Rafale deal or scam?

It is a political controversy related to the purchase of 36 medium multi-role combat aircraft (MMRCA) by the Defense Ministry of India from the French company Dassault Aviation. The first Rafale jet will be delivered by September 2019 and the delivery will be complete by April 2022. 

Why India needs Rafale badly and urgently is explained by the Air Chief Marshal BS Dhanoa. “In the Balakot operation, we had technology on our side, and we could launch a precision stand of weapons with great accuracy. In the subsequent engagements, we came out better because we upgraded our MiG-21s, Bisons, and Mirage-2000 aircraft. The results would have been further skewed in our favor had we inducted the Rafale aircraft in time,” he said. 

“In the proposed induction of the Rafale and S-400 surface-to-air missile system, in the next two-four years, once again the technological balance will shift in our favor like it was in 2002 during Operation Parakaram during the last stand-off,” Dhanoa further added.

Since 2001, the Indian Air Force (IAF) has been demanding medium fighter aircraft for the purpose of national security. In 2007, the Ministry of Defense finally issued a request for the procurement of 126 medium multi-role combat aircraft fighters. Till 2011-12 various options were tested to select one. In 2012, the UPA government shortlisted Euro-fighter typhoon and Rafale aircraft of Dassault Aviation. It finally chose Rafale aircraft due to its easy maintenance and overall lowest bid. Since 2012, under the UPA government, negotiations were on regarding the procurement of 126 Rafale aircraft (18 in fly-away condition and the remaining 108 were to be manufactured in India by Hindustan Aeronautics Limited (HAL) using the transfer of technology. There are two estimates of the cost of Rafale procurement under UPA-government given by Congress leaders. According to Surjewala, the Rafale deal worked by the UPA government was of Rs 42,000 crore while in Sibal's calculation the 126-jet deal could have cost Rs 79,200 crore. On a whole, it is claimed by Congress that the deal done by them was 3 times cheaper than the current deal. However, it is to be noted that no deal was finalized and only negotiations were on which could not fall into the right place because of the differences between UPA-government and Dassault Aviation on the terms proposed by each other. India wanted Dassault to take responsibility for the quality of HAL-produced Rafale aircraft but Dassault wasn’t willing to do so. Also, they were not able to reach an agreement regarding the transfer of technology. There were also differences relating to the price of the aircraft. Hence the deal could not have been finalized. 

In 2015, the BJP-led NDA government announced a new deal to acquire 36 direct fly-away aircraft (2 squadrons) from France. There is a provision in this deal that Dassault Aviation and its partner companies Safran and Thales will share a part of their technology with DRDO, HAL, and Reliance Defense Limited. The estimated cost of this deal is 58000 crore out of which 15% needs to be paid in advance. As per this deal, India will also get spare parts and weapons including Meteor Missile (one of the world’s advanced missiles) along with the fighter jets. This deal also includes the cost of personnel training to run these jets, India’s specific requirements for subsystems and modifications, cost of supporting infrastructure and five-year service agreement and maintenance charges. All these costs were not included in the UPA-proposal of the deal but included only the preliminary costs, hence its cost turned out to be lower than the current deal. The deal requires Dassault to invest 30% of 58000 crore in military and aeronautics research in India and 20% on the production of Rafale components in India. 

Soon after this announcement, Congress alleged that this Rafale deal signed by Modi-government is non-transparent and is against the Make in India initiative. It also alleged that NDA-government has favored Anil Ambani by making his company Reliance defense Limited as the Indian partner of Dassault in this deal and has wronged HAL in this deal. It alleged that the deal finalized by Modi-government is 3 times expensive as compared to Congress negotiated deal in 2012 which eventually leads to the loss of INR 40000 crore to India. Now Congress claims that it finalized the price of each jet at INR 526 crore but the reality is there was no official statement relating to the acceptance of this price. These numbers are purely hypothetical. 

Rahul Gandhi alleged that PM Narendra Modi has helped Anil Ambani to get this deal at the cost of HAL. Actually, in the whole Rafale deal, the major controversy is about the offset clause of this deal amounting to INR 30000 crore and in almost every rally Rahul Gandhi is claiming that 30000 crore of Indian public has been misused. In reality, this argument is completely baseless. This is because in this offset clause, decided as per the defense procurement policy, 50% or 30000 crore will be invested by France in Indian companies of its own choice. This means that though the Indian government can recommend some companies to Dassault Aviation for collaboration, in the end, it is the Dassault who has the final say in choosing the company which suits her the best. 

The misconception created by Congress among the general public is that earlier Rafale aircraft were to be manufactured by Dassault and HAL together but now the Dassault and Reliance will manufacture Rafale jets together. This misconception is created on futile grounds because under the NDA-deal no Rafale jets are to be manufactured in India as all the 36 jets will be manufactured in France by Dassault and are bought by India in fly-away condition.  Contrary to the impression that Reliance is the biggest beneficiary in the Rafale deal, Reliance will not get the business of this whole 30000 crore offset clause, but only 3% of 30000 crore. Moreover, Dassault has chosen numerous companies other than Reliance (like L&T, BHEL, HCL, etc.) for collaboration and is opening joint ventures with these companies to manufacture engineering-related goods like radar, airframe, etc. for other aircraft and machinery. This will help Indian companies (both public and private) to have newer and better technical skills. Under this offset clause, it has been mandated for Dassault to invest timely and contravention of this provision will lead to the imposition of penalties on Dassault. Hence, Dassault has not chosen Reliance as the only partner, rather Reliance is merely one of the bunch of companies chosen by Dassault Aviation and that too independently without any undue pressure.  Reliance will also invest its own capital along with this 3% of 30000 crore invested by Dassault in the joint venture Dassault Reliance Aviation Limited (DRAL) to manufacture parts for Falcon executive jets. 

In response to the Congress’ allegations, Anil Ambani wrote a two-page letter to Rahul Gandhi on December 12, 2017, to explain why his Reliance Group bagged the multi-billion dollar project. He said that the Reliance Defense has the largest shipyard in the private sector at Pipavav in Gujarat and is currently building five Naval Offshore Patrol Vessels (NOPVs) for the *Indian Navy and 14 Fast Patrol Vessels for the Indian Coast Guard. Dassault chose Reliance Group as its joint venture partner to meet the 'offset' or export obligation component of the deal and this was "an independent agreement between two corporate private sector entities, and Governments had no role to play in this matter," he wrote.

On 5 February 2017, an RTI was filed to IAF to reveal signed agreement of Rafale deal and price details. IAF rejected this RTI on grounds of confidentiality. 

Nirmala Sithraman, Minister of Defense, refused to disclose Rafale jet price citing national interest. This was because of an inter-governmental agreement that was signed between India and France under which no country can reveal its details to the public. But on 17 November 2017, in a press conference, she said she will soon disclose the specific price details of Rafale because it’s public money and she has no issue with revealing price details to maintain transparency. The next day, her junior minister Subhash Bhamre disclosed that the price of each jet is INR 670 crore and the price of weapons are excluded from this and these jets will arrive in India by April 2022. Her changing statements regarding price disclosures led to further heated arguments by the opposition criticizing her hypocrisy. 

    

In its defense, Narendra Modi said that their deal is more transparent as compared to Congress’ deal because now India is also getting components and weapons along with jets which were missing in Congress’ deal. The Comptroller and Auditor General (CAG) tabled a cost analysis report in Parliament in which it was clarified that Rafale deal negotiated by BJP-led NDA government 2.86 percent cheaper than the deal by Congress-led UPA government.

In 2018, Ex-President of France François Hollande gave a statement that it was the Indian government who chose Anil Ambani for the Rafale Deal and they had no choice. This heated up the Rafale controversy and raised questions on the Modi-government. But the governments of India and France claimed that no government was involved in choosing Anil Ambani and it was the Dassault Aviation who chose Anil Ambani over HAL as a partner in India, "because of the Ambani’s land (Aerospace park facility at Mihan) in Nagpur which provided better access to the runway." Dassault revealed that it was in-between talks with Mukesh Ambani’s firm even since 2012 (at the time of UPA-government) and then changed later to discussions with Anil Ambani because his defense unit was taken over by Anil Ambani. 

The Government of India also alleged that the former French president Hollande's allegations have been made to save his own skin. He is accused of conflict of interest because an entertainment company owned by Anil Ambani co-produced a film by the French leader's partner right when the crucial Rafale deal was finalized.

