Perhaps a headache to the Narendra Modi led NDA government, but for the opposition Congress it’s another hard tool to hit a slashing blow as a preparation for the upcoming 2019 Parliamentary election.
Yes, it is the Rafale deal. In Manipur too leaders of Manipur Pradesh Congress Committee, led by CLP leader Okram Ibobi, CWC member Gaikhangam and MPCC president TN Haokip along with its squad took the street on Tuesday joining the mother party in denouncing the alleged misleading Supreme Court by the Modi led NDA government in the Rafale deal case.
It is time that we understand what is all about Rafale deal?
The story starts on August 28, 2017, when the then Defence Ministry accepted proposals for 126 MMRCA fighter Jets. MMRC means Medium Multi-Role Combat Aircraft Fighter jets.
Various companies submitted their bids for buying the fighter jets.
In May 2011, two aircraft were shortlisted - Euro Fighter and Rafale aircraft. Negotiation started in January 2012 , with Dassault Aviation for Rafale aircrafts. Negotiation started o January 2012, with Dassault Aviation for Rafale Aircrafts as their bid amount was very least.
The deal was to purchase 126 fighter jets. Of which 18 fighter jets were supposed to be “Off the Shelf”. That is they were supposed to be manufactured in France. And they would have been ready to fly as soon as we got them. And the remaining 108 gighter jets were supposed to be manufactured in India by the Hundustan Aeronautics Limited (HAL). Dassault Aviation , The French company, was to transfer its technology to HAL. In which the company shares the information on how the fighter jets could be manufacture in India. Using this technology, HAL would have manufactured the remaining 108 jets. Transfer of Technology was an important aspect in the deal because, if in the future the relation between India and Franch take a bad turn or if Dassault Aviation could not manufacture aircraft, even then we could have made the aircraft ourselves in India, which would have been similar to the Rafale Aircraft.
In March 2014, Dassault Aviation and HAL signed a “Work Share Agreement” which stated that 70% of the work to manufacture the 108 aircraft in India, was to be undertaken by HAL and the rest 30% by the Dassualt Aviation.
The Negotiation took a long time as the two companies could not agree on several points.
During this time our Government Changed and the negotiation were not finalized.
Finally on March 25, Dassault’s CEO Eric Trappier said that the paper work was 95% completed.
He said, “You can imagine my satisfaction to hear from the HAL Chairman that we are in agreement for the responsibility sharing …”. He said that the deal will be signed soon enough.
The New Rafale deal (2015)
On April 8, 2015, the Foreign Secretary of India said that negotiation among Indian Governemnt, HAL and Dassault’s are still not over. After 2 days Prime Minister Narendra Modi went to France and suddenly on April 10, 2015 a joint statement was issued by the Indian and French Governments that a new deal will be stuck. As per the new deal , 36 Rafale Aircraft were to be purchased by the Indian Government of which in Fly – Away off the Shelf condition.
The opposition questioned this move as PM Modi finalized this deal without the approval of cabinet committee on Security. What happen to the old deal Which included 108 aircraft to be manufactured in India by HAL was what has been put up.
On April 13, 2015, then Defence Minister Manohar Parrikar said that, “ PM Modi took the decision and I back it up.”
After this , on 23rd September 2016, an Inter-Government agreement was finalized and signed. What’s interesting is that only a few a days before PM Modi’s France visit on 25th March and 28 March, 2015, 2 new companies were founded, - Reliance Defence Ltd. and Adani Defence Systems and Technologies Ltd.
It’s also interesting that under the new deal, India and France issued a joint statement on April 10, in which its was stated that ‘the aircraft and associated systems and weapons would be delivered under the same configurations as has been tested and approved by the Indian Air Force. That means the aircraft of the new deal were to be of the same configuration as under the previous deal.
This is the logical interpretation of the joint statement.
Before moving ahead , its better understand ‘what is an Offset Clause?”
If someone agree to purchase a pen from for Rs. 100, then the pen will be given on the condition that Rs. 100 be paid back. But if an agreement is reached that of the Rs. 100, Rs. 50 will be invested in buyer company, that is an ‘Offset Clause’ in the contract.
That means Offset Clause is a requirement under which the supplier is bound to spend part of the money in a specific place decided by the buyer and supplier. In the new Rafale deal there is an offset clause for 50% of the value. The deal is worth Rs. 60, 000 crores, which means India will buy fighter jets from Dassault for Rs. 60,000 crores. Out of it Dassault has to invest 50% of it , Rs. 30,000 crore , in India. Technically it should be up to decision in which Indian companies it wants to invest.
On October 3, 2016, Anil Ambani’s Reliance group started a joint venture with Dassault Aviation. Dassualt reliance Aerospace ltd. On 21st June , a report in the Hindu Business Line stated that of the Rs. 30,000 crore offset money, Dassault is planning to invest rs. 21, 000 in the joint venture. This is the reason why the opposition, congress and Rahul Gandhi repeatedly question this deal and accuse the government of favoritism towards Anil Ambani’s Reliance Defence Ltd.
On September 21, 2018, the controversy blew up when the ex-Franch President Francis Hollande, who was the President from 2012 to 2017. He said that the Modi Government chose Anil Ambani as the Offset Partner and the Franch Government had no choice in it.
