It never was refuted, because the government claimed to not be able to provide info's on costs. The SC is now insisting on price info's and we will have to see what comes out of that. So far all we know is, that the flyaway unit cost for the 36 Rafales was 670 crores, while Congress claims around 525 crores during MMRCA.
Soon after the contract was signed, a senior political leader in the National Democratic Alliance held an off-the-record briefing in New Delhi for several journalists.
It was divulged that the contracted price averaged out to €91.7 million (Rs 686 crore/Rs 6.86 billion) per Rafale. This included the purchase of 28 single-seat fighters, for €91.07 million (Rs 681 crore/Rs 6.81 billion) each; and eight twin-seat fighters, each priced at €94 million (Rs 703 crore/Rs 7.03 billion).
That puts the cost of each of the 36 'bare bones' fighters at €91.7 million (Rs 686 crore) -- totalling up to €3.3 billion.
Besides this, the IAF paid €1.7 billion for 'India-specific enhancements', €700 million for weaponry such as Meteor and SCALP missiles, €1.8 billion for upgrade of 2 Indian bases, and €350 million for 'performance-based logistics', to ensure that at least 75 per cent of the Rafale fleet remains operationally available.
All this added up to another €4.5 billion, taking the cost of the contract up to €7.85 billion.
Cost of 126 aircraft deal
The only authoritative indicator of Rafale's bid in the 126-fighter MMRCA contest has come from Manohar Parrikar, while he was the defence minister. Talking to Doordarshan on April 13, 2015, he quoted a figure:
The Rafale is quite expensive. As you go into the upper end, the cost goes up. When you talk of 126 aircraft, it becomes a purchase of about Rs 90,000 crore (Rs 900 billion).
While this figure would include elements of technology transfer and manufacturing infrastructure creation, Rs 90,000 crore for 126 Rafales translates into an indicative cost of Rs 714 crore (Rs 7.14 billion) per fighter.
But this price is certainly that of the 18 aircraft that Dassault was supposed to produce in France. Indeed, we know from confidences to insider that HAL was unable to calculate the number of hours that would be required to build the Rafale in India and that consequently they increased the necessary working hours so that the price in India would be the same as the price in France.
French pricing for Rafale
The French senate periodically issues authoritative figures for Rafale pricing.
soit un coût unitaire (hors coût de développement) de 73 millions d'euros pour le Rafale B (pour 110 avions), 68 millions pour le Rafale C (pour 118 avions) et 78 millions pour le Rafale M (pour 58 avions).
Translation
Then a unit cost of 73 million (excluding development costs) for the Rafale B (for 110 aircraft), 68 million for the Rafale C (for 118 aircraft) and 78 million for the Rafale M (for 58 aircraft).
Projet de loi de finances pour 2015 : Défense : équipement des forces
The figures put the acquisition cost per Rafale at €73 million (Rs 559 crore) for the Rafale B (twin-seat version); €68 million (Rs 521 crore) for the Rafale C (single-seat version); and €78 million (Rs 597 crore) for the Rafale M (aircraft carrier version).
These prices are significantly lower than what the IAF is paying for the Rafale.
The reason is that French industry has contributed 25% to the development of the Rafale and that this contribution must be included in the price of the exported Rafale in order to ensure the economic balance of the Rafale's production.
An analysis of official French senate figures indicates that the €45.9 billion cost of the Rafale programme consisted of two components: €25 billion for design, development and testing costs, and €20.85 billion for building 286 Rafales for the French air force and navy. It amounts to a developmental cost of €87.5 million (Rs 670 crore/Rs 6.7 billion) per Rafale -- more than its manufacturing cost.
Because these figures are an estimate of the cost for the French state, it is necessary to add the part that industry has paid, i.e. € 87.5/3 = € 29 Million which is 25% of the total developmental cost 116.5.
But there is no reason why French industry should pay these 29 million euros for the Indian Rafale, which justifies the increase when moving from the French cost to the Indian price.
The Rafale C price for export should be € 68 + 29 = € 97 million and was offert at 91.07 which is a 6.5 % reduction