The revelation by Hollande, the former president of France, that Anil Ambani’s firm Reliance Defence was chosen as the Indian offset partner by the French company Dassault at the instance of the Indian government, has added another twist to the sordid tale of the Rafale deal. The brief history of this long saga is that in 2007, the UPA government accepted the proposal of the Indian Air Force to buy 126 fighter aircraft to fix its depleting strength. The proposal then went through the long rigmarole of the prescribed procedure for defence purchases. Finally, Rafale was selected as the most suitable supplier. The understanding with Dassault was that they would supply 18 planes in a ‘fly-away condition’ and the remaining 108 planes would be made in India by HAL for which Dassault would transfer technology. Though the negotiations reached an advanced stage, the UPA government could not clinch the deal.
Within a year of assuming office, Prime Minister Modi decided to visit France in April 2015. The Rafale deal was ready to be clinched. Eric Trappier, the CEO of Dassault, had said on March 25, 2015, “You can imagine my satisfaction to hear from the HAL chairman that we are in agreement for the responsibility sharing, considering as well our conformity with the RFP (Request for Proposal) in order to be in line with the rules of this competition. I strongly believe that contract finalisation and signature would come soon”.
On April 8, 2015, then Foreign Secretary S Jaishankar while briefing journalists about the Prime Minister’s visit, had this to say on the Rafale deal: “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 very technical, detailed discussions. We do not mix up leadership level visits with deep details of ongoing defence contracts. This is on a different track. A leadership visit usually looks at big picture issues even in the security field.”
This was the status of the deal when Prime Minister Modi arrived in France. After the scheduled summit-level talks between him and the then president of France, Francois Hollande, a joint statement was issued on April 10, 2015, two days after the Foreign Secretary’s press briefing and 15 days after the statement of Eric Trappier. The joint statement said, “The two leaders agreed to conclude an Inter-Governmental Agreement for supply of the aircraft on terms that would be better than conveyed by Dassault Aviation as part of a separate process underway; the delivery would be in time-frame that would be compatible with the operational requirement of IAF; and that the aircraft and associated systems and weapons would be delivered on the same configuration as had been tested and approved by Indian Air Force, and with a longer maintenance responsibility by France.”
The announcement in Paris took everyone by complete surprise because nobody had any inkling of what was in Modi’s mind when he left for France. No wonder, therefore, that then Defence Minister Manohar Parrikar was left with no choice but to distance himself from the deal. He told Doordarshan on April 13, 2015, “Modi-ji took the decision; I back it up”. He told NDTV that the decision was “the outcome of a discussion between the Prime Minister and President of France”.
There was no explanation as to how the number of planes was suddenly reduced from 126 to 36. There was no explanation as to why we made a mockery of “Make in India” by not insisting on the production of these planes in India. There was no explanation as to why Prime Minister Modi completely disregarded the firmly-established defence procurement procedure in pushing through this new deal.
Two questions, apart from many other relevant ones, are naturally occupying the minds of people as the controversy rages. The first is price and the delivery schedule of the planes; the second is the appointment of the Anil Ambani’s Reliance Defence as the major offset partner. As far as the first is concerned, they were supposed to be on better terms than the earlier proposal. So, if the earlier proposal was likely to cost 90,000 crores for 126 planes, or 715 crores per plane, according to Parrikar’s own statement to Doordarshan on April 13, 2015, then why has the price now gone up to nearly 1700 crores or so per aircraft? This becomes even more startling when we compare this with the statement made by the Minister of State of Defence in Lok Sabha on November 18, 2016, wherein he said, “An intergovernmental agreement with the Government of French Republic has been signed on 23. 09. 2016 for purchase of 36 Rafale aircraft along with requisite equipment services and weapons. Cost of each Rafale aircraft is approximately 670 crore. All the aircraft will be delivered by April 2022.”
Is it not open to the government to now argue that the interpretation of “Aircraft along with equipment, services and weapons” means merely the basic platform of the aircraft, and does not include the “India-specific enhancements”?
As far as delivery is concerned, it will not be completed before 2022. So, it is no better than the earlier UPA government proposal. Thus, we have lost both in price and in delivery schedules.
As far as the offset agreement is concerned, Dassault is under obligation to import from Indian entities goods worth 50% of the value of the total contract. So, if the value of the 36 aircraft is Rs. 60,000 crore or so, Dassault has to import from India items worth Rs. 30,000 crore. Reliance Defence has been given 70% share of the offset obligation; so its share amounts to 21,000 crores.
The first question which arises, therefore, is why was HAL, which was knocked out of manufacturing this aircraft, also denied the opportunity to be a major offset partner? Why was Reliance Defence brought in which has no experience in this field? The government’s case that the supplier, namely Dassault, was free to choose its offset partners and the government had nothing to do with it, in fact, it was unaware of it, has been torn apart by the statement of former President Hollande, who says that he had no choice in the matter after the government of India’s recommendation to select Reliance Defence.
These and many more are question that are troubling the minds of the people. To sum up,
1. Why did the Prime Minister make a complete mockery of the firmly established defence procurement procedure in finalising a totally new proposal to buy 36 aircraft only during his visit to Paris?
2. By reducing the number of aircraft from 126 to 36, has he not put national security in peril?
3. By knocking out HAL completely from the deal, has he not made a mockery of his own much-advertised “Make in India” programme?
4. Does not the introduction of an inexperienced private party as a major offset partner and that too at the PM’s own recommendation raise serious doubts about the integrity of the deal?
5. Why is the government hiding behind technicalities and refusing to reveal the truth if there is nothing suspicious about it?
6. Why is the government running away from an enquiry into the deal if its hands are clean? Why does it continue to remain non-transparent and secretive even about facts which are already in public domain and why is it taking recourse to alternative facts, half truths, untruths and abuses to defend the indefensible?
There is no doubt that it will have to pay a heavy price for its shenanigans.
Yashwant Sinha, former BJP leader, was Minister of Finance (1998-2002) and Minister of External Affairs (2002-2004)
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