The Rafale deal was also adjudicated by the Supreme Court and it gave a clean chit to the government in this case on 14 December 2018. Delivering the Rafale verdict, a Supreme Court bench headed by CJI Ranjan Gogoi dismissed petitions on three areas of concerns pertaining to “decision making, pricing, and offsets”.  

The Congress demanded a Joint Parliamentary Committee (JPC) to investigate the alleged irregularities in the Rafale deal. But the incumbent government rejected the demand for JPC probe on the argument that the Supreme Court has already given a certificate of integrity to the deal. 

In February 2019, a new heat was given to Rafale deal by The Hindu newspaper which published some official documents expressing concerns of S. K. Sharma, Deputy Secretary (Air-II), the Joint Secretary & Acquisition Manager (Air) and the Director General (Acquisition) in the Ministry over the parallel negotiations between PMO and Dassault.

Nirmala Sitharaman, the Defense Minister of India, cleared the air on the issue of documents published by The Hindu by arguing that only a part of the document has been published to mislead the public and another part of the document which proves that there was no conflict and cause of concern in this deal was deliberately not published. The concealed part, she says, which is signed by the then Defense Minister, Manhor Parrikar discloses that there were no parallel negotiations by the PMO and it was only a follow-up procedure done by the government which is not detrimental to our interests.

Who got us the better deal? 

There was no deal at the time of Congress, under which it was delayed for a long time and later on was dormant for years. 

There is a vast gulf between the deals of both the governments and hence there is no use of comparing the cost of both with each other. This is because Congress was buying 126 aircraft but Modi-government is buying 36 aircraft and logically when we reduce the quantity the price per item increases. Apart from this in the BJP deal, all the 36 aircraft are coming under ready-to-fly condition but in Congress deal, only 18 aircraft were coming under ready-to-fly condition. Moreover, there is no clearance on the question that if Congress wasn’t buying components and weapons along with the fighter jets, what was the use of buying the aircraft? Without components and weapons, aircraft could have only be placed in museums and are incapable of fighting in wars. 

Conclusion

The Rafale deal is still considered mysterious because of the two questions. First, the IAF requires 42-45 squadrons of advanced aircraft, so how will the two squadrons suffice the need? Apart from this, another big question is how will India cope up with the logistical requirements for the Rafale jets after their procurement? These two questions remain unanswered till the date.

Why this deal is not considered as crystal clear is also because of the fact that the Indian government has still not disclosed the specific details of Rafale deal like the actual cost of each jet, what weapons will be inserted in these jets, what specifications are required by IAF in these jets. BJP Government’s stand is that if these specific details are made exactly clear in front of everyone, it will be easy for war-waging countries to adjudge the deterrence and deep-strike capability of the asset which beats the very purpose of procuring advanced fighter jets. Moreover, it’s a commercial deal and disclosing every price detail will lead to losses to the seller. The IAF chief Dhanoa also backed the government's assertion that revealing details on the price of the fully-loaded aircraft would lead to rivals getting to know its capabilities. He acknowledges that the taxpayers had the right to know where their money goes, but the Comptroller and Auditor General of India (CAG) was there to ensure that it was being well spent and hence there is no need to worry about the pricing because it is well negotiated. "It is definitely a better deal. It is lower than what was there in the MRMCA contract," he said. 

On technology transfer, Dhanoa said, "Technology may not be going to the Hindustan Aeronautics Ltd (HAL) but it is coming to the Defence Research and Development Organisation (DRDO) and then to a lot of Indians". 

Also, there is a theory that we need to understand is that Congress might be playing its political propaganda to win 2019 General elections just like it did in 2004 when the Vajpayee government was nearing its completion. It was a clean, honest and progressive government and to defame it, Congress created fake “Kargil Coffin scam”- PM Vajpayee, Defense Minister George Fernandes, and 3 army officials were made the prime accused. The case dragged on for 9 long years. The CBI declared in 2013 that there is no evidence against the accused. In the meantime, Congress won two general election back to back. Not just the coffin scam, they created imaginary scams out of the thin air and the leftist media made sure it reached the masses. Today, Congress is trying to manufacture the same imaginary scam out of the clean Rafale deal. The truth is that more or less every allegation of Congress has bitten the dust.