Political Economy

Congress Releases Papers Alleging Multiple Violations in Rafale Deal by Modi Govt

The Congress said that both the prime minister and Union defence minister Nirmala Sitharaman “lied” to the nation in order to favour Anil Ambani-owned Reliance Infrastructure Limited.

New Delhi: With merely eight months left for the general elections, the purchase of 36 Rafale fighter jets – worth Rs 60,145 crore – is gradually becoming the biggest political thorn in the side of the Narendra Modi government. Days after Rahul Gandhi accused the Union government of hiding facts about the controversial fighter jet deal during the no-confidence motion in parliament, the Congress on Friday released a new set of documents to back up his claim that the Rafale purchase is one of the most blatant incidents of cronyism in independent India’s history.  

Alleging multiple violations in the deal that could compromise India’s national security, the Congress said that both the prime minister and defence minister Nirmala Sitharaman “lied” to the nation in order to favour the Anil Ambani-owned Reliance Infrastructure Limited.

Defence minister Niramala Sitharaman addressing a press conference on the Rafale deal. Credit: Twitter

Defence minister Niramala Sitharaman addressing a press conference on the Rafale deal. Credit: Twitter

The Rafale deal was shrouded in mystery from the very beginning, ever since the prime minister announced the purchase during his visit to France in 2015. Subsequently, it came to light that the then defence minister Manohar Parrikar had gotten to know about the deal only a week before it was announced in a foreign land – a convention-defying act by the prime minister. Such deals have to compulsorily be approved by the cabinet committee on security but Modi unilaterally concluded the agreement.

Then, it became evident that the Modi government bought each plane at more than Rs 1,600 crore while the previous UPA government had negotiated the deal with Dassault at only Rs 526 crore.

The controversy became worse when it emerged that a joint venture company between Reliance Defence Limited (RDL) – a subsidiary of the Anil Ambani-owned Reliance Infrastructure Limited (RIL) – and Dassault Aviation secured the offset deal at Rs 30,000 crore. This raised eyebrows as the public sector defence company Hindustan Aeronautics Limited (HAL) had landed the offset contract in the deal that the UPA government had struck with the French aviation company.

That RIL had no experience in manufacturing planes in contrast to HAL, whose sole occupation is manufacturing defence planes, ruffled many feathers last year. In addition, the clause which required Dassault to transfer its technology to HAL also found a quiet burial as the public sector company was denied its biggest ever offset contract.

Since then, the government has only said that the Congress was “shameless” in alleging a scam as the government bought the planes in an emergency situation because the UPA wasted many years in implementing the previous deal. However, according to estimates, the first plane to land in India should take another five years. Despite persistent allegations by the opposition, the government has been shying away from letting out significant details of the agreement. There has been no factual rejoinder by the defence ministry yet. Sitharaman has only said that the cost of the planes cannot be divulged because of a secrecy clause in the deal.

However, the matter assumed significance again when Gandhi on the floor of the parliament said that there was no secrecy clause and that the defence minister was misleading the nation to prevent the truth from coming out. Congress leaders since then have also alleged that none of the allegations made by the Congress over the past year found any response from the government.

New documents

On Friday, however, the documents released by the Congress made multiple points that the government will have to answer.

Although the offset contract given to the Dassault Reliance Aerospace Limited – a joint venture between RDL and Dassault – is worth Rs 30,000 crore, the Congress released RIL’s papers which claimed that “a consequent Lifecycle Cost Contract” of Rs 1 lakh crore was also awarded to it.

In this context, Randeep Surjewala, chief spokesperson of the Congress said, “What is surprising is that one of the biggest defence offset contracts went to a company, Reliance Defence Ltd, which was constituted only 12 days before (March 28, 2015) the announcement of purchase of 36 Rafale aircrafts by PM in France on 10th April, 2015. The company Reliance Defence Ltd. did not have the license to manufacture fighter aircrafts at that time.”

Surjewala placed records of the ministry of corporate affairs, RIL’s press releases and company records to make his point that the Modi government had gifted the Anil Ambani-owned company a huge defence contract despite the fact that it neither had any industry experience nor any required assets.

The Congress then trained its guns at the defence minister. Surjewala said that the ministry of defence had issued a press release on February, 7, 2018, which said, “…no Indian Offset Partner for the 2016 deal for 36 Rafale Aircrafts has been so far selected by the vendor (Dassault Aviation) because as per the applicable guidelines, Dassault Aviation is free to select the Indian Offset Partners and provide their details at the time of seeking offset credits, or one year prior to discharge of offset obligation”.

