WHAT IS THE RAFALE DEAL ALL ABOUT?
Historic background of the issue
Rafale deal is a defense agreement between the Indian Government and the French Government. It was for the acquirement of aircraft for the air-to-air and air-to-ground attack of the same sortie. USA, Europe, and Russia were competing for this deal.
Nevertheless, the consideration was for the Rafale aircraft over all the above competitors. It started under the then National Democratic Alliance (N.D.A). Late Prime Minister Atal Bihari Vajpayee was heading the government during that time.
In 2012, the Indian Air Force (I.A.F) required new aircraft due to the aging squadrons. The requirement was of a minimum of 42 fighter squadrons to maintain ideal potentiality. However, between 2000-2012, the squadron strength came down to 36 because of obsolescence.
The original proposal was for the procurement of 126 Mirage-2000 jets to replace the
MiG-21s in service. Nevertheless, under the Vajpayee government, it was later converted to 126 Medium Multi-Role Combat Aircraft (M.M.R.C.A). However, the issue of Request for Proposal (R.F.P) for the same took place in 2007 under the United Progressive Alliance (U.P.A).
Choice of the Indian Air Force
The air force had to choose among the following- Boeing Super Hornet, Lockheed Martin
F-16IN Super Viper, R.A.C MiG MiG-35, Saab Gripen C, the Eurofighter Typhoon, and the Rafale.
The I.A.F finally narrowed down on both Eurofighter Typhoon and the Rafale aircraft as they met their technical evaluation and the flight evaluation criteria in 2011. In January 2012, Rafale became the lowest bidder or the L-1 bidder. It eventually won the deal over Eurofighter for the supply of aircraft to India. After this, contract negotiations began with the manufacturers Dassault aviation the same year.
According to the deal, the deal was for the purchase of 126 Rafale jets. The purchase of the 18 of them was to be off-the-shelf. The remaining 108 of them were to be license manufactured in India by the Hindustan Aeronautical Limited (HAL), Bengaluru.
Unfortunately, Request for Proposal (R.F.P.) and the medium multi-role combat aircraft was withdrawn in June 2015 as contract negotiation had reached an impasse. Transfer of technology was not cost effective.
The beginning of the controversy
The controversy arose when the U.P.A claimed that the deal which they cracked was much better than N.D.A. On the other hand, the deal was not formalized by the previous government as stated by the government.
The contract had many shortcomings. Had it been finalized, it would have thwarted the agreement due to increased cost by manifolds.
WHAT WAS THE U.P.A DEAL FOR THE RAFALE
Well, there was as such no agreement between the Indian and the French government signed up for the same under the previous government. This is because of the various issues which arose as there was no consensus between the two parties.
WHAT ARE THE REASONS FOR THE CONTROVERSY?
The most important aspect is the request for proposal, cost and the transfer of technology, which remained incomplete even after two years until 2014.
Transfer of Technology (T.o.T)
The prima facie reason because of which the there was no consensus on the contract under the U.P.A regime was the clause on Transfer of Technology.
Dassault aviation was not ready to take the responsibility on the quality control of 108 aircraft, which have to be built upon by HAL, Bengaluru. Both the HAL and Dassault have since been giving a different statement on the hours of labor for the production purpose.
While Dassault allocated three crore staff hours, HAL had given an approximation which was higher than the original figure by three times. This cost stated by HAL was increasing the price by several times.
Additionally, there was no agreement on the transfer of technology previously. What was there was the license manufacturing technology.
It was the same reason because of which the defense minister rebutted on the allegation put by Congress by stating – “ the bases of the earlier contract was on the procurement of 126 jets. On the other hand, this new contract is on the procurement of 36 off the shelf purchased of jets. So, the T.o.T is not economically feasible.”
DID THE MODI GOVERNMENT CRACK THE DEAL AT A HIGHER COST?
The finalized deal is controversial because of the cost involved in it. The U.P.A claims that the N.D.A government has signed a deal for approximately 1570.8 crore which is 300 percent more than the price at which U.P.A negotiated.
There have been various improvements in the design and the specification of the planes. However, these highlights are not coming onto the foray. Ability to take off from a high-altitude station such as Leh, advancement to the search track sensor and potential electronic jammers pods are a few of them. These changes are as per the Indian requirement.
Not to mention that the cost of the improvement established in this deal is equal to the 126 aircraft. This improvement is costly because this is a one-time research and development cost.
The basis with which the Congress is pointing a finger towards the government is that the new deal is a massive blow to the Prime Minister’s dream of ‘Make in India‘. Furthermore, the fact that the Congress is missing is that the new deal is with front-line technology, more efficiency, and a performance guarantee clause.
ADDITION IN THE NEW DEAL
The I.A.F is getting meteor missiles, as it is considered the most advanced in the world. The present government has settled in a contract which indeed gives it an upper edge over the opposition.
