Rafale Deal: A ‘Toofani’ Scam

B Arjun

NOT very long ago, in 2012, the Indian Air force (IAF) selected Rafale fighter jet for procurement to augment its depleting fleet. The process adopted by the IAF for evaluating the competing aircraft set the gold standards for fighter aircraft acquisitions. Air Commodore Jasjit Singh praised the Air Force for following a “systematic and scientific process”. The Brazil defence minister Celso Amorin asked the then Indian defence minister AK Antony to share India’s “open tender evaluation process for the Medium Multi-role Combat Aircraft (MMRCA) competition, in which the French-made Dassault Rafale emerged as the lowest bidder.”  It was largely assumed that the malaise of corruption had been eliminated from Indian defence deals and the ‘ghost of Bofors’ would never come back to haunt. But who knew then that a new government would come and destroy the entire process and make defence deals look as murkier as they were in past.

Post the selection, the process of price negotiations picked up momentum to procure 126 Dassault Rafale fighters. But before the deal could be inked, the UPA government was voted out of power in 2014. Less than six months after assuming power, the Modi government took a  hurried action, as bizarre as demonetisation, to abruptly jettison the entire initial contract for 126 aircraft by withdrawing the Request for Proposal (RFP), initiated in 2007 by then UPA government and arbitrarily signed a contract with the French company for delivery of 36 Rafale aircraft.   

No discussion or deliberations were conducted, both within and outside the government circles, before signing the deal. Years of hard-work put in by the IAF in evolving a model method of procurement was shredded to pieces. National security considerations, democratic norms and propriety were thrown into the dustbin before making commitments to the French. The new contract also forfeited IAF’s requirement for transfer of high-end manufacturing or technology to India. 

The 36-aircraft deal makes a mockery of IAF’s operational needs. The 36 off-the-shelf purchase does not help the IAF to replace the ageing fleet of Russian aircraft, which was one of the main objectives of initiating the RFP almost a decade ago. As per the threat perception worked out by the IAF’s perspective planning staff, it needs at least 42 squadrons, each consisting of 16-18 planes, fighter planes. By 2019 -2020 with another 14 squadrons of the vintage MiG 21s and MiG 27s leaving, the IAF is likely to be left with less than 30 squadrons.

The obvious question is how does piecemeal induction of two squadrons of Rafale aircraft solve IAF’s operational problems? The question which arises is what made Prime Minister Modi alter IAF’s perspective plan and jeopardise its operational preparedness? The three guiding principles for the MMRCA procurement outlined by AK Antony, UPA’s defence minister were: 'First, the operational requirements of IAF should be fully met.' 'Second, the selection process should be competitive, fair and transparent, so that best value for money is realised. Lastly, Indian defence industries should get an opportunity to grow to global scales.' Modi government just shredded the three principles while going to purchase the fighter jets.’

The question which arises is why did Modi disregard these basic guidelines formulated in the best interest of national defence? Was he under some international pressure to strike a deal at breakneck speed? Was there any international pressure to sign the deal?

THE RAFALE SALE

The former French president Francois Hollande, a so-called socialist is best described as a ‘debased salesman’. History will remember him for selling maximum Rafale fighter jets in one single year and keeping Dassault Aviation afloat.  He sold 96 Rafale aircraft – 36 to India and 24 each to Qatar and Egypt. This was an achievement because for 24 years prior to 2015, the French had not sold even a single Rafale to any country.

Hollande’s terrific salesmanship story just does not answer the question about sudden jump in sales; it also obscures the fact that some high level international commercial and political networking guided by American interests helped him achieve his objective.

Hollande was perhaps a noble salesman, not only did he save jobs in France but also helped United States defence industry. After becoming the president in 2013, Hollande asked the French air force to cap its ‘total projected fleet at 225 jets, down from 286, and asked Dassault to slow down the pace of delivery from 11 to around five planes a year. Defence expenditure was not slashed to save money for welfare of his people. The money saved on 61 jets, was used to procure four Lockheed Martin C-130J aircraft and four MQ-9 Reaper unmanned aerial vehicle (UAV) from USA. So, was Hollande helping America, its most aggressive NATO ally, at the cost of national industry? Surprisingly, Hollande was smarter, he sold French Rafale to three US strategic allies – India, Egypt and Qatar. The Americans probably helped because France had let Rafale cause atrocities in Syria and Libya.

In February 2015, Egypt signed a deal with France for 24 aircraft. The first three were received in July 2015, the second batch of jets arrived in Cairo in January 2016, while the third set came in April this year.  In April 2015, Hollande signed another deal with Modi and sold 36 fighter jets to India at a cost of $9.2 billion (Rs 58,000 crore). Hollande signed the third agreement of the year with Qatar for 24 Rafale jets. It is reported that the aircraft costed the Egyptians €5.2 billion. Similarly, the Qatar air force paid €6.3 billion for a similar number of aircraft.

The Qatari deal is priced higher because it included the provision of long-range cruise missiles as well as meteor missiles. And also because two third of the aircraft that Egypt has bought are twin-seat trainers, which are priced less than the single-seater fighters.   

As far as the Indian deal is concerned, figures from Dassault Aviation’s March 8 annual report reveal that the opposition parties are blaming the government for buying the aircraft at an exorbitant price where India has ended up paying Rs 351 crore more for each jet than other Rafale customers such as Egypt and Qatar.

So the question is: What extra stuff is India getting that it has to pay more than what Qatar is paying for the same Rafale? The second question: What special feature was added to Rafale to suddenly change the cost?

The government is aimlessly saying that Euro fighter aircraft, the second best contender, became cheaper after the price negotiations with Rafale revealed that the per unit cost of the French jet with all accessories was higher than what the company had quoted earlier. Therefore, Rafale was no longer the lowest bidder. If the true price comes out only during the final price negotiations then how can the government confidently claim that Dassault Aviation was no longer the L1, without even carrying out similar negotiations with the manufactures of Euro fighter aircraft?

One of the reasons cited for withdrawing the initial deal is Dassault’s unwillingness to ‘furnish performance and warranty bonds and refusal to act as single point of responsibility for the contract.’ This leads to the question that if the conditions and cost of Rafale jets was higher, then why didn’t the government scrap the entire deal? If Dassault had reneged on its price and promise then why did the government feel obligated to buy 36 aircraft from the same company?

The government is doing disservice to democracy by hiding the actual price of the aircraft. It cannot hide behind the veil of national security to prevent the truth from coming to surface. Another specious argument that the prime minister is giving is that there is no scope for corruption because it is a deal between two governments. However, what he is missing is that governments across the world are the hot beds of corruption because of their support for crony capitalism. And in the Rafale deal how one denies the fact that the biggest beneficiary of the contract is Anil Ambani-led Reliance Defence with nil experience in manufacturing sophisticated machines. By brazenly supporting a debt ridden capitalist at the cost of national security, Modi has lynched propriety.

 

Newsletter category: