New Delhi: After months of being relentlessly attacked and questioned about the Rafale fighter-jet deal, the Narendra Modi government on Monday handed over a set of documents that are meant to explain the decision-making process behind the deal to a group of Supreme Court petitioners.
The Centre did so in order to comply with a recent Supreme Court order which stated that the government should explain the rationale behind the deal to a group of petitioners who had sought a court-monitored probe into the purchase of the 36 aircraft from France.
The petitions seeking the probe in the Rafale deal were first filed by advocates Manohar Lal Sharma and Vineet Dhanda.
There are three broad points that the government looks to make with regard to the steps that lead to the Rafale deal, the pricing of the aircraft and the issue of how the offset partners were chosen.
Some of the arguments retrace defences the Centre has trotted out in the past, while a few provide new information. The Wire examines what the government has said and breaks it down.
Why was the old UPA Rafale deal junked?
The initial tender for 126 Rafale jets could not be concluded, the government has said, due to “unresolved issues related to 108 aircraft to be manufactured in India”.
The two main issues involved production problems and questions of contractual responsibility. According to the documents filed by the Centre, it would have taken Hindustan Aeronautics Ltd “2.7 higher man-hours” to make the jets in India, when compared to the time it would have taken Dassault to make them in France. And secondly, issues related to “contractual obligation and responsibility” for the 108 jets that would be made in India could not be resolved.
“[These] issues remained unresolved for more than three years. This delay impacted the cost of acquisition, as the offer was with in-built escalation and was inﬂuenced by the Euro-Rupee exchange rate variations. As the contract negotiations reached a stalemate and RFP compliance could not be ensured, the process for RFP withdrawal was initiated in March, 3 2015,” the documents say.
What the government leaves out: In multiple reports over the last year, The Wire has pointed out how HAL and Dassault managed to iron out any differences they had and actually signed a work-share contract. Former HAL chief Suvarana Raju is also on the record as having said this contract was given to the Modi government and that HAL would “guarantee” aircraft it made, in an allusion to the problems of contractual responsibility being resolved.
If these problems were solved, why was the bigger deal ditched?
Why was a smaller deal pushed through and what process was followed?
The Centre’s primary justification for this is that while the long and inconclusive MMRCA process dragged on, India’s enemies in the same time managed to induct “modern aircraft and upgraded their older versions”, and thus posed a threat to the country’s defence.
“The combined effect of our own reducing combat potential and our adversaries enhancing their combat potential made the situation asymmetrical and extremely critical. An urgent need was felt to arrest the decline in the number of fighter squadrons in IAF and enhance their combat capabilities,” the document says, on why a smaller deal was then decided upon.
This argument seems fair enough. However, the government goes on to state that because of this critical situation, an Indo-French joint statement was issued in April 10, 2015, announcing India’s intention to buy 36 Rafales in a fly-away condition.
What the government leaves out: Nearly everything. While it is tough to second-guess the government on emergency defence purchases, the Centre still remains silent on how it went about it. For instance, the government meticulously lays out every part of the acquisition process from May 2015 onwards, which is when the deal was presented to the Defence Acquisition Council.
However, the new documents are surprisingly short of details on what happened in the weeks and months leading to the April 2015 announcement.
As defence writer and analyst Saurabh Joshi noted on Monday: “Does this mean there was no discussion within the government about the proposal for 36 Rafale fighters before April 10, 2015? Surely there must have been some meeting, some minutes of meeting or something on file that discusses the proposal to acquire 36 Rafale fighters before the announcement of April 10, 2015 in Paris?”
If there is some record, the Modi government doesn’t seem intent on sharing it. This is an important detail, because opposition parties like the Congress have alleged that the deal was changed at the last-minute to benefit Anil Ambani’s Reliance Defence.
How was the price for 36 jets negotiated and was it better than the UPA’s deal?
In the May 2015 meeting of the Defence Acquisition Council (DAC), the government laid out the capabilities of the 36 jets would be in accordance with the service qualitative requirements (SQR) of the earlier 126-aircraft tender.
After this, an Indian negotiating team (INT) was formed that held discussions with the French side between May 2015 and April 2016 to work out details of pricing, delivery and maintenance.
“A total of 74 meetings, which included 48 internal INT meetings and 26 external INT meetings with French side were held during the negotiations. As mandated by the DAC, the INT undertook a collegiate process involving due deliberations and diligence at various levels during the negotiations,” the document says.
“As mandated by the DAC, the lNT completed its negotiations and arrived at better terms relating to price, delivery and maintenance as compared to the MMRCA offer of Dassault Aviation. The INT report was ﬁnalized and signed on 21 July 2016. The INT report also indicated better terms and conditions arrived at as a result of negotiation as compared to 126 MMRCA case…,” it added.
What the government leaves out: The question of whether the pricing of the Modi government’s Rafale deal was better than the one negotiated under the previous UPA administration has been hotly debated over the last year. Defence minister Nirmala Sitharaman has gone on record to state that the NDA-II got Rafale jets at “9% cheaper rate than UPA deal”.
But a recent series of reports in Business Standard, which obtained access to the earlier RFP, show that on a per-aircraft basis, the Modi government’s deal is 40% more expensive than what Dassault had offered for the 126-aircraft tender under the UPA.
In recent times, the Modi government has also stated that it would be difficult to compare the Rafale jets bought under the NDA-II with those that were being considered by the UPA because the 36 aircraft included India-specific modifications and different weapons systems. This aspect has also been refuted by Business Standard.
It’s unclear therefore how the Centre has stated in its latest documents submitted to the Supreme Court petitioners that the INT managed to arrive at “better terms relating to price” as compared to the MMRCA offer of Dassault Aviation.