RAFALE Aircraft

The Rafale is a twin-jet fighter aircraft able to operate from both an aircraft carrier and a shore base. The fully versatile Rafale is able to carry out all combat aviation missions: air superiority and air defense, close air support, in-depth strikes, reconnaissance, anti-ship strikes and nuclear deterrence.

The controversy of the Rafale deal

  • Lack of Transparency:
    • The present deal as direct government-to-government agreement, as against the earlier open tender, is criticised.
    • Cost breakdown of Rafale in the original bid under UPA and in the 36 aircraft in the government-to-government deal under NDA are not in the public domain.
    • The Government’s refusal to share the price details which was ‘Classified information’, citing the Security Agreement provisions.
    • This was as per the Inter-Governmental Agreement (IGA) between the Governments of India and France.
  • Accountability to Parliament:
    • The government is duty-bound to share the full pricing details with the Comptroller and Auditor General (CAG) and the Public Accounts Committee (PAC) of Parliament.
  • Pricing Issues:
    • The price for 126 aircraft that was quoted nearly a decade ago, was never finalised, and no contract was signed or executed.
    • The basic price of each Rafale aircraft was said to be around Rs 670 crore.
    • At the time of its signing, the 36-aircraft deal was said to be worth around Rs 59,000 crore (€ 7.878 billion).
    • Breakup given by Top defence officials: the basic cost of the 36 aircraft was € 3.402 billion (approximately Rs 670 crore per aircraft), the weaponry was for € 710 million, spare parts for € 1,800 million, weather and terrain compatibility fits for € 1,700 million, and performance based logistics support for € 353 million.
  • Transfer of Technology:
    • The offset proposal supports the ‘Make In India’ initiative of the Indian Government through Article 12 of the IGA.
    • The current deal states that Dassault will facilitate the implementation of ‘Make In India’ by the industrial supplier notably through offsets for 50% value of the supply protocol.
    • The absence of transfer of technology (ToT) component is raised as an issue.
    • Also, no role is guaranteed for any Indian public sector company, including HAL.
    • c Some India-specific enhancements that were part of the earlier deal do not figure in the 2016 deal
  • Conflict of Interest:
    • The bypassing of procedures, the excessive interest of the Prime Minister’s Office in the deal and the changes made by the government in the terms of the deal and even in the Defence Procurement Policy itself cannot be explained without reference to the offset factor.
    • The offset deal granted to private MNC without any competition has raised eyebrows about lack of transparent bidding.
    • This has increased the suspection of possible chances of Nepotism.

 

CAG’s report on Rafale deal:

The CAG report concludes that the 2016 agreement is slightly better in terms of both pricing and delivery than the 2007 deal.

RAFALE Aircraft

The concerns of the CAG’s findings:

  • The 2.86% gain in the aircraft price claimed by the CAG is at variance with the taller claims made by the government.
  • The question of 50% offsets in the deal, which has been at the centre of a major controversy due to involvement of Indian MNC, has not been dealt by the CAG in this report.
  • The CAG report is unhappy about the defence ministry’s repeated demand not to discuss specific prices in the Rafale deal, as not disclosing price was presented as part of the agreement between India and France on the planes.
  • The original issue of bringing down the total acquisition from 126 to 36 aircraft was not given much attention.
  • There is also no answer to the question why the offer of a lower price made by the manufacturers of another shortlisted aircraft, the Eurofighter, was neither considered nor used to bargain for a better price.
  • The CAG’s assessment of savings in India Specific Enhancements (ISE) to be around 17% is also not properly documented and needs deeper examinations.
  • The CAG report makes it clear that the Air Force’s inability to specify its requirements clearly was to blame, in large part, for the delay.
  • It stresses on the fact that the defence acquisition processes in India require reforms and streamlining.

 

Conclusion:

The report comes amidst varied revelations about possible lapses and deviations in the Rafale deal. The CAG report is less likely to bring closure to the controversy over the deal as it does not clarify all the doubts about the deal. There is a need to deliberate the report in the Parliament in its forthcoming sessions and bring in the required transparency about the deal.