Modi Should Explain How Rafale Deal Went From '95% Complete' to Zero in Two Weeks

Days before the PM replaced the deal with one that would eventually exclude HAL and favour Reliance, the Dassault CEO had said 'contract finalisation and signature could come very soon.' So what changed?

The manner in which Prime Minister Narendra Modi bypassed a number of relevant institutional mechanisms to announce the purchase of 36 Rafale fighter jets during his official visit to France in 2015 is being re-examined with greater focus.

A look at the events preceding Modi’s visit in April 2015 by itself suggests a startling lack of transparency.

The main questions revolve around how the prime minister took such a big call on cancelling and revamping the Rafale deal – a subject closely related to national security and the public exchequer – before relevant approval or inter-ministerial discussion. And why did defence minister Nirmala Sitharaman beat around the bush last week by insisting that all due procedures were followed?

As defence journalists have pointed out, former defence minister Manohar Parrikar was informed hurriedly only a few days before Modi’s France visit of the decision to acquire 36 jets, leaving him to publicly defend a decision that “he neither understood nor agreed with”.

Consider the circumstances surrounding Modi’s announcement to procure 36 aircraft in fly-away condition from France. Just a day before the PM’s visit, in a customary press briefing, foreign secretary S. Jaishankar said:

“In terms of Rafale, my understanding is that there are discussions underway between the French company, our Ministry of Defence, the HAL which is involved in this. These are ongoing discussions. These are very technical, detailed discussions. We do not mix up leadership level visits with deep details of ongoing defence contracts. That is on a different track. A leadership visit usually looks at big picture issues even in the security field.”

This shows that the foreign ministry’s senior-most bureaucrat – who ought to have a had a clear idea of the prime minister’s itinerary in a foreign country – was not aware of the impending announcement. Or, in other words, the official stand still appeared to be a continuation of the deal that the previous UPA-II government had laid down – for a larger purchase (of 126 aircraft) from the French company that involved the government-owned Hindustan Aeronautics Limited (HAL) as the Indian manufacturing partner. 

Jaishankar’s statement also shows that until April 8, 2015, HAL was officially still very much a part of the deal. Put in another way, it would appear that the government had not turned its back on negotiations that were based on the outcome and terms and conditions of the original request for proposal (RFP).  

There is other evidence to suggest that even Dassault CEO and chairman Eric Trappier may not have been aware of Modi’s decision to cut the size of the deal to 36 aircraft, exclude HAL and remove the crucial transfer of technology clauses.

An Agence France-Presse report (published on Indian Defense News on March 27, 2015) quotes Trappier as saying that the work on completing an Indian contract for the Rafale fighter jet is taking time, but the deal to purchase 126 Rafales is now “95% completed.”

Also read: Explainer: Questions the Modi Government Needs to Answer on the Rafale Fighter Jet Purchase

There is also a video available in public domain, published by Dassault on March 25, 2015 – just two weeks before Modi’s France visit and the reduced order announcement. In the video – which was shot on the occasion of the handing over of two upgraded Mirage-2000s to IAF by Dassault in the presence of senior IAF officials and Indian ambassador to France – Trappier says that Dassault has a long-standing relationship with HAL and that will be more strengthened once the order for 126 Rafales is concluded and that he is looking forward to that. He proudly states that Dassault is happy to abide by all the conditions of the RFP.  “Considering as well our conformity with the RFP,  in order to be in line with the rules of this competition, I strongly believe that contract finalisation and signature could come very soon,” he said.

If the contract negotiations for a deal worth billions of dollars were “95% completed” in the three years from 2012 and Dassault was eagerly waiting to conclude the deal abiding the terms and conditions of the RFP, what might have prompted Modi to cancel the contract altogether?

One possible reason, put forth by opposition political parties in India, is that it helped boost India’s private sector as a whole and in particular benefitted certain Indian private companies – namely Anil Ambani’s Reliance Defence – which went on to become a significant joint venture partner of Dassault for the off-the-shelf purchase of 36 aircraft.

In the past few weeks, BJP leaders, Union ministers, their supporters and a host of right-wing defence analysts have provided a long list of reasons for the cancellation of the RFP and they keep saying the “collapse” of the negotiations was the reason for Modi to take such call. But none of them answered the legality of Modi taking a unilateral call without the approval of relevant cabinet committees and undermining the power of his own cabinet colleagues and senior cabinet ministers –  especially the minister of defence and minister of finance.

More importantly, none of the apologists is able to give a reason for why the negotiations “collapsed” after the April 8 evening press conference of India’s foreign secretary in which he stated that negotiations were on between the Indian government, Dassault and HAL. And most surprisingly, Trappier and the company with whom the negotiations were on – Dassault – were not aware of these collapse of negotiations.

Instead of engaging in tactics that divert from these important questions, the government needs to provide convincing answers especially because billions of dollars of public money is involved.

Most importantly, the prime minister needs to provide a valid reason for the cancellation of the RFP (the new deal, as others have pointed out, was not only more expensive on a per unit basis but also failed to fulfil the requirements of the IAF),  the exclusion of HAL and the reasoning behind such a drastic and unilateral turnaround.

Ravi Nair can be contacted on Twitter @t_d_h_nair