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https://theprint.in/2017/12/01/rafale-deal-govt-passed-option-buy-e59-mln-unit-cheaper-eurofighter/
New Delhi: Months before it signed the deal to buy 36 Rafale fighter jets from France in 2016, the NDA government passed over another European offer that promised deliveries of the Eurofighter Typhoon combat aircraft which was €59 million per unit cheaper than the French planes.
The offer – made at the top level of the Indian government – involved diverting deliveries of Eurofighter Typhoon jets from Britain, Italy and Germany to meet urgent Indian requirements. The offer also pledged to set up a full production line for transfer of technology of the combat jets. (Read full letter)
The offer of the Eurofighter Typhoon, manufactured by a consortium of European firms, was pushed by both Germany and Britain at the most senior levels.
The price: €138 million per unit for 126 Eurofighter Typhoon aircraft against the €197 million for each of the 36 Rafale jets New Delhi agreed to buy from Paris.
Both prices do not include the cost of weapons. India has to pay another €710 million for missiles that come with the Rafale. The cost of weapons for the Eurofighter Typhoon were not discussed as the offer was not pursued.
In fairness, the Eurofighter Typhoon offer was for the larger order of 126 jets involving better economies of scale. The price for 36 flyaway jets was not discussed as India did not engage in detailed talks with the consortium.
Earlier this month, the opposition Congress party alleged a “huge scam” in the Rafale deal, raising questions about the cost of the fighter jet and the procurement procedure that was followed. The Congress claims it had negotiated a lower price for the same Rafale jets.
The Congress also accused the government of promoting the financial interests of its “crony capitalist friends” at the cost of a defence public sector unit, calling into question a large part of the offsets being executed by Dassault Reliance Aerospace Limited.
The NDA government has denied any wrongdoing in the deal. Defence minister Nirmala Sitharaman has said that the situation in the Air Force was grim when the alliance took power in 2014 and blamed it on what she said was inaction by the previous UPA government.
Prime Minister Narendra Modi’s government had to move quickly on the Rafale deal to ensure the Air Force was not left unattended, she had said.
Reliance Aerospace has said that it had no role to play in the selection of the fighter and is only an offset partner to make parts for executive jets and other products.
‘Clear signal’ in favour of Rafale
Back in 2012, both the French Rafale and the Eurofighter Typhoon had been found compliant to all India-specific requirements by the Air Force. Other aircraft such as the F-16, Gripen and F/A-18 had been rejected after a series of tests. Negotiations started with Rafale due to the lower price offered then.
“Out of the six proposals received in response to the RFP for procurement of the MMRCA, the proposals of M/s Dassault Aviation for Rafale and M/s EADS, Germany for Eurofighter Typhoon were found compliant to the technical requirements. The proposal of M/s Dassault Aviation had the lowest cost,” then defence minister Arun Jaitley had told the Lok Sabha in August 2014.
After it became clear that the UPA-led process to purchase the Rafale was getting delayed, the Modi government was forced to scrap it in favour of a fresh deal. Sensing a fresh opportunity, Germany, strongly backed by Britain, made a new bid and offered a 20 per cent reduction in Eurofighter Typhoon prices for India.
This offer was first made in July 2014 and was valid through 2015 when New Delhi was negotiating the Rafale deal.
Also read: The turbulent history of the Rafale deal
Several sources involved in the process told ThePrint that while a patient hearing was given initially to Eurofighter, a clear signal came from South Block that only the Rafale was being considered.
Also, unlike the process followed with France, where several options on numbers and capabilities were discussed, talks with Germany and Britain did not go beyond a paper proposal.
The Eurofighter Typhoon had been offered at a total cost of €17.5 billion for 126 fighters, or €138 million per plane.
The Rafale deal cost India €7.1 billion for 36 jets, which translates to €197 million per jet.
Even if the €353 million performance based logistics cost – the money to maintain and fly the fighters for five years – is deducted, the Rafale jets cost India €187 million per fighter.
Promise to transfer technology
The German deal also promised technology transfer to manufacture the jets in India. “The alliance of Indian companies with the Eurofighter Typhoon program will have a comparable impact on employment and create more than 20,000 jobs for highly skilled employees in India,” the formal proposal read.
The Rafale jet deal that was finally signed in 2016 did not include the requirement of manufacturing the jets in India, likely due to the limited number of 36 aircraft ordered. While this number is expected to go up, the deal only has a clause that 50 per cent of the contract value will be invested in India. The lead Indian company chosen for this offset clause is Dassault Reliance Aerospace Limited.
The Germans also offered to divert current orders in case India required the jets on an urgent basis.
“To further accelerate the availability of fighter aircraft for the government of India we are in dialogue with our European customer nations Germany, United Kingdom, Italy and Spain to divert from their own deliveries to the benefit of the Government of India should you wish to utilize such an accelerated program,” the offer said.
Sources said that India did not get into detailed discussions about the per unit price of the Eurofighter in the event New Delhi reduced the number of jets it planned to order as it eventually happened with the Rafale.
“It was clear that discussions would only be carried on with the French and there was no room for any other offer,” an official, who had been involved in the discussions, told ThePrint.
India is due to get 36 Rafale jets by the end of 2019 – a much needed addition to the Air Force that is desperate for cutting edge fighters. The Air Force is also keen to add to this fleet with more orders, given the unreliability of the existing Russian fleet and delays in inducting the indigenous Tejas.
Read the full letter here:
