Partners Today, Competitors Tomorrow: Inside the Rafale Deal

Happy Marriage or Mexican Standoff

India is set to approve the purchase of 114 Rafales, which would be one of France's most important weapons deals in history. For defense manufacturers worldwide, India has always been seen as the largest “whale” in South Asia, and to the French that is no exception. After all, a sale of this magnitude represents a win not only for Dassault Aviation, the manufacturer of the Dassault Rafale, but for France and perhaps most importantly for her aviator-wearing president, Emmanuel Macron. Not only does it mean jobs, but also prestige in a time of economic and geopolitical uncertainty. Some can even argue that it represents, to an extent, a dismissive wave toward the current American administration-a much-needed win.

On the other side, this deal perhaps represents India’s best chance at modernizing its air force in one fell swoop and gaining access to the technologies and know-how needed to revitalize its laggard aviation industry. Just last year, clashes turned violent over the Pakistan–India border, clashes in which Pakistan’s J-10s played a major role. The Rafale, although a fourth-generation aircraft, is seen as a vital “bridge” and accelerator toward India’s fifth-generation programs and a strong pillar to support its Tejas program. However, behind closed doors there are undeniable pressures; making the sale more akin to two parties sitting on opposing couches, entertaining polite conversation while aiming revolvers at one another. As with all sales deals, each party wants to ensure that it leaves with as much as possible while risking as little as possible.

As anyone who has studied the cynical world of geopolitics might tell you, for nations there are no “friendships,” only aligned interests. India has been truthful about its intentions to become a major player in the defense industry and will use this opportunity to build the pillars necessary to do so. Some in France have speculated that giving India too much access to Rafale production know-how will essentially result in France creating a new world-class competitor in the long run.

While there might be a great deal of pomp and circumstance over Rafale fuselages being built in India, the truth is that it’s the subsystems that make the combat platform truly special—from its engine and electronic protection systems to its radar—and therein lie the keys to the kingdom, which India wants a copy of.

Too Big to Cancel, Too Flawed to Compete

In the fighter jet community, few stories invoke as much sadness and mockery as the HAL Tejas program, yet India perseveres with it as a point of national pride. Even among other national fighter programs wrought with ballooning budgets and indefinite delays, the Tejas was taken to lengths where other nations would have probably given up and started a new project altogether. Starting in the 1980s, the Tejas was meant to replace the Soviet MiG-21, an aircraft that most air forces retired from active combat by the 2000s. Despite its long development time, the aircraft is seen in the fighter community as a rather weak option, even by limited-budget standards.

The weakness stems from a number of technical limitations the platform has in comparison to other fourth-generation fighters such as the Rafale or the Gripen, including its limited payload and combat radius. Its lengthy development time also meant that by its debut and acceptance, some of its systems were already dated. An equivalent analogy would be spending the last two decades developing a smartphone only to release it today with less than a gigabyte of internal storage—sure, it is functional for its primary purpose, but there are better options on the market.

The Tejas’ inability to compete with other fourth-generation aircraft is substantiated by the fact that it has yet to win a foreign tender, even in nations with restrictive budgets. To be fair, this failure stems from a combination of weak payment terms, India’s limited diplomatic reach, and - following the 2025 Dubai Airshow where Wing Commander Namansh Syal sadly lost his life - a damaging reputation for being an unreliable platform. Such perceptions have been associated with much of India’s defense technology.

Finally, it must also be noted that when a nation buys a new fighter, it needs to invest in creating complex supply chains to ensure they remain operational. Even nations that produce fighters struggle to keep their aircraft combat-ready. It is an open secret that just because a nation has a fleet of fighter aircraft does not mean that they can all fly; and just because an aircraft can fly does not mean it can fight; and just because it can fight does not mean it can fight to its fullest potential. The main reason this happens is inefficient supply chains. In 2024, for example, according to an Inspector General report of the U.S. Department of Defense, the United States Air Force’s Lockheed Martin F-35 Lightning II sustainment efforts resulted in only 67.1% of its deployed fleet being fully mission capable (i.e., able to perform all designated missions out of the hangar); the goal was 80%. If the U.S. struggles to maintain its own premier fighter fleet at full mission capability despite its defense infrastructure and resources, India’s promise to do so for international customers would, at the very least, raise questions. This rings especially true at a time when more nations are seeing their defense material play active roles in protecting borders and projecting strength amid an increasingly unstable global order.

