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The Congress and BJP are once again at loggerheads over the cost of India’s largest defence procurement deal – the Rafale deal. Proposed in 2007 and inked in 2016, the wait for the Rafale fighter jets has spanned over a decade. In the meantime, the Governments of India and France have changed, and so have terms of the contract signed – and allegedly the prices too.
What are the terms of the Rafale deal? Why the massive delay in procuring the jets from France? How much does the contract cost India?
Built by the French firm, Dassault Aviation, Rafale jets are twin-engine Medium Multi-Role Combat Aircraft (MMRCA). Dassault describes Rafale as “Omnirole” jets that are versatile and can adapt to meet all air mission requirements.
Apart from the 36 Rafale jets that were ordered by India, Dassault also manufactured 132 Rafale aircrafts for the French Air Force and has received contracts for 24 jets for Egypt and 24 jets for Qatar.
According to an Indian Express report, former Indian Air Force chief Arup Raha termed Rafale an excellent aircraft and said, “It is tremendously capable in all its roles. It is a multi-role aircraft and can be used very effectively. It can prove its worth in any situation.”
While the need for additional fighter jets was realised by the Ministry of Defence in 2000, a formal Request For Proposal (RFP) for Medium Multi-Role Combat Aircrafts was not issued before 2007. Between 2000-2012, the Indian Air Force’s strength declined to 34 squadrons as many jets were rendered obsolete. Each squadron consists of 18 jets and to reach its optimum capability, India requires 42 squadrons of fighter jets.
Since the present Indian Air Force fleet mostly consists of heavy and light-weight combat aircraft, the Central Government decided to buy medium-weight fighter jets.
The RPF for procurement of 126 MMRCA was finally issued in 2007 under the Manmohan Singh led UPA government. This took place after the original proposal to buy 126 fighter aircraft was first mooted during Atal Bihari Vajpayee’s NDA government.
The bidding process took place under the UPA Government, headed by the then defence minister AK Antony. According to the deal, out of the 126 jets bought, 18 would be received by India in fly-away condition and the rest would be built in India at the Hindustan Aeronautics facility under transfer of technology.
While initially the deal with Dassault was estimated to be worth $10.2 billion (Rs 54,000 crore) in 2007, negotiations between India and the French manufacturing company started only in 2012. By April 2015, however, terms of negotiation between the Narendra Modi led NDA Govt and Dassault Aviation changed.
According to reports by The Times of India, Transfer of Technology was the primary issue of concern between the two sides. Dassault Aviation was allegedly not willing to take the responsibility of quality control of producing 108 aircraft in India. While Dassault provisioned for 3 crore man-hours for production of the aircraft in India, Hindustan Aeronauticals Limited's (HAL) estimate was nearly 3 times higher, escalating costs manifold.
The new deal with 36 Rafale jets was finally signed on September 2016 by then Defence Minister Manohar Parrikar. According to reports by The Indian Express, specifics of the deal included providing free training to 10 IAF personnel, including three pilots, estimated to be worth Euro 100 million. The IAF will also get a guarantee for an additional 60 hours for the trainer version of Rafale fighters and a concession to keep the weapons storage in France for an additional six months without any charge. The French also agreed to supply spares for a period of seven years at initial cost.
According to a report by The Hindu, the price of an aircraft was about Rs 740 crore and India wanted to buy them for at least 20 percent lower.
The Defence Ministry has refused to divulge details. The Congress has termed the deal as ‘the great Rafale mystery’. Congress President Rahul Gandhi took to social media, demanding financial details on the deal from Prime Minister Narendra Modi and Defence Minister Nirmala Seetharaman.
While addressing the Parliament, Finance Minister Arun Jaitley accused the Congress of manufacturing allegations against the BJP Government. Jaitley accused the Congress Government too of maintaining secrecy over defence deals during its regime. The Defence Ministry issued a statement, terming the demand to disclose details on the Rafale contract ‘unrealistic’.
The Defence Ministry also stated that the approximate acquisition cost of the Rafale aircraft has already been provided to the Parliament.
Rahul Gandhi, however, countered the Government’s claim by posting details of former defence deals disclosed by the UPA government in Parliament.
Congress also alleged that the BJP government promoted the interests of Anil Ambani-owned Reliance Defence Limited (RDL) after RDL entered into a joint venture with Dassault Aviation. RDL was chosen as Dassault Aviation’s Indian strategic partner to meet an offset clause in the deal which specified that 50 percent of the amount in the deal needs to be invested into the Indian defence ecosystem.
Irked by the allegations levelled by Congress, RDL threatened to take legal action.
According to reports, RDL issued a statement that said, "Government policy issued on 24 June 2016 allows for 49% FDI in the Defence Sector under the automatic route, without any prior approval. No approvals from the Union Cabinet or CCS were required for the formation of the aforesaid Joint Venture company under the automatic route”.
While the Rafale jets are reportedly expected to arrive in India anytime between 2019 and 2022, defence experts believe India still remains in urgent need of more fighter jets – at least 144 at present just to retain its edge in combat.
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Published: 11 Feb 2018,08:38 AM IST