https://www.thehindu.com/opinion/op...e-on-rafale/article25125552.ece?homepage=true
L’affaire Rafale’ has become the Achilles heel of the National Democratic Alliance (NDA) government. The incontrovertible truth is that in August 2007. The Indian Air Force found two aircraft technically equipped — the Rafale and the Eurofighter Typhoon. The tender had made it clear that all bids were to be inclusive of cost of initial purchase, transfer of technology, licensed production etc.
On December 12, 2012, Rafale emerged as the L-1 vendor with a publicly disclosed price of ₹526.1 crore per aircraft. Out of 126 aircraft, 18 were to come from France in a flyaway condition, with the remaining 108 aircraft to be manufactured with transfer of technology. In addition, there was a 50%-offset clause requiring Dassault Aviation to invest 50% of the contract value by way of investment . On March 12, 2014, a ‘workshare agreement’ worth approximately ₹36,000 crore was signed by Dassault Aviation; 70% of the work on the 108 aircraft to be was to be done by PAL and 30% by Dassault Aviation.
Unilateral move
On May 26, 2014, the NDA government assumed office. Prime Minister Narendra Modi visited France on April 10, 2015. Two days before the visit, then Foreign Secretary S. Jaishankar stated: “In terms of Rafale, my understanding is that there are discussions under way between the French company, our Ministry of Defence, the HAL… We do not mix up leadership-level visits with deep details of ongoing defence contracts. That is on a different track.”
Two facts are significant here — one, there were ongoing negotiations between the Defence Ministry, Dassault Aviation and HAL for the purchase of 126 Rafale, 108 out of which would manufactured by HAL, and two, Mr. Modi would not be involved in this as the issue was of technical nature.
However, during his French trip, Mr. Modi inexplicably, and unilaterally, announced ‘off-the-shelf’ purchase of 36 Rafale aircraft at a cost of ₹1,670.70 crore per aircraft. Dassault Aviation disclosed this price in its annual report for 2016.
The price was more than thrice the originally negotiated price of ₹526.1 crore and would involve an additional outflow of approximately ₹41,000 crore. HAL was dropped. Interestingly, all this was done without even cancelling the original global tender for 126 fighter aircraft.
No spin can change perception
The fact that the technical specifications were identical in both cases and therefore, there was no case for a price increase is evidenced by the joint statement of April 10, 2015, issued by the then French President, François Hollande, and Mr. Modi which read: “Aircraft and associated systems and weapons would be delivered on the same configuration as had been tested and approved by Indian Air Force, in clear reference to negotiations and testing process for the Rafale jets under the UPA government.”
The government proceeded to cancel the original tender only on June 24, 2015. Subsequently, the Defence Procurement Procedure of 2013 was retrospectively amended on August 5, 2015, in a very suspicious manner. Finally, the deal was signed on September 23, 2016.
The government refuses to disclose even the purchase price of the 36 Rafale aircraft, citing mythical ‘secrecy clauses’. Ironically, the said agreement nowhere prohibits disclosure of the commercial costs involved.
Since hard facts militate against the government, no amount of alternative facts, fake news and hallucinatory spin can transform the perception of it.
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There are concerted efforts to create a needless controversy around what was in effect decisive action taken by the Narendra Modi government to make good a critical shortfall in the country’s defence preparedness.
As the defence establishment applauded the government’s decision to go in for a timely induction of 36 Rafale fighter jets to bolster its strike capability, the Opposition looked desperately for scandals where there were none. That the direct government-to-government deal precluded Quattrocchi-type middlemen had further constrained the scope for any speculation on that count.
The deal’s timeline
First, a close look at the deal’s timeline to get a fair idea about the roles played by the UPA and NDA governments. As the country did a stocktaking of the lessons learnt in the wake of the Kargil conflict, the absence of a lethal air strike capability was direly felt and prompted the Indian Air Force to look around to fill a critical gap in its defence preparedness. However, the process to acquire a new set of Medium Multi-Role Combat Aircraft (MMRCA) began only in 2007 when the Defence Ministry was headed by A.K. Antony.
After a long-drawn process, bids were opened in December 2012, and the French company Dassault Aviation was picked. There were protracted negotiations between the UPA government and Dassault on the aircraft’s prices and transfer of technology.
