In April 2011, after a major technical evaluation by the IAF and due diligence by the Ministry of Defence, the Typhoon and the Rafale were shortlisted

by Ramananda Sengupta

As a controversy rages over the Rafale deal, with Opposition accusing the government of lying about the “scam” and former Union Ministers Arun Shourie and Yashwant Sinha claiming “it’s bigger than Bofors” and a case of “monumental criminal misconduct”, Ramananda Sengupta takes a look at what the deal is all about and why the allegations.

Need For Fighter Fleet

In August 2007, the Manmohan Singh-led UPA government issues tenders for 126 Medium Multi-Role Combat Aircraft (MMRCA), in order to replenish India’s rapidly ageing fighter fleet. While 18 aircraft were to be purchased in fully built-up condition, the rest would be manufactured in India by Hindustan Aeronautics Limited (HAL) under transfer of technology.

Contenders

Boeing’s F/A-18E/F Super Hornet, Dassault Aviation’s Rafale, Eurofighter Typhoon (German-Italian-Spanish-UK project), Lockheed Martin’s F-16 Fighting Falcon, Mikoyan MiG-35 Fulcrum & Sweden’s Saab JAS 39 Gripen.

Shortlist and Selection

In April 2011, after a major technical evaluation by the IAF and due diligence by the Ministry of Defence, the Typhoon and the Rafale were shortlisted. In January 2012, Dassault Rafale was selected, owing to its lower life-cycle cost, among other things.

Hiccups

In 2014, negotiations hit a wall over escalating costs —from $12 billion to almost $30 billion — and Dassault’s refusal to stand guarantee for HAL’s ability to deliver the aircraft on time. There were also differences over the scope of technology transfer.

NDA Govt’s Flip-Flop

In April 2015, PM Modi announced, “I have asked President (Hollande) to supply 36 ready-to-fly Rafale jets to India.” Two days later, then defence minister Parrikar said the MMRCA negotiations were dead since years of negotiations for local assembly had been in vain. The final number of planes would be decided through government-to-government negotiations. “There were a lot of problems. That’s why we have adopted G2G procedure,” he said.

The Criticism

The Opposition and strategic experts attacked this move and argued it went totally against Modi’s Make in India campaign and that adding yet another weapons platform to the IAF inventory without thinking it through would just compound the logistical issues faced by the Force.

Rebuttals by BJP

■ There was no deal signed by the UPA, so the comparison against an estimated cost was meaningless.

■ Two, the 36 aircraft were not only upgrades of the version that was initially offered, they would have 13 India-Specific Enhancement capabilities which no other Rafale sold to any other nation would have.

■ Also, the secrecy clause, which was backed by the French in a quick statement, was to ensure that competitors could not extrapolate the cost of the add-ons.

■ The vendor had the right to choose its partner, and Reliance was not the only company to benefit from the clause. Also, the govt had negotiated a 50% offset clause, far more than the mandated 30 per cent. Dassault had already set up a factory at Mihan, Nagpur, which would initially produce components, but eventually the entire aircraft, if more were ordered, not just by India, but other buyers. This also fits into the Make in India program.

Charges

■ Congress has been pressing for price details of the deal but the NDA govt has refused to divulge them citing confidentiality provisions of a 2008 Indo-France pact. It has alleged that the Centre is hiding behind the secrecy clause because divulging the details would expose the massive corruption in the deal. Congress president Rahul Gandhi has accused Modi of personally benefiting from the deal.

■ At a Press conference in Delhi on August 8, lawyer-activist Prashant Bhushan and former Union ministers (in the Cabinet of Atal Bihari Vajpayee) Arun Shourie and Yashwant Sinha, listed the following charges:

  • The new deal was a gross violation of mandatory procedure.
  • They cited Dassault financial statements and a M oD release to claim that it was €8.139 billion or I60,000 crore, i.e., I1,660 crores per plane, which was I1,000 crore more per plane than the price cited by the MoS, Defence, in Parliament on November 18, 2016.
  • Cost of 36 Rafales being brought in flyaway condition: They cited Dassault financial statements and a MoD release to claim that it was €8.139 billion or I60,000 crore, i.e., I1,660 crores per plane, which was I1,000 crore more per plane than the price cited by the MoS, Defence, in Parliament on November 18, 2016. The MoS had said: “Inter-Governmental Agreement with the Government of French Republic has been signed on 23.09.2016 for purchase of 36 Rafale aircraft along with requisite equipment, services and weapons. Cost of each Rafale aircraft is approximately I670 crore and all the aircraft will be delivered by April 2022.”
  • The government’s claim that the final cost was protected under a secrecy cost which was part of the deal was a lie, and the nation had the right to know how its money was being spent.

Favouritism

The offset clause, which mandates that at least 30 per cent of the cost of any deal has to be reinvested in the host country by the seller, was violated because Dassault had agreed to partner with Reliance Industries, which had no defence production expertise and had set up defence companies barely a few months before Modi announced the purchase of 36 planes.