Rafale Jet Purchase Deal: All You Need To Know About It
November 17th, 2017
The Congress Vice-President Rahul Gandhi on 16 November, Thursday targeted Prime Minister Narendra Modi by raising the Rafale Aircraft deal and accused the government of ‘changing the entire deal to benefit one businessman’, The Hindu report said.
“Listen, all of you keep asking me so many questions and I happily answer them. I want to ask why don’t you question the PM over the Rafale deal? Why don’t you ask Amit Shah’s son? PM changed the entire deal to just help one businessman. Why are you not questioning him?” Mr Gandhi told the media while addressing the office bearers of the All India Unorganised Workers’ Congress on Thursday. This comment follows a series of critical tweets where he mentioned that the Rafale deal was a ‘loot’.
Mr Gandhi raised questions about Dassault Aviation entering into a joint venture with Reliance Defence Limited, an Anil Ambani-owned company.
Self "Reliance" is obviously a critical aspect of "Make in India."
— Office of RG (@OfficeOfRG) November 16, 2017
Can you explain "Reliance" on someone with nil experience in aerospace for Rafale deal?
— Office of RG (@OfficeOfRG) November 16, 2017
What is the Rafale Deal
The UPA-I government floated a tender on 20 August 2007, for the purchase of 126 Medium Multi-Role Combat Aircraft (MMRCA) for the Air Force.
Dassault Rafale was declared L1 vendor as the bidder with lowest price quotation (with a base price of $10.20 billion, amounting to Rs. 54000 crores at that time) in 2012. 18 out of the 126 aircrafts were supposed to come in flyaway condition and the rest were to be manufactured in India by HAL with the transfer of technology. After formation of new government in May 2014, the earlier Request for Proposal (RFP) for the purchase of 126 aircraft was cancelled on July 30, 2015. Modi Government signed a new deal on September 26 the next year for buying 36 Rafale fighter jets for $8.7 billion.
On October 3, 2016, Anil Ambani’s Reliance Defence Limited collaborated with Dassault Aviation in a joint venture for defence production in India.
The price difference is stated to be huge, as per the claim of Congress. They say that the UPA negotiation settled for each aircraft price to be Rs. 526.10 crore. The recent price is about 1570.80 crore rupees for each aircraft. “It is time for Prime Minister Narendra Modi and his government to answer to people of India as to why the government is buying 36 Rafale aircraft at a highly inflated price compared to originally negotiated the base price by UPA-Congress,” declared Rajdeep Surjewala, Congress communication chief.
Allegations around the corner
The previous deal which was cancelled by PM Modi after his trip to France in 2015, had made India’s defence public sector undertaking, Hindustan Aeronautics Limited (HAL), a partner of Dassault Aviation to make 118 Rafale aircraft in India through a transfer of technology clause. Once this deal was scrapped in July 2016, a new $8.7 billion deal was signed on 23 September 2016. Just 10 days later, on October 3, 2016, Reliance Defence Limited entered into a joint venture with the French fighter plane maker. The deal thus went from the hands of public sector to a private company.
Surjewala in a press conference on 14 November alleged Government of India of “promoting the interests of PM’s crony capitalist friends“. They also accused BJP of undermining the importance of national security regarding the Rafale aircraft deal and stated that “a huge scam is brewing”.
He said that the Bharatiya Janata Party-led