August 7, 2015


Prime Minister Narendra Modi’s grand effort of bailing out the Dassault Rafale fighters deal from bureaucratic tangle with the decision to purchase 36 fighters in ‘ready to fly condition’ has sunk again into an impasse where escalating costs, and prohibitive delays have bogged down the negotiations being held in France.

A team of negotiators from India led by Deputy Chief of Air Staff, Air Marshal SBP Sinha  have submitted a list of alterations that the French maintain will increase the price, and delay the supply of the fighters. India is insisting that Dassault invest 50% of the overall contract price as offsets in its domestic defence or internal security sectors, according to the Janes Defence Weekly.

Political intervention , thus, is again becoming necessary, according to sources, with PM Modi’s Man Friday, Ajit Doval expected by sections of the military to fly down to France to break the deadlock.

Defence was a major platform of the BJP during the election campaign for the Lok Sabha elections, and former Defence Minister A.K.Antony was repeatedly pilloried for indecisiveness and inaction.On the completion of one year in office BJP national spokesperson GV.Narasimha Rao told reporters, “defence strategic clearances were held up during the period of Antony as defence minister and the department was crying for support."

The NDA government has cleared projects worth 16 billion dollar, but till date not a single Request for Proposal or a tender has been floated, let alone a defence deal signed. Rafale, despite the initial enthusiasm, is still being discussed with the agreement nowhere in sight.

Sources pointed out Dassault Aviation has decided to step up the production of the Rafale fighters from the current 11 to 16 a year. But it already has orders of 26 fighters each from Qatar and Egypt with India third on the list. And if the deal is not concluded soon, there could be orders from other countries that could then make India slip further down the line, thereby delaying the integration of the fighters the Indian Air Force so desperately needs.

Of course there is no word about the remaining 90 fighters of the original deal that was for 126. The questions raised by The Citizen at the time remain relevant even today. These are:

1. What are the terms and conditions for the supply of the 36---instead of the original 18---ready to fly Rafale aircraft? What will be the overall cost for the 36 aircraft. The price for the 18 aircraft that was part of the original L-1 tender was about $two billion, going up to unconfirmed figures of $ four billion. (it was subsequently increased to six billion dollars). Now that the numbers have doubled to 36, which would require infrastructural maintenance and sustenance what will India be paying for Prime Minister Modi’s commitment?

2. Is this a stand alone deal? Or part of the original contract for the supply of 126 fighter jets? It now appears to be a stand alone deal, but there is no word about the remaining fighters.

3. How soon is the ‘soon’? Dassault Aviation has an average of producing just 11 fighter jets a year. What is the time frame that has been discussed? Or has it been discussed at all? The government has spoken of early delivery, but given the current negotiations the schedule remains with a question mark.

4. What happens to the remaining 90 fighter jets? The contract was for 126 aircraft with 108 in the original understanding to be manufactured by public sector Hindustan Aeronautics Limited. Dassault had not agreed to the Indian insistence to stand guarantee for these aircraft. Does it mean that HAL will no longer be in the picture? There is no word about HAL even now.

5. Who then will get the contract for the remaining 90 fighters planes? Will it now go to the private sector? And currently in the private sector those with their homework in place are the Ambanis and the Adanis. so are they being considered for the contract? Unofficial reports suggest that they are in line, but again there is no confirmation whether the remainder of the initial agreement will go to the private sector.

In between Defence Minister Manohar Parrikar has been making confusing statements. He has now fallen silent about the deal, and the grapevine suggests that he is looking for another post, having had enough of defence.

A sample of Parrikar’s statements:

“That is the only solution. In fact, only [Prime Minister Narendra] Modi could have taken this kind of decision. [When it comes to] Prime Ministers in the past many years, probably Atalji [Bihari Vajpayee] showed some decision-making ability. However, I would like to add that the decision is not complete. The decision is only to acquire 36 [aircraft] at better terms.” This was in April after the PM’s visit, indicative of the Minister’s own ignorance about the terms.

In May he told the Economic Times: “On the Rafale deal, for example, we are ordering just 36. If we had ordered 126, it would have been 3.75 times the cost. Yes, there are money issues but spending more effectively is more important.”

And again, “The basic message is that the Rafale deal has been restricted in number. By doing this, we will free about Rs 60,000-65,000 crore - money which will be used for Make in India. Even in the Rafale deal, we will have 50% offsets. So this will take care of partial Make in India. But more than that, we now have money released for activities that can be carried out in improving and speeding up the LCA (Light Combat Aircraft). We can have 10-12 squadrons as MiG 21 replacements.” Now the negotiating team is insisting on this offset, that the French have responded to by increasing the price. So from a quick, efficient, time saving deal it is again moving into a costly, time consuming delivery.

Parrikar was almost triumphant when he told the media then, “By buying 36 Rafale fighters at a price less than (what was quoted in response to) the earlier tender for 126 aircraft, I have saved the cost of 90 Rafales. We will use that money to buy Tejas LCAs”. This seemed to be the first confirmation of what was being discussed in military circles that the original contract for 126 fighters had been reduced to the final 36.

But not so for within a day the Minister seemed to have had yet another change of heart, or mind. And instead of following up on the remarks he retracted with a tightlipped, “"I'm not saying we will buy more Rafale; I'm not saying we will not buy more.”And that is where the matter rests for the moment, leaving all the questions about the very basics of the deal unanswered.


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