Any dispute in the execution of the inter-governmental agreement (IGA) with France for Rafale deal will be settled through the bilateral high level group: Defence minister. Sitharaman, on her part, said provisions in the IGA and the letter of comfort provide “adequate safeguards to the government of India”

NEW DELHI: Defence minister Nirmala Sitharaman on Monday said any dispute in the execution of the inter-governmental agreement (IGA) with France for the Rs 59,000 crore deal for 36 Rafale fighter jets will “be settled through the bilateral high level group” established by the two governments.

“Any dispute not settled by this group shall be settled by arbitration in accordance with UNCITRAL (United Nations Commission on International Trade Laws) arbitration rules,” she added, in a written reply to a question in Rajya Sabha on the lack of a sovereign guarantee in the mega deal.

As earlier reported by TOI, the law ministry had initially red-flagged France’s refusal to provide direct sovereign guarantee for execution of the Rafale contract but the government went ahead to ink it in September 2016 after the French government provided a “letter of comfort” signed by its Prime Minister. The sovereign guarantee provided by a country is legally on a much stronger footing, as also enforceable, than a comfort letter if it comes to a future breach in contract and arbitration.

Sitharaman, on her part, said provisions in the IGA and the letter of comfort provide “adequate safeguards to the government of India”. Incidentally, India has already paid Rs 34,000 crore to France for the 36 Rafales, which are slated for delivery between November 2019 and April 2022, with another instalment of Rs 13,000 crore due later this year, as was first reported by TOI.

Responding to other questions on the Rafale deal, Sitharaman said the 36-jet procurement was signed “with better price, better maintenance terms and better delivery schedule” in comparison to the 126-jet MMRCA (medium multi-role combat aircraft) project, which could not be finalised by the previous UPA regime.

“The unit cost of the basic Rafale aircraft in the 36-jet procurement was about 9% cheaper than the price arrived at in the unconcluded MMRCA process, in which Dassault Aviation was L1 (lowest bidder) in a global open tender,” she added.

The Congress has alleged the “non-transparent” Rafale deal was vastly overpriced, violated defence procurement procedures, included no transfer of technology (ToT), and was intended to benefit the Anil Ambani-promoted Reliance Defence as the “offsets partner” of the French fighter manufacturer Dassault Aviation at the cost of defence PSU Hindustan Aeronautics Ltd.

Sitharaman, on her part, said the basic aircraft price had already been disclosed to Parliament. “The government has also shared all pricing details with CAG. Disclosure of comprehensive pricing details in the public domain, which overlap with sensitive details of kind of systems, equipment, weaponry etc, will not be in the interest of national security,” she said.

“Further, pricing details are covered by Article 10 of the IGA, which provides that the protection of the classified information and the material exchanged under the IGA shall be governed by the provisions of the security agreement signed by the two governments on January 25, 2008. The supply protocol for 36 Rafales has provision for commercial confidentiality,” she added.