 capital budget is $15 billion, acknowledging that a significant portion is already committed to ongoing projects like the Tejas Mk1A, Sukhoi Su-30 upgrades, and infrastructure development.
To calculate how long the IAF’s capital budget would be consumed by the Rafale purchase, we divide the total acquisition cost by the annual capital budget, assuming payments are spread evenly over the delivery period. Deliveries for such a large order typically span 5-10 years, depending on production timelines and negotiations. Given Dassault’s full order book, deliveries for 110 jets could take 6-7 years, as noted in posts on X .
Scenario 1: Low-End Cost Estimate ($14.3 billion)
- Total Cost: $14.3 billion.
- Annual Capital Budget: $15 billion.
- Payment Period: Assuming a 7-year delivery schedule, the annual payment is $14.3 billion ÷ 7 = $2.04 billion per year.
- Percentage of Capital Budget: $2.04 billion ÷ $15 billion = 13.6% of the annual capital budget each year for 7 years.
In this scenario, the Rafale purchase would consume 13.6% of the IAF’s capital budget annually for 7 years, leaving 86.4% for other projects. While manageable, this still limits the IAF’s ability to fund other critical acquisitions, such as the Advanced Medium Combat Aircraft (AMCA) or additional Tejas jets.
Scenario 2: High-End Cost Estimate ($27 billion)
- Total Cost: $27 billion.
- Annual Capital Budget: $15 billion.
- Payment Period: Over 7 years, the annual payment is $27 billion ÷ 7 = $3.86 billion per year.
- Percentage of Capital Budget: $3.86 billion ÷ $15 billion = 25.7% of the annual capital budget each year for 7 years.
Here, the Rafale purchase would consume over a quarter of the IAF’s capital budget annually for 7 years, severely constraining funds for other modernization efforts. If we consider the total cost against the capital budget without spreading payments, $27 billion ÷ $15 billion = 1.8 years. This means the entire capital budget for nearly two years would be consumed if the IAF paid upfront—though in practice, payments are staggered.
The IAF’s capital budget is already stretched, with commitments to existing programs like the 97 Tejas Mk1A jets (?65,000 crore, or $7.8 billion) and Sukhoi Su-30 engine upgrades (?21,000 crore, or $2.5 billion) . Additionally, the IAF must fund the AMCA program, estimated to require $2 billion annually for development, and other projects like missile systems and infrastructure along the LAC . Allocating 13.6% to 25.7% of its capital budget annually to the Rafale purchase would leave little room for these initiatives, potentially delaying indigenous programs critical to India’s self-reliance goals.
Moreover, the high-end $27 billion estimate exceeds the MoD’s initial $20 billion budget for the MRFA tender, forcing tough decisions like phased payments, cost-sharing with Dassault, or reducing the number of jets [Web ID: 2]. The Rafale’s long-term life cycle costs—estimated at $48.71 billion over 40 years for 110 jets—further compound the financial burden, compared to $80.16 billion for the F-35A, which offers fifth-generation capabilities . Critics argue that investing in 4.5-generation jets like the Rafale, when fifth-generation fighters like the F-35 or Su-57 are available, may not be the best use of funds, especially given the IAF’s urgent need for modernization .
While the Rafale enhances the IAF’s capabilities with its advanced avionics, Meteor missiles, and India-specific enhancements, its high cost raises questions about strategic priorities [Web ID: 15]. The IAF could alternatively accelerate indigenous programs like the Tejas Mk1A and AMCA, which offer lower life cycle costs and align with “Make in India” . Similar sentiments, with users noting the Rafale’s expense and suggesting a mix of foreign fifth-generation jets and domestic production to optimize resources .
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