Rafale Returns to Bite

The BJP-RSS led Government of India claims that the Rafale deal struck by them is “better in terms of capability, price, equipment, delivery, maintenance, training, etc. than that notionally negotiated by the then [UPA] Government in a process it could not conclude in 10 years.” Powerful rhetoric, no doubt, but somehow, the words lack punch because these they are not backed by facts. It is too much to swallow that Rs 1600 cr of imports is a better deal than a “notional” deal worth one third the price, and one which also creates domestic capability.

Nirmala Sitharaman like her predecessors Manohar Parrikar as well as Arun Jaitley knew nothing of this deal until it was concluded. Until the last few days before the Prime Minister grandly announced this deal on April 10, 2015, the Ministry of Defense was still speaking about negotiating the “notionally” worked out ten year old deal. {See the Timeline on Rafale] According to Scroll.in on Wednesday, Nirmala Sithararaman at a press conference in 2017 assured that government “will give you (the media)…the cost and amount which is being paid, agreed to be paid, because those are public money”. Now “public money” and “transparency” have disappeared, replaced with “confidentiality” and “classified information”. That’s the way of those who have something to hide. They tend to get entangled in their own rhetoric.

Timeline of Rafael Deal

1. March 03, 2014: Nitin Gokhale wrote in NDTV that Dassault and HAL sealed a work share agreement.

2. February 19, 2015: Dassault CEO Eric Trappier says “the pricing issue is very clear. Our pricing remains the same from day one of LI. So there has been on that front”.

3. March 25, 2015: Trappier speaking on the occasion of handing over two upgraded Mirage 2000 to India team spoke of his company’s longstanding relation with HAL and how it will be strengthened by the order for 126 MMRCA deal.

4. March 27, 2015: AFP report carried by Indian Defense News quotes Dassault CEO as saying that work on completing an Indian contract for Rafale fighter is taking time but the deal is “95 per cent completed”.

5. April 08, 2015: Indian Foreign Secretary S Jaishankar was reported as saying: “In terms of Rafale, my understanding is that there are discussions underway between the French Company, our minister of defense, the HAL which is involved in this”.

6. April 10, 2015: PTI reported PM Narendra Modi as saying that “Keeping in mind the critical operational necessity of fighter jets in India I have talked to him (the French President) and requested for 36 jets in flyaway condition as quickly as possible, under a government-to-government deal.”

On November 16, 2016 the Minister of State of State, Subhash Bhawre in a written reply also provided per unit cost as Rs 670 cr for each jet as per Inter Government Agreement signed on September 23, 2016. Rs 1000 cr, he informed, has been set aside for weapon mix, all spares and costs for 75% fleet availability and performance based logistics, support for first five years. Indeed both Indian Express as well as Business Standard on Thursday provide additional details about the deal based on background briefing by senior MoD officials. According to this the total value of deal was Euro 7.9 billion. The cost of fighter jets Euro 3402 million; weaponry cost Euro 710 million; spare parts & components Euro 1800 million; weather and terrain compatibility fits Euro 1700 million; and performance based logistics support Euro 353 million.

Not only is the price of each fighter jets more than Rs 560 crore negotiated “notionally” by UPA II, it is higher at Rs 670 cr after PM Narendra Modi negotiated this new deal, it is evident from the breakup that it is not weapon mix but ensuring spare parts & component and 75% of fleet availability for which India is paying through its nose.

For anyone to claim that Rs 1600 cr for each jet is better than Rs 560 cr which also included domestic licensed production by HAL [which is already engaged in Mirage 2000 project with Dassault] has to be gullible to believe so. Not only would have HAL, having worked with Dassault, been in a better place to absorb the technology and upgrade its own capability, it would have ensured long term indigenous back up. The speed with which the deal was struck also calls for doubts because this pushed the costs up to ensure that Dassault ditched HAL and settled for Anil Ambani led group with zero experience. There are no ‘free lunches’ in commercial deals. And there is always a price to be paid for hasty decision/s. This is quintessential Narendra Modi, at his autocratic best, striking a deal which benefit corporate houses. Besides, this deal is a one-time deal, each new purchase will have to be negotiated afresh, and also does nothing for indigenization because the public sector HAL which alone had the capability absorb technology and more than five decades of working with Dassault was sidelined to accommodate a crony of the Prime Minister, who landed a Rs 29,000 cr gift for the asking.

The rhetoric of “national security” and harming “military preparedness” maybe music to ears of jingoists and sycophants but what is unmistakable is that Rafale deal stinks and scarce public resources have been squandered to accommodate corporate cronies. The country will be paying nearly three times the “notionally negotiated” price. If this is not what constitutes scam then what does?