However, he said that RIL had issued a press release a year earlier on February 16, 2017, to announce that it had secured the offset contract in the Rafale deal. “Even Dassault Aviation in its Annual Report 2016-17 has claimed that ‘offset contract’ is being executed by Reliance.” Surjewala said.

Former French President Francois Hollande and Prime Minister Narendra Modi at the Elysee Palace in Paris, France, on April 10, 2015. Credit: Reuters/Ian Langsdon

“Simple question is, who is lying – Defence Minister, Nirmala Sitharaman or Reliance/Dassault Aviation,” he asked.

He further said that if Dassault was free to choose its offset partner, as the defence ministry claims, it would be a clear violation of guidelines in such matters.

The defence ministry set up a permanent ‘Defence Offset Management Wing’ (DOMW) and issued ‘Defence Offset Contract Guidelines’ for all ‘offset contracts’ in 2016. Surjewala said that multiple clauses in these guidelines made by the Modi government warrant all offset proposals and their progress will have to be approved and monitored by the defence minister and the “acquisition manager” in the defence ministry. The guidelines also said that six-monthly audits have to be conducted by ministry officials.

“My questions to the government are as follows: Can Reliance and Dassault Aviation sign an ‘offset contract’ of Rs.30,000 crore without the approval of the defence minister? Has the ‘offset contract’ been countersigned by the ‘acquisition manager’ of the defence ministry? Why have the six-monthly audits by DOMW not been conducted? Has the ‘Acquisition Wing’ submitted an Annual Report to ‘Defence Acquisition Council’? Can a private corporate entity and supplier of the defence equipment in the largest defence deal of the country be permitted to wholly gloss over the Defence Offset Contract Guidelines/Instructions,” Surjewala asked, alleging that none of these regulations were followed in the offset deal.

To substantiate his charge that the Rafale deal was a case of cronyism, he highlighted a separate contract around the same time of the Rafale deal in which RDL’s sister company, Reliance Aerostructure Ltd benefitted.

“Another subsidiary of RIL, Reliance Aerostructure Ltd (RAL), was given the license to manufacture fighter aircraft in 2016 around the same time when RDL got the offset contract in the Rafale deal. Intriguingly, Reliance Aerostructure Ltd. was given the license to manufacture fighter aircraft by the Defence Ministry but it did not own any land or building on the date (it was awarded) the license February 22, 2016. What is even more surprising is the fact that even Reliance Aerostructure Ltd was incorporated on April 24, 2015, i.e 14 days after the announcement of purchase of 36 Rafale aircraft by PM in France on April 10, 2015,” Surjewala said.

He alleged that RAL was granted an Industrial Licence for Category A, High Security Defence Production in violation of several rules and acts like the Industries (Development and Regulation) Act, 1951, the Registration and Licensing of Industrial Undertaking Rules, 1952 and new Arms Rules, 2016.

“In its license application for manufacturing fighter aircrafts, Reliance Aerostructure Ltd. has given its address and location as ‘Survey No. 589, Taluka Jafrabad, Village Lunsapur, District Amreli, Gujarat’. At that time, these premises were not owned by Reliance Aerostructure Ltd. The aforesaid address belonged to ‘Pipavav Defence and Offshore Engineering Co. Ltd.’ Even on the date of license i.e 22.02.2016, Reliance Aerostructure Ltd. did not own the land or building at the aforesaid address. It was Reliance Defence Ltd. that acquired the company only on 18.01.2016 and name was then changed to Reliance Defence and Engineering Limited.”

He cited the company’s annual report 2015-16, page number 5 to substantiate his allegation. Similarly, he said even RAL was allotted 104 acres in Mihan SEZ, Nagpur, Maharashtra on 28 August 2015 for around Rs 63 crore, which was paid only in July, 2017. “So when the RAL was awarded the license to manufacture fighter aircrafts, it technically had no assets of its own. Is the Modi government serious about our country’s security?”

Calls to two BJP leaders went unanswered at the time of writing. The story will be updated if and when the BJP’s response comes. Until now, although the Rafale deal has been a point of discussion in the public domain for over an year, the government has yet to give a factual rejoinder. The Congress’s allegations have opened a can of worms. If the government still chooses to be unresponsive, the Rafale deal may very well prove to be BJP’s own Bofors scam.