Read this to know how RaGa is not telling the truth on either the price of the French planes, the way contracts were awarded, or why Congress sat on the decision as India’s fighter jet numbers kept dwindling alarmingly

Rahul Gandhi is in search of BJP’s ‘Bofors moment.’

But if he and his advisers think the Rafale deal is equivalent of the Bofors scandal for the current government, they are mistaken.

Essentially, the Congress is making two claims on the Rafale issue: One, the NDA government paid an inflated price as compared to the UPA’s price for the fighter jets and two, the government favoured a private company over the Defence Public Sector Unit, the Hindustan Aeronautics Ltd or HAL. On both counts, the man who aspires to become the Prime Minister of India one day, has been economical with the truth.

History of procurement

If anything, the Congress-led UPA I and II governments need to take the blame for hollowing out the Indian Air Force (IAF) by sitting on a procurement projected as absolutely essential at the beginning of this century. The IAF first articulated the need to acquire 126 fighter jets by 2000. In nine years, the IAF said, it would have to phase out the vintage MiG-21 series of aircraft and replacement should be in place by 2010 to retain the Air Force’s combat edge against Pakistan. So the qualitative requirements were drawn up, the numbers arrived at. By 2003, Air HQ was ready to put out a tender. Yet it took four more years for the Defence Acquisition Council (DAC) to accept the IAF’s demand. The Acceptance of Necessity or AON was accorded on 29 June 2007.

But thanks to the indecisiveness of two successive UPA governments, the procurements never happened. So, in seven years between 2007 and 2014, the UPA failed to clinch the deal. Neither did it arrive at any price per aircraft. Meanwhile, the IAF’s combat fleet kept dwindling at an alarming rate.

The events need a bit of a recap to put the matter in the right perspective.

Six companies--EADS from Germany, manufacturers of the Eurofighter Typhoon; Lockheed Martin (who make the F-16s) and Boeing ((F-18 aircraft) from the USA, Sweden’s SAAB (makers of Gripen); Dassault Aviation from France (the Rafale manufacturers) and Russia’s Rosoboron Export (MiG-35)--submitted their techno-commercial bids in April 2008 for what came to be known as the Medium Multi-role Combat Aircraft or MMRCA tender, followed by nearly 11 months of field evaluation trial (FET) held in the heat of Rajasthan desert during peak summer months and extreme cold conditions in the high altitude zone of Ladakh.

In 2010, the evaluation committee of the IAF shortlisted two aircraft — the Eurofighter Typhoon and the Rafale aircraft fielded by the Dassault Aviation (DA) — and forwarded the recommendation to Defence Minister AK Antony.

Procrastination

Antony took almost a year to accept the recommendation. It was already 2011.

For the next two years, negotiations certain aspects related to License Manufacture of 108 aircraft in India with Hindustan Aeronautics Ltd or HAL as the lead production agency could not be finalized. Major differences occurred on the aspect of Man Hours that would be required to produce the aircraft from kits in India and who would take the responsibility for the entire lot of 126 aircraft. While the French Company maintained that 31 Million Man Hours that it had proposed should be sufficient to produce 108 Rafale aircraft in India, HAL was asking for mark up of this Man Hours by 2.7 times.

This point became the bone of contention between the government and the French manufacturer.

Moreover, in the understanding of the MoD, the company that had emerged as the winner in the bid—Dassault Aviation—would have to sign a single contract with the Indian government. The French Company would then need to have back-to-back contract(s) with HAL and other Indian Production Agencies. Dassault Aviation would also be responsible for the delivery of the complete 126 aircraft to IAF and the single point responsibility for this contract rested with Dassault Aviation because the tender was issued to them.

Congress indecision

However, Dassault Aviation did not fulfil the commitment given in the first meeting and an impasse ensued on the responsibility of delivery of 108 aircraft to be manufactured in India. Another hurdle came up on the point of work share of HAL. Dassault Aviation was asked to submit a 'Responsibility Matrix', clearly defining the role and responsibility of Dassault Aviation and HAL. The `Responsibility Matrix' was to facilitate a back-to-back contract of Dassault Aviation with HAL.  The CNC or Cost Negotiations Committee was not able to move the negotiations forward since the interpretation of two fundamental aspects of the case by the French Company was not in line with the original terms in the tender.
The UPA government, under the overly cautious AK Antony instead of imposing a deadline for the French manufacturer to comply with the terms of the tender, dragged its feet and allowed Dassault Aviation to get away with obfuscation. Moreover, in an unusual move, Antony instructed MoD officials to bring the file back to him after concluding the negotiations to re-examine the integrity of the process before proceeding to finalise the contract, creating confusion and doubt in the minds of the officials who were negotiating with the manufacturer.

Turning it around

Meanwhile, the Modi government took office in May 2014.

As the new political leadership was briefed about the impasse, MoD officials were told to try and break the deadlock as soon as possible since the IAF’s fleet of fighter aircraft was precariously poised. Manohar Parrikar took over as defence minister in November 2014.

