In industrial terms, an India FAL for Rafale makes sense for both France and India. DA gets to augment its production capacity while India creates jobs/industrial ecosystem across multiple locations like Nagpur, Jewar, Hyderabad, etc.
Systems level localization will happen over time as with the M2000. For example, we might be able to add a 2nd mission computer for simplifying weapons integration. But fcs, core avionics and sensors will remain off limits, imo.
When it comes to future upgrades, the IAF has shown a clear preference for the OEM, even if there were cheaper alternatives available from other vendors.
Why else would they choose DAs M2000 upgrade package costing over $2b instead of IAI? There is also the risk of losing OEM warranties and certification.
Let me narrate an incident to you from my working experience to highlight why this entire charade of ToT , MII is a brain dead move without know why & even then there's no way you can absorb the experience for you see & you remember , you hear & you forget , you do & you understand. First principles.
Back in the day our rival came out with a Scroll Chiller Package which had the ability to produce hot water a natural by product of the refrigeration cycle , which required a few modifications to the Chiller Package.
This was more a marketing gimmick than anything as I'd explain shortly but this became a best seller among HVAC Consultants who started recommending it to budget hotels , the pharma industry etc.
The downside was production of hot water affected the output in terms of tonnage of the Chiller Package Plant meaning a 40 TR Water Cooled Chiller Package System instead of giving you a tonnage of 37-38 Tons of Air Conditioning gave you ~ 35 Tons or less.
I got into a huge debate with a Chief Engineer of a prominent German Pharma Co in Nashik who was pretty sold on the idea of a Chiller Package Plant producing hot water & before whom even verifiable calculations on how this affected the performance of the CHP in terms of tonnage output & life of the said CHP plant fell on deaf years.
Finally as a last ditch measure I asked if he was looking for a water heater or a Chilled Water Plant ? The same analogy works here. Are we looking for a FA to defend ourselves or are we creating an assembly set up not even an mfg ecosystem by assembling the Rafales here ?
Mind you , the notion of locating a strategic unit here so we have some leverage on the mfg set up doesn't quite work if vital tech & sub systems are proprietary data which will never be disclosed & held by the OEM in their home country like in this case.
IMO we're better off with getting tech offsets . That monster budget of ~ 50 billion USD will come down substantially for eventually that's what it'd cost , likely more in the vicinity of ~ 60-70 billion USD , if one were to consider LCC , upgrades , consumables , OPEX etc over the entire life cycle of the Rafales in service with the IAF.
However if Dassault Aviation is actually looking to diversify it's assembly / mfg set plus set up an MRO which is what it seems like then we should negotiate accordingly since DA is actually making a virtue out of necessity here.
Then again we don't hold much cards here as DA would've been much more amenable to such an arrangement circa 2014-18 . Not now , when their order book is overflowing , MoD can't stall negotiations as we're already running against time & don't have much latitude for negotiations etc.
