Rafale Jet Deal Doesn't Comply with 'Make in India' slogan.

India and France signed a government-to-government agreement to purchase of two squadrons of the Rafale multi-role fighter aircraft, a massive cut down from the original plan to acquire 126 fighter planes. As a part of the original plan 18 of these fighters were to be handed over by 2015, with the rest being assembled or made locally. Instead, the rapidly rising cost of the aircraft forced the government last year to cancel the deal as unaffordable, and to decide on buying just two squadrons, without any condition for local assembly or manufacture.

In this context, Newsclick interviewed defense analyst D. Raghunandan. According to him, this deal doesn't add value to promote any indigenous development. The force has to depend on other fighters, leading to it managing and maintaining a fleet with planes from multiple manufacturers with low number of fights in each. Raghunandan said, the deal has been arrived mainly by the Prime minister and defense minister in such a way that all the stake holders in the previous plan was not correct including the Indian Air Force. He said, this kind of deal is not good for the country in long term.

Rough Transcript:

Pranjal: Hello and welcome to Newsclick. Today, we have with us D. Raghunandan, a defense analyst. We are going to discuss Rafale deal signed between India and France. Hello Raghu, welcome to Newsclick. So the way this deal has been signed and there has so much hype created around it, how well it has been structured, how well it has been executed and is India going to benefit from it?

DR: Let me say that when the deal was first talked about and struck at 126 aircraft, the situation has changed a lot. We are now talking about a very truncated deal with only 36 aircrafts been acquired and acquired in a fly away condition which means there will be very little of transfer of technology from the Indian point of view of the acquisition of technology, very little scope for local manufacture of it. So all India is going to be is a few aircrafts. Whereas the earlier idea was get a substantial number of aircrafts which the air force said they required and along with that to get technologies and a substantial portion of assembly or manufacture in this country so there was a process of acquisition of technology here as well. Now, that is not going to happen and if you ask me from a purely military point of view I think we are adding to the nightmare that our air force has become. Our air-force today is like a zoo, it has got too many animals in too many different cages and it is a nightmare for ground forces to maintain service in such a wide variety of aircraft. If we have had 126 aircrafts, it is a different matter altogether. Now you have got 30 odd Rafales, few odd Mirages and a few odd xyx this is not a way to structure an air force.

Pranjal: Even Manohar Parrikar told that the way this 126 deal was signed when UPA 2 was in the government. So he said that was not properly structured and this deal is properly structured and we are thoroughly looking at. So can you throw some light on that. where does that come from?

DR: I frankly do not understand at all because the defense procurement procedure worked out in India over many stages and involving multiple stakeholders in the government in the finance sections of the government and the military all sitting together and working out the procedure by which you lay down your requirement for the user forcer which is air-force then discussing the politics, strategy and everything else and then doing an evaluation through a global tender from which you did a shortlisting and then arrived at final and the numbers were decided by all these people sitting together. So I don't understand how a lone defense minister can suddenly turn up and say this was badly done. Does he mean all the service chiefs were wrong? Does he mean entire bureaucracy was wrong? I don't understand how anybody can arrive at that decision. If he wants to say I as a defense minister has overturned that decision, that is a complete different matter. But, there was a procedure followed, the air-force had stipulated it requirement for 126 aircrafts for variety of reasons which has not changed till now. Your Tejas is still not online, it's not ready to come into forces for the numbers required in next five years at least, so that position remains same. Your Su-30 are still along the same track as they were earlier and your rate of obsolescence of series gather momentum and it is five years down the line. So you are just a few years away from retiring your MIG fleet. So I really don't understand it what the defense minister is saying. In fact, it has turned the clock back in to a period when extremely arbitrary decision were taken at a whim or at drop of a hat. Whereas this time whether you agree it or not a fairly extended procedure was followed to arrive at this decision.

Pranjal: Raghu, lot has been talked about pricing of these jets. So where do we stand in that term? Have we proposed a proper price because if you look at the cost of the planes proposed and we acquiring the quantity they are not parallel to each other. There is a contradictory difference between the two.

DR: I am not so sure but one thing I will definitely say that if we are buying 36 aircrafts and we are not getting any special concessions on numbers if we have bought 126 aircrafts, we might have got them at a slight a cheaper cost in terms of unit price. But now we are about six years down the line somewhere when the deal was first spoken about and when the initial was done and Rafale was chosen over the Eurofigher on the basis of the what is called L1, the lowest of the price bid from equivalent aircraft. From that time, it is six years down the road but the unit price is really expensive right now. 230 odd million dollars per aircraft that is huge to pay that's first. Second thing is that I believe that the Indian side has put some additional conditions in the six years since then the aircraft wants a, b, c and d done in the aircraft. So it is not going to a shop and buying a ready made aircraft. It has to be special things to be done. Egypt has just bought 2 aircrafts total flay away just pick it off the shelf. If it had been that we could have pushed harder for a lower price. But these niceties apart I believe we have structural reasons why India has got itself into a position where the price is high. Firstly, I think for all the complex defense procurement procedure we have evolved, we have fundamentally flawed as far as the pricing is concerned. You a take a decision on the basis of a variety of considerations including a first quotation of a price then you decide, Rafale is the winner and then you start price negotiation. Now, this I don't understand if you are in the process of a bargain and you tell the shopkeeper that I have decided this is what I want and then you say let's negotiate the price he has no incentive to lower his price because India has tied itself in knots with this defense procedure and if you now change your mind and say we will go for L2 which is Eurofighter and people will throw up stink and say this is arbitrary and this is corruption involved and so on. I find this structure particularly problematic in trying to negotiate for a price after you have decided which aircraft you are going to buy. Price should be a key factor in as to which aircraft you are going to buy and not follow after the decision and which is why today we are in trouble the French know you have decided on the Rafale, you can't go back so there is no incentive on them to push down the price.

Pranjal: Because if you are looking at the prices which we are paying it is at the cost of other things that the defense could have acquired and which is required for the other armies too.

DR: Yeah, but that is a different argument. Sticking just to this deal itself, there is one very strong reason why we should be pushing for a lower price and that is the earlier price negotiated for the 126 aircraft also involved transfer of technology in which there is a price. Now when buying them fly away, there is now transfer of technology so you should not be paying for that. So it can't be more than the price that has been sighted. It should be substantially less.

Pranjal: Major question is why only Rafale. We could have bought other planes for similar cost if we are looking at transfer of technology that is also not taking place. The big question comes, why only Rafale at that time when you look at various deals signed by the current BJP government in one and a half years. In no such places the technology transfer is taking place actually. It is only we are buying and they are giving it to us. Be it the case of nuclear deal and now in the case of aircrafts.

DR: This two aspects you raised and I will answer them separately. The first is why the Rafale? As I said the Rafale was selected after a competitive process where there was 4 aircrafts initially being offered. India floated a global request for proposals, requests came in and out of the four, two American contenders were rejected, the Swedish contender was rejected that left the two which seem to suits the air force requirement. The Euro fighter and Rafale were selected. And after the extensive air trials by the air force they decided the Rafale. Now, it will be very difficult to for us to question the Air force's judgement and requirement as to which aircraft suited their. One really unless there are very strong reasons to oppose it one really needs to go along with that decision unless there are strong reasons. The only thing I would say is I believe even the Air force and everybody else put together has sufficiently not taken a long term perspective in deciding on the Rafale. For instance, India in terms of a small interceptor role fighter aircraft if MIG 21 going out does not have a substitute and we are using far more and larger and more expensive aircraft for what should be a fairly simpler role. If you look at the long term, you are looking at an air force structured among a small fighter which could be the MIG but the MIG is now being superseded by the Tejas and then you have a set of aircraft in between which you use for ground attack and for interception where you have got the Su 30. You are really looking for an aircraft in between these two. The delay in the Tejas has caused the problem there and looking at further at long term, you are looking at further at long term, you are looking at the Indo-Russian joint venture the fifth generation Rafale is sort of neither fish or fowl. If you look into long view there is not too many reasons the Su 30 could not do that provided of course you have Tejas to do the other roles. So there is a bit of a panic reaction because of the dwindling strength, not having enough aircrafts the Mirages getting degraded. So you were left with the situation where you wanted more Aircrafts you did not have some and therefore you went in for this deal, there was a push. Those circumstances behind the push unfortunately continue today. But the second point you rightly posed is if you are going to buy just outright buy and not acquire technology, then I don't see India is gaining. With Su 30 you are already acquiring the technology, you have a technology transfer agreement in place you could have done that. If that is going to be the important part of the deal may be Euro fighter deal may have been better because they were also offering technology transfer. The last part of your question is I believe is most crucial and that is ever since this government has come in now they have been acquiring hardware for all the talk of make in India there is no acquisition of know how. In fact, the make in India is a complete misnomer, it is assemble in India. So with the Rafale deal, it is not even going to be assmble in India. With just 36 aircrafts there is no assmbly involved either. The big issue I believe not the subject of today's discussions may be we could discuss in some other day is that India over the last fifty years this is not today, yesterday has completely ignored and not done what is required to build up indigenous to design and make your own aircraft. Now, that is not a problem which can go and get resolved in one year or two year. But this government has shown no signs of doing anything to reverse this trend and to restore. In fact, if you go back by this deal they are doing everything opposite. Just buying away and feeling happy and doing that, this is certainly not the way to go for any technology, leave alone in defense where you need to be far more self reliant and your own capability. Tomorrow at the time of if there is a conflict and if you are struck with the imported aircraft how do you know you are going to get the spares not going to get the spares, what is going to happen then, this is not a happy condition for the country to be in.

Pranjal: Self dependence needs to be developed and the Indian agencies needs to be promoted according to that. Thanks a lot Raghu for giving us your time and as the thing proceeds we will be coming back to you on this issue.