The Indian Air Force (IAF) has proposed the acquisition of approximately 114 additional Rafale fighters, sufficient to equip roughly six operational squadrons. This substantial procurement represents a major capital commitment and provides an opportune moment for addressing defence manufacturing capabilities.

India's Defence Ministry is pursuing an ambitious indigenisation strategy for the proposed 114-aircraft Rafale procurement, targeting up to 50 percent local content rather than accepting token 10–15 percent localisation. Dassault Aviation however, has proposed up to 60 percent indigenous content, with plans for final assembly lines in India, along with local production of major structural components.

This initiative, running parallel to indigenous engine development, represents a significant commitment to aerospace self-reliance and strategic autonomy. Negotiations with Dassault Aviation will prove critical in determining the feasibility and scope of this transformative defence manufacturing program.

MoD has subjected the initial "Statement of Case" to rigorous examination, identifying significant deficiencies in the articulation of localisation potential. Officials have deemed the proposal incomplete, signalling that the Ministry requires greater clarity on the realistic scope for domestic industrial participation before granting approval to proceed.

Rejection of Token Localisation

MoD has explicitly rejected proposals centred on token localisation levels, dismissing the notion of merely 10–15 percent local content as fundamentally inconsistent with the government's broader Atmanirbharta Bharat (Self-Reliant India) initiative.

This categorical rejection signals a decisive shift in India's defence procurement philosophy, moving away from passive acceptance of imported systems and towards substantive domestic participation in critical defence manufacturing. Officials have signalled that marginal localisation efforts would represent insufficient commitment to India's self-reliance objectives and strategic autonomy goals.

Ambitious Indigenisation Target

This ambitious objective encompasses multiple manufacturing dimensions, including local assembly operations, manufacturing of components and subsystems, and integration of Indian-developed avionics and sensor systems. This multifaceted approach reflects a comprehensive understanding of defence manufacturing, moving beyond simple assembly operations to encompass full system integration and advanced technology incorporation.

The M88 engine manufacturing and MRO facility is being set up in Hyderabad, expected to serve both IAF and Indian Navy Rafale fleets. India aims to be the largest global operator of Rafale outside France with this deal. Discussions also link to broader aerospace ambitions involving joint engine development for the AMCA fighter.

Proposed Indigenisation Mechanisms

Local assembly operations would establish India-based production facilities capable of conducting final assembly of complete Rafale airframes. Component manufacturing would distribute production across Indian defence enterprises, covering structural elements, avionic harnesses, and mechanical systems. 

Integration of indigenous avionics and sensor systems represents the most technologically sophisticated element, leveraging India's growing capabilities in electronic warfare systems, fire control radars, and multi-sensor suites developed by DRDO and private defence contractors.

Negotiation Imperatives

Dassault Aviation, as the original equipment manufacturer, must agree to substantially modify its traditional defence export model to accommodate unprecedented levels of Indian participation. These negotiations will require careful balancing between operational requirements—ensuring that indigenisation does not compromise aircraft capability or performance standards—and domestic production objectives. The complexity of integrating Indian-manufactured components and systems whilst maintaining stringent defence specifications accompanied with quality will necessitate comprehensive technical and contractual frameworks.

Strategic Considerations

Achieving 50 percent localisation requires sophisticated technical knowledge transfer, detailed intellectual property sharing, and establishment of Indian manufacturing supply chains capable of meeting strict aerospace quality standards. Dassault Aviation will need to certify Indian manufacturing partners, provide technical documentation, and conduct training programs to ensure production standards meet exacting defence requirements. These arrangements will likely require modifications to established industrial security protocols and export control frameworks.

Convergence With Engine Development

This indigenisation initiative gains particular significance when considered alongside parallel efforts in indigenous engine development. The combination of domestic aero-engine programs and substantial Rafale localisation would establish comprehensive Indian aerospace capabilities spanning propulsion systems, airframe assembly, and systems integration. This convergence creates potential for establishing an integrated aerospace manufacturing ecosystem capable of supporting multiple future defence aviation programs.

IDN (With Agency Inputs)