Dassault responded to it, saying that it chose of its own accord. The present Franch government says that they have nothing to do with the deal as it was finalized by Dassault and reliance.
On September 13 , 2018 , defence Minister Nirmala Sitharam said that the government had not given any suggestion to Dassualt and they chose Reliance on their own.
October 21, 2019, Dassault’s CEO said that only 10% of the Offset obligations is supposed to go to reliance. The rest of the Offset money will be invested in more than 100 companies, This directly contradicts the report of the Hindu Business line and reports of other journalists who said that Rs. 21,000 crore is to be paid to reliance.
But for now, Dassalt has confirmed that a minimum investment of Rs. 800 crore will be put into the joint venture with Reliance.
Pricing of Rafale Jets
The next controversy about the Rafale deal is about its cost. Congress spokesperson says that the cost of the old deal was Rs. 54,000 crore. The average cost of each plane was somewhere between Rs. 520-570 croe. Rahul Gandhi and Congress Spokesperson claim the cost was Rs. 526 crore per plane to be exact.
On April 13, 2015, the then Defence Minister , Manohar Parrikar said that the cost of 126 Rafale aircraft would be Rs. 90,000 crores. It includes the cost of Technology Transfer, manufacturing infrastructure and even the cost of the additional parts that were to be including in the aircraft. This took up the average cost upto Rs. 714 crore per plane.
Moving to the new deal. The cost for the new deal will be Rs. 59,000 crore for 36 jet fighters. That is Rs. 1638 crore per plane. This creats all the controversies. Congress asks how did the cost per plane jump up to Rs. 1638 crore from Rs. 526 crore ? Almost three times the original amount. Even if Manohar Parrikar’s calculation of the cost per plane is considered, Rs. 1638 crore is still a much larger price than Rs. 714 crore . what is the reason for it.
On 18th Novemebr , 2018, the Junior Minister of Defenace said in the parliament, that as per the new Rafale deal the cost per plane is Rs. 670 crore, but it increase to Rs. 1638 crore because, they include the cost of other items such as weapons, maintenance and spare parts.
Government of India tells that the total cost of the deal and the basic cost per plane. Other than these, the government does not disclose the details of specific expenditure on weapons, maintenance and spare parts.
The Defence Minister and the Government cited national security as the reason for not revealing the details. An important thing that needs to be understood is, out of the 126 aircraft of the old deal, 108 were supposed to be manufactured in India, which could have brought down the cost of production.
So we should actually compare the price of the ‘Off the Shelf’ planes – 18 from the old deal verses 36 from the new. That would be fair.
But NDA government is not revealing the cost of the 18 planes even under the old deal.
Comparing the cost with the Rafale deals of other countries, like Egypt and Qatar which also brought Rafale aircraft cannot be done accurately, as there is no specific details of the contracts made by those countries. On the other hand , France reveals the price of the rafale aircraft periodically. In 2013-14, France revealed the price of all the models.
The price of the Rafale in that catalogue was between Rs. 500 – 600 crore per aircraft. If we compare with that, the price under the current deal is still way too much.
Speculations and comparisons will continue till as there is no actual details of the cost. But will it be forever undisclosed due to national security?
Supreme court judgement:
Four separate PILs were filed in the Supreme Court, demanding an investigation into the Rafale deal.
On September 5, 2018, SC started hearing the hearing of the case. It asked thye Central Government to share, with the court, the details of the Rafale deal in a closed envelope.
On 12 November , the central Government gave the details to the Supreme Court as directed. On December 14, SC gave its verdict.
The 29 pages long judgment is available on the official website of the Supreme Court.
In the judgement , the SC has stated that, it will not interfere in the case of Rafale deal as it is outside its jurisdiction. It is not the Supreme Court’s place to investigate sensitive defence deal or advice the government on it.
“WE find no reason for any intervention by this court on this sensitive issue”.
The case would have ended here, if there were not factual error in the SC judgement.
For example, the judgment state in point 25, that the pricing details have been shared by the Comptroller and Auditor General (CAG) and the CAG’s report has been examined by the Public Account Committee (PAC) only redacted portion of the report was placed before the parliament and is in public domain.’
But in reality, there were no such reports submitted to PAC. Neither is it available in the public domain nor has it been submitted in the parliament.
And this is what Rahul Gandhi pointed it out in a press coference following the judgment.
After Rahul Gandhi’s press conference, Modi government says that the sealed envelope given to the Supreme Court stating the details of the deal, was misinterpreted by the Supreme Court Judges. Which caused typing mistake in their report. They meant to say that the CAG report “ will be examined by the PAC”. But it was typred “has been examined by the PAC” in the report.
The government has now put in a petition in the Supreme Cort to rectify the report.
The leaders of opposition parties claim that the government is lying as three Supreme Court judges cannot all be grammatically wrong, resulting in the misinterpretation causing such a blunder. They also alleged that the sealed envelop given to the Supreme Court contain lies.
Experts believe that the Supreme Court Jusgement may be declared null-and –void because the main point is factually incorrect.
But the fact about - who is wrong and who is right will soon be coming up in the public domain after Supreme Court gives another verdict.