As the CNC members took the matter to Parrikar he realised the process had been convoluted to such an extent that, it would have been impossible to take it forward. He, however, knew from the briefings given by the IAF, there was no time to lose in acquiring fighter jets. The number of effective squadrons was going down rapidly. The IAF leadership also told him that they were happy with Rafale’s performance and would rather have the fighter in its fleet than scout of other options.

Parrikar took the matter to the Prime Minister and briefed him about the necessity of procuring the fighters urgently. At the same time, Parrikar told Modi, it would be legally untenable to go through with the tender that was being negotiated since the process had got vitiated completely thanks to Antony’s indecisiveness and a crucial oversight in the original terms of the contract.

Under the circumstances, there was no alternative but to withdraw the original tender, Parrikar told Modi since the CVC (Central Vigilance Commission) guidelines provide that negotiations cannot be held with the competitor who has come second in the contract (L2 vendor in officialese). The only way, the then defence minister suggested, was to scrap the tender and buy a minimum number of Rafale jets off the shelf to fill a critical gap in the IAF’s inventory.

The Prime Minister agreed and decided to talk to the French President about such a possibility during his upcoming visit to Paris in April 2015. The Cabinet Committee on Security (CCS) also gave its approval to the new proposal before Modi left for Paris on 9 April 2015.

India’s decision was announced at a joint Press Conference between Modi and then French President Francoise Hollande on 10 April 2015. Once the in-principle decision was taken, it was left to Parrikar and his team in the MoD to negotiate the eventual price for buying the 36 jets. Their confidence bolstered by the PMO, the Parrikar-led MoD drove a hard bargain with the French. But it wasn’t until another 15 months later—in September 2016-- that India finally signed the contract and got the state-of-the-art fighters at a competitive price.

Better product, cheaper price

The final negotiated price for 36 Rafale package, along with the initial consignment of weapons, Performance-based Logistics (PBL), simulators along with annual maintenance and associated equipment and services was fixed at 7,890 million Euros.  In any case, officials involved in the nitty-gritty of the negotiations pointed out that the package cost of 126 MMRCA and 36 Rafale cannot be directly compared to work out per unit cost as the deliverables in the two cases were quite divergent.

The lower price apart, the Rafales that IAF will operate will have a weapon suite much superior to the ones proposed in the earlier case. They will include Air to Air weapons METEOR Beyond Visual Range Missiles with ranges more than 150 Km, MICA-RF Beyond Visual Range Missiles with ranges more than 80 Km and MICA-IR Close Combat Missiles with ranges more than 60 Km. The Air-Ground weapons include SCALP missiles with a range in excess of 300 Km. The induction of METEOR and SCALP missiles will provide a significant capability edge to the IAF over India’s adversaries.

The Rafale for IAF will have 13 India Specific Enhancement (ISE) capabilities which are not present in the Rafale aircraft being operated by other countries. Three capabilities pertain to Radar enhancements which will provide IAF with better long range capability. One of the specific capability being acquired is the Helmet Mounted Display (HMD) through which the IAF pilots will be able to counter many threats simultaneously. Another very significant capability enhancement sought is the ability to start and operate from 'High Altitude Airfields'.

On the second point about favouring an industrial house close to the Prime Minister, Sandeep Unnithan of India Today has clinically demolished the argument in his piece in the latest issue of India Today, titled the Rafale dogfight (https://www.indiatoday.in/magazine/the-big-story/story/20180806-the-rafale-dogfight-1296568-2018-07-27). He writes: “Documents provided by Dassault Aviation indicate the Dassault-Reliance JV is one of the 72 partnerships Dassault has forged with Indian industry. Others on the list include Snecma-HAL Aerospace for engine components, Samtel for multi-function cockpit displays, Godrej, Larsen & Toubro and Tata Advanced Systems.”

Moreover, under the Defence Procurement Policy, Dassault Aviation like any other original equipment manufacturer is free to choose its offset partners. Several private companies and not just one besides the Govt of India’s Defence Research and Development Organisation (DRDO) will execute the offset obligations ( supply defence industrial goods, or absorb some of the technology) and NOT co-produce Rafale as described by the uninitiated.

Also as Minister of State for Defence Dr Subhash Bhamre told the Parliament earlier this year, no offset agreements in the Rafale deal have so far been communicated to the MoD. This is not unusual because, under the offset policy, vendors or OEMs are permitted to provide details of their Indian Offset Partners (IOP) either at the time of seeking offset credits or one year prior to discharge of offset obligations.

So, there was no ‘UPA price’ to compare it with an ‘NDA price,’ and two the offset contracts are yet to be finalised.

Clearly, the NDA government’s purchase of Rafale aircraft off the shelf was guided by urgent necessity and not by any other considerations. On the other hand, one must ask the question why did the UPA not show any urgency in procuring the fighter jets when national interest dictated that the IAF’s request be met forthwith? That in my view is the bigger scandal.