European inflation has been capped at 3.5 % to reduce the cost. Thus, in case the inflation goes down, and the cost will decrease as the payment is being made in installments. Under the current agreement, the 36 Rafale procurement offset proposal supports the ‘Make in India‘ initiative of the Indian Government through Article 12 of the Inter-Governmental Agreement (I.G.A).
It states that the French Party will facilitate the implementation of ‘Make in India’ by the industrial supplier notably through offsets for 50% value of the supplied protocol.
The offsets proposal also includes provisions for transfer of sophisticated design technology, which is meaningfully superior to the licensed manufacturing offered in the earlier M.M.R.C.A pact. These critical design technologies are presently under discussion between the two governments.
THE SECRECY IN THE RAFALE DEAL
For a long period, Rahul Gandhi has been alleging that the government the exact price details of the deal which are finalized between the two governments are not being revealed. However, the fact remains that an approximate figure of the deal has been present in the parliament.
Providing information about the various details of the customization and the weapon systems specially designed as per Indian requirement if revealed would hinder the national security of the country.
The disclosure of this confidential information is not allowed due to a bilateral agreement signed by both the government in 2008 which has a confidentiality provision.
WERE ALL THE PROCUREMENT PROCEDURE FOLLOWED ON RAFALE DEAL?
Defense by the government
One of the most important questions which remain unanswered is whether all the procedure for the procurement of the aircraft followed with the clearance from the Cabinet Committee on Security (C.C.S) before the announcement or not.
To back it up the actions of the government, defense minister Nirmala Sitharaman addressed the media. She had in a hush-hush manner stated that all the process regarding the acquisition were in accordance to the D.P.P.
Although it might be factually correct for the aspects, including mandating, conducting and monitoring of negotiations and seeking all necessary approvals, including that of the Cabinet Committee on Security, before entering into the I.G.A, it may be partly right.
Defense Procurement Procedure (D.P.P.)
According to the paragraph 71 of Defense Procurement Procedure, 2006 it clearly states that-
“There may be occasions when procurement would have to be done from friendly
foreign countries…mutually agreed provisions by the Governments of both the countries. Such procurement will be done based on an Inter-Governmental Agreement (I.G.A) after clearance from the Competent Financial Authority (C.F.A.)….”
However, the paragraph 72 and 73 of the same Act respectively clearly mentioned that-
“In cases of large value acquisition and especially that requiring product support over a
long period it may be advisable to enter into a separate I.G.A…… It is expected to safeguard the interests of the Govt of India and should also provide for assistance of the foreign Govt in case the contract(s) runs into an unforeseen problem.”
“In certain acquisition cases… These considerations may also dictate the selection of particular equipment offered by a vendor not necessarily the lowest bidder (L-1). Decisions on all such acquisitions would be taken by the Cabinet Committee on Security (C.C.S) on the recommendations of the Defense Procurement Board (D.P.B).”
According to the paragraph 71, the government might be factually correct. However, according to the paragraph 72 and 73, C.C.S. was not consulted as per the due procedure. Moreover, the Defense Procurement Board did not receive prior information regarding the announcement. Additionally, when the announcement was made, the Inter-Governmental Agreement was not drafted.
Eventually, the now finalized deal is along with the lines of the procedure; although the announcement bypassed the rules in all manners which may or may not be breaking the laws.
THE CRONYISM RELATED TO RELIANCE
The involvement of the Prime Minister’s so-called friend has raised many eyebrows regarding this deal. Allegations of cronyism, double-dealing and favoring of the private sector over HAL ha been flying high in the air. So, things need to be put to rest on this issue as well.
Dassault has chosen Reliance Defense Ltd. to meet its ‘offsets’ or export obligation in the contract. The Ministry of Defense (M.o.D) has no role in the selection of Indian partners by the foreign vendors.
All purchased planes are in the fly-away condition. So, neither HAL nor any other company can make it.
As per D.P.P., the M.o.D has no role in the selection of Indian partners by the foreign vendors. The mentioned above rule was introduced in the country in 2005, and it has the same position since then.
ADD-ON IN THIS DEAL
Reports state that there is a new offset clause in which the Dassault aviation would spend 50% of their earnings in the defense sector of the country. This clause is was not mentioned in the previous contract and is something new.
The new development would help the local manufacturers to learn the global technology. It would prepare them to compete in the international level and hence get a business of about 3 billion euros.
The French side has made a 30% offset commitment for military aerospace research and development programs and the rest 20% for making components of Rafale here.
The French government has agreed, in principle, to collaborate on the Kaveri engine which lacks the real power thrust needed to fly the Tejas.
An upgraded Kaveri engine with 90 kN thrust compared to the existing 72 kN can be developed with French cooperation. Tejas aircraft currently runs of American engines. These aircraft can then use these newly developed engines.