Rafale : An unabridged and delineated spiel.
Lets discuss the most burning issue of Indian politics ie Rafale deal. As the neighboring countries are getting equipped with latest equipment and weapons obviously Indian air force should not lag behind and thus has the strong need of Rafale fighting airplanes. I hope you will read and understand the complete issue meticulously.
Now the question is to understand whether or not the deal has soaked its hands in corruption or are there any financial irregularities and favoritism. I will be dividing the entire blog in several timelines so that we can understand it much better.
Let me take you back in 2007 with UPA-I government headed by an accidental prime minister and currently on bail the then finance minster Mr. P Chidambaram. It was during this time Indian Air force sent a proposal to government to buy Medium multi-role combat aircraft (MMRCA). Looking at this proposal the then government floated the tenders for 126 MMRCA.
After some months in August 2007 Dassualt (Dassault Aviation is an international French aircraft manufacturer of military jets) placed its bid for Rafale and other bidders for the same tender were were Russia’s MIG-35, the Swedish Saab JAS-39 Gripen, American Lockheed Martin’s F-16 etc.
Now after a month in September 2007 some unconfirmed reports were published by media that Mukesh Ambani’s Reliance group has made a new company by name “Reliance Aerospace Technologies limited”. The reports mentioned that RATL and Dassault had agreed for a joint venture for any Indo-French deal happening in future. Since these reports were unconfirmed reports so lets hold this para here and if needed we will come back here.
There were no talks for the tenders, bid and deals for the next 3–4 years may because 2009 general elections are coming near and who don’t want a second term in office. But should this happen on the cost of national security. Do we really need 1300 odd days for selecting a best bid for tender ? Not to forget several terrorist attacks that happened in 2008 from Jaipur to Mumbai.
Its 2011 with UPA -II government headed again by an accidental prime minster and most of the government policy decisions coming from 1 Akbar road rather than from PMO. It was only in May 2011 that the Indian air Force and the government shortlists Rafale and Eurofighter jets for the final deal.
In January 2012 It was the dassault Rafale which had won the MMRCA (Medium multi-role combat aircraft) deal to supply Indian air force with 126 rafale aircrafts out of which 18 fighters were to be imported in a fly-away condition and remaining 108 aircrafts were to be manufactured by Hindustan aeronautics ltd.(HAL) with transfer of technology from Dassault aviation.
Now I will tell you why the process didn’t started in 2012 after finalization of bid. Let me tell you the reasons for which dassault was chosen as lowest bid were (i)Life-cycle cost (ii)Cost of acquisition (iii)Operating cost over a duration of 40 years (iv)Cost of transfer of technology. Now as we are aware that 108 aircraft were to be manufactured by HAL so Indian government wanted Dassault to ensure the quality of aircraft produced by HAL on which dassault refused. Its a very important point to note that will help us to understand this deal in 2015–16.
Now lets move around 700 days ahead. Time is flying with speed of light.It is January 2014 with general elections 3 months ahead. Now the reports came that keeping in mind inflation and all other economic factors the cost of each rafale has risen to Rs. 746 crore. I hope you all remember several factually incorrect prices (530 cr, 540 cr, 560 cr, etc.) mentioned by the congress president during assembly election rallies in 2018. It should be well noted that during the congress tenure itself the price has risen to 746 cr. The then Defense minister AK. Antony made a statement that “the deal signing was taking time due to budgetary constraints in that fiscal year”. May be he was correct as how could there be any budget after the series of scams from 2010 to 2013.
Now its March 2014.Till this time also there were Negotiations over pricing, technology, weapon system, customization and maintenance continued. Only a Work share agreement between HAL and Dassault Aviation is signed by this time.
Its general election time now.I perceive that UPA-2 would have thought why should we sign any deal now, lets fill our pocket as they knew they will not be bestowed with power for the 3rd term.
Now lets move in 2015 with honorable Narendra Modi as the the prime minister and Manohar parrikar as the defense minster. On 25th March 2015, Dassault’s CEO Eric made the statement “although the deal is taking time, but its 95 % completed”.
In April 2015 the Prime Minister Narendra Modi officially visits Paris and he announced that government has decided to buy 36 rafale aircraft in fly away conditions citing the needs of our Indian air force. Let’s not forget its been 8 years have been passed after the Indian air force first cited their demands for MMRCA.
In January 2016 FNT (French Negotiating Committee )quoted a figure of €8.6 billion for the deal but INT (Indian Negotiating Committee) denied as the prices were high. Interestingly in the same month french President François Hollande visits India on the occasion of Republic Day and a MOU on the purchase of Rafale jets is signed without finalizing the financial terms.
In May 2016 two sides came at a final agreement of €7.87 billion (₹58,891 crore). This is lesser than what was quoted by FNT in January 2016. The price came down as INT asked that prices should be calculated on the basis of actual cost ie “Price as on today” and European inflation indices were capped maximum at 3.5 % per annum. What I have just written is very important part and I request you to read it very carefully with your economist mind open. On the other hand UPA in their regime have agreed upon fixed cost formula which allowed dassault to to add an additional price of 3.9% inflation from the beginning of the deal. From here we can some what agree that NDA was doing every way possible to reduce the cost of the deal.
In September 2016 after getting flag of clearance from the Indian Cabinet Committee on Security, India and France sign the IGA (Inter Governmental Agreement)for 36 Rafale jets for € 7.87 billion (approx. Rs 59000 crores). The most significant thing is that the deal which was signed was of rafale aircraft fully loaded with modern weapons. Out of 36 rafale 28 were single seat(₹681.7 crore each) and 8 were dual seat (₹703.4 crore each). Apart from these aircraft many other things that were signed in this deal were performance based logistics,radar warning receivers ,several air and ground missiles. The agreement also included 50 % offset clause which is very important understand. It means dassault will invest 50 % of the contract value( € 7.87 billion) ie €3.9 billion or ₹30,000 crore back into India and also 30 % of 30,000 cr ie 9,000 cr is reserved for DRDO and remaining investment has to been done by buying goods and services form India.
It was in October 2016 that Anil Ambani’s RDL and Dassault Aviation announce a joint venture (51:49). Under the contract, Dassault was mandated to make investments (offsets) in India worth 50% of the value of the purchase. Now I should mention here that “NO GOVERNMENT APPROVALS ARE REQUIRED WHEN JOINT VENTURE BETWEEN TWO “PRIVATE” COMPANIES IS FORMED.
Now lets look at several statements by politicians, supreme court judgements and CAG report.
- When asked whether India had put pressure on Reliance and Dassault to work together, Mr. Hollande said he was unaware and “only Dassault can comment on this.
- Contradicting Hollande’s claim, French government issued a statement mentioning that French companies have the full freedom to select Indian firms for the Rafale contract.Dassault also clarified that Anil Ambani was Dassault Aviation’s choice.
3. On 14 December 2018, the supreme court dismissed all the petitions seeking a probe into the alleged irregularities in the deal, and gave a clean chit to the Union government on all the three aspects, viz., the decision making, pricing and selection of Indian offset partner.In its ruling, the court said it has “studied the material carefully” and is satisfied with the decision making process, and that it found no evidence of wrongdoing.
4. Comptroller and Auditor General (CAG) has said in its report dated 13th February 2019 that the Rafale fighter jet deal signed in 2016 was 2.86 per cent cheaper than the UPA’s deal in 2007. The report was also tabled in Rajya Sabha.
The crux of the matter is Its not the “Chowkidaar who is Chor but it is ulta Chor Chowkidaar to daante”.
Now we as the audience in this more than a decade long drama should come to conclusion that there was no financial irregularities and any type of favoritism in rafale deal. It is one of the most important deal as far as the national security of India and Indian Air Force is concerned.
With this I would love to end with my detailed story on rafale deal. Your view points and criticisms are most welcomed.
Cheers !
Jai Hind ! Vande Matram !