While there are clearly several reasons why the platform struggles to compete, even within its indigenous market, the root cause is largely systemic and institutional. Influenced by cultural aversion to risky R&D investment, corruption, bureaucratic inertia, and sometimes unstable governance, the Indian aviation ecosystem was, for lack of a better word, built incorrectly—or at the very least not to the specifications demanded by the modern fighter market. Still, the Tejas program has value as a benchmark of where the industry currently stands. It could be argued that due to India’s unwillingness to abandon the program and its low adoption rate—even within the IAF, which had fewer than 40 in its inventory in 2025—it is morphing into more of a technology demonstrator than a frontline fighter program. In other words, it highlights the stage India has reached in its aviation industry. Unfortunately, the results fall short of New Delhi’s expectations, and so it looks further afield. Specifically, to France.

A Defense Company’s (Almost) Promised Land

India’s troubled relationships with its neighbors, namely Pakistan and China, combined with its mountainous northern terrain and sheer size, mean that it needs a capable air force. It must demonstrate strength not only against Pakistan, which operates fourth-generation fighters, but also against China’s future fifth- and possibly sixth-generation aircraft. Simply put, this is a task beyond India’s current indigenous capabilities.

For a time, Russia was the go-to partner for most of India’s defense material in what was perceived as a win-win alignment of priorities. Russia gained access to what became its largest export defense market and created a counterweight to Chinese influence in the region; India gained the technology needed to deter China and Pakistan without committing too strongly to either the West or the East. For numerous well-known and lesser-known reasons, ranging from geopolitical shifts to technological concerns, Russia lost favor as a guarantor of Indian air power. This loss of favor was capitalized upon by Western companies such as Lockheed Martin, Boeing, Saab, Airbus, and Dassault, which began aggressively promoting their platforms.

While suspicion regarding India’s geopolitical stance will always remain a factor, the primary operational friction point is its “Make in India” policy. Although India may not have the highest per capita GDP, it has a large economy overall. This translates into significant defense spending power. India leverages this reality in negotiations, ensuring that foreign purchases generate domestic jobs and include technology transfers that advance its long-term ambition of self-sufficiency. Despite its complicated security environment, India’s nuclear deterrent reduces the pressure to compromise on its industrial policy. At the same time, it recognizes the need for a capable conventional military force to serve as a buffer between diplomacy and outright nuclear escalation.

It comes as no surprise that no nation feels entirely comfortable sharing the secrets behind its technological edge, even among allies. This dynamic was illustrated when a British F-35 made an emergency landing in India due to weather, prompting concern among partner nations about safeguarding sensitive technology. Ironically, the F-35 was later offered to India-such are the shifting winds of arms diplomacy. India has made its ambitions in the defense technology sector clear and is actively pursuing its own high-tech military industry. Like China, it hopes that technology transfers will allow it to bypass some of the costs and headaches associated with independent research and development, thereby accelerating the rise of domestic competitors.

What if, however, a company had so many fighter orders that its indigenous manufacturing capacity could not keep pace, resulting in a substantial backlog of aircraft that may no longer be produced by the mid-2030s? Enter Dassault.

Suffering from Success (ft. Éric Trappier)

While fifth- and sixth-generation fighters capture headlines, fourth-generation aircraft are expected to remain the backbone of many air forces until at least 2050. Although the F-35 is impressive by most measures, maintaining a full fleet is a Herculean task because of its complex maintenance requirements. Even if some estimates suggest it may be cheaper to operate per hour than a Eurofighter, the F-35 demands infrastructure, precision, and responsiveness that only a limited number of nations can sustain. Software updates, for example, are critical; without them, the aircraft’s capabilities degrade. Combined with procurement friction from Washington, this explains why fourth-generation aircraft such as the Rafale remain highly attractive. However, there is a fly in the ointment: at current production rates, it could take over a decade to clear the backlog.

French industry cannot produce the aircraft quickly enough despite significant effort. Ironically, the same political incentives that keep the program alive-job distribution across regions—also slow production. Like most fighter programs, Rafale manufacturing is geographically dispersed to maximize employment benefits. This means Dassault can only produce aircraft as quickly as its slowest supplier of critical systems. Those suppliers, in turn, depend on their own subcontractors. Reports suggest that radar production by Thales can take around two years, with much of the work outsourced to multiple suppliers. Engines face similar bottlenecks due to specialized materials and components. In 2025, CEO Éric Trappier stated that production averaged no more than two jets per month, implying that clearing the backlog would take more than a decade.

Why not simply scale up production? At a strategic level, suppliers consider expansion risky. Establishing new manufacturing lines requires significant capital investment. In sectors such as chips and wiring, alternative commercial markets may be more stable or profitable. Few firms are willing to stake major investments on defense contracts that fluctuate every few years. While Dassault and the French government can offer incentives, they cannot compel private firms in a free-market system to expand capacity.

Indian manufacturers, however, see opportunity. With a somewhat more centralized economic structure, New Delhi possesses additional levers to encourage domestic industrial participation. India recognizes France’s urgent need to increase output and is using this as leverage to shift more production to its own soil. In doing so, France could alleviate bottlenecks and accept new orders, while India acquires valuable industrial expertise.

Always Sign a Prenup

It is difficult to determine who needs whom more, but the main point of friction is clear. Reports vary widely on what percentage of the aircraft will be manufactured in India—figures range from 30% to 80%—and it remains unclear whether these percentages refer to the entire aircraft or just the airframe. While manufacturing an airframe is no small achievement, the true “secret sauce” of a fighter lies in its critical subsystems: radar, electronic warfare suites, engines, and system integration.

Dassault’s key suppliers, Safran and Thales, have shown hesitation about granting Indian firms deeper access to their supply chains. While concessions such as engine maintenance, repair, and overhaul facilities are under discussion, repairing a system does not equate to mastering its design and production.

French concerns are understandable. Many globally competitive technology firms began by learning within established industry leaders before emerging as rivals. On the other hand, few nations can offer a manufacturing ecosystem as large and ambitious as India’s. The country has spent decades attempting to develop its own critical subsystems, building a skilled workforce in the process. Its relatively unaligned diplomatic posture also makes it a flexible partner.

If structured carefully, the deal could allow both sides to leave the negotiating table satisfied—and potentially establish a new model for defense industrial cooperation.

Vindication of Charles De Gaulle and Jawaharlal Nehru

Few strategic partnerships have mattered as much as this one for France. Not because of the terms of the document but mainly because of the geopolitical context around it.  De Gaulle often warned France that although it's always beneficial to have allies, France should be careful otherwise it risks its strategic autonomy. While contemporary listeners may have taken this as overhyped, lately the belligerency coming out of Washington is leading to several allies reevaluating their relations and defense overreliance on American technology. Hence the recent prevalence of memes in certain online spaces, showing France’s wartime leader as all manner of laser-eyed or creepily grinning faces.

Similarly, India during the Cold War took an even more independent stance with the Non-Aligned Movement. While sustaining close ties to Moscow at the time, the fall of the Soviet Union worsened its economic challenges. With its nimble diplomatic policy and privatization, it was able to pivot and in the late 90s the economy started to show signs of recovery and growth. These shared experiences and goals of autonomy meant that both nations could buy and sell indigenously developed military technologies without much interference from Washington. France has been able to out compete the US for some time in India with Mirages and Scorpène submarines. Furthermore, it is important to note that the transfer of technology is showing signs that it may start flowing in both directions, especially after India’s drone and loitering munitions performance in Operation Sindoor.

The Rafale deal therefore offers options for two nations that are currently trying to claw back some of their vaunted Cold War-era autonomy. Not everyone might leave the negotiating table happy, but if agreed, it will serve to further reinforce the partnership in a time when stability is desperately needed. Even if this leads to India becoming a more formidable competitor on the fighter market, France may still benefit as a supplier of critical subsystems or guarantor of the jet's quality. India becoming better at creating fighters seems inevitable, and although not ideal for France it makes more sense to profit from India’s rise instead of simply ignoring it.