The talks continued until early 2014. A deal remained elusive, apparently due to the reluctance of a scam-ravaged UPA government, hit hard by the revelations of corruption and policy inertia.
Unlike Bofors, no corruption was involved, no money was exchanged. An inter-governmental agreement ensured that middlemen were eliminated in an attempt to plug holes in India’s combat readiness.
Second, with regard to the price of the aircraft, it is clear that the deal struck by the Narendra Modi government works to be at least 9% cheaper than the one concluded by the Manmohan Singh government insofar as its basic price is concerned, and at least 20% cheaper after including add-ons, such as state-of-the-art weaponry and gadgets, which would make the Indian Rafale both fearsome and lethal.
Flawed allegations
In any case, the very premise of these allegations that essentially relate to the offset clause is fundamentally flawed. The two governments involved have nothing to do with the offset provision under which Dassault decided to partner with the Reliance Group, among dozens of other Indian firms such as BTSL, DEFSYS, Kinetic, Mahindra, Maini and SAMTEL.
Dassault Aviation was negotiating potential partnerships with over a hundred other firms, as stated in its official press release.
Moreover, as noted in the Ministry of Defence’s statement, media reports of February 2012 suggest that Dassault, within two weeks of being declared the lowest bidder for procurement of 126 aircraft by the UPA government, had entered into a pact for partnership with Reliance Industries in the defence sector.
In the present case, it is only right to say that it was Dassault’s prerogative to pick its industrial partner.
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The government should formulate a coherent strategy to deal with perceptions
No sooner had the ink dried on the Inter-Governmental Agreement between France and India to procure 36 Rafale aircraft than the Congress Party raised questions on the procedures adopted and the massive increase in prices. To many of us, this initially appeared to be just one more attempt to politicise a perfectly good defence deal.
The UPA, while in power, had been painfully slow in meeting the strategic requirements of the defence services. The 126-aircraft Rafale deal had tied itself in knots and failed to get approval even after extensive trials had been carried out and cost negotiation completed. The Indian Air Force was diminishing in strength and struggling to maintain its fighting ability to combat two adversaries.
Modi’s decisiveness
In contrast to the sluggishness of past practices, Prime Minister Modi had moved decisively to fast track the procurement of 36 Rafale aircraft.
While this would not meet the complete requirements of the Air Force, it would provide a significant boost to its dwindling capability.
There was also no hint of corruption in the deal — of middlemen with foreign accounts or changes in specifications to favour a particular manufacturer. These facts should have been enough to ensure that the allegations of any scam faded away quickly and quietly. However, that has not happened.
We are living in a ‘post-truth world’. ‘Post-truth’ was named as the 2016 word of the year by Oxford Dictionaries and is defined as “relating to circumstances in which people respond more to feelings and beliefs than to facts.” This reality was ignored by the government as it sought to counter the Opposition’s charges by haughty, factual denials. The Defence Minister Nirmala Sitharaman correctly identified the Rafale row as a ‘battle of perceptions’ but the tools used to fight this battle have been less than adequate.
Absence of transparency
The attempt to hide behind the a secrecy clause was clumsy and unconvincing, particularly, when many aspects of the pricing were already out in the open. The Finance Minister said that the Rafale deal negotiated by the government was 9% cheaper than the previously negotiated price, but in the absence of transparency, such statements lose the weight of authority.
There was a similar ineptness in dealing with the case of Anil Ambani’s company as the major offset partner of Dassault. In reply to a Rajya Sabha question in February 2018, Ms. Sitharaman stated: “Details of Indian offset partners have not yet been provided by the French industrial suppliers.” While this is factually correct, the answer appeared to be evasive. Evasion leads to speculation and doubts are generated.
Emily Thorne, a fictional character in the television series
Revenge, says, “Truth is a battle of perceptions. People only see what they’re prepared to confront. It’s not what you look at that matters, but what you see. And when different perceptions battle against one another, the truth has a way of getting lost.” This is what appears to be happening in the Rafale row.
The procurement of the Rafale is an essential requirement. It is inconceivable that the government would agree to pay exorbitant costs without due diligence. The Air Force is in urgent need of modern aircraft and Rafale would partially fill this operational void. If this deal is not to become a political casualty, the government should formulate a coherent strategy to deal with perceptions.
Lt. Gen. Deependra Singh Hooda is a former General Officer Commanding-in-Chief of the Indian Army’s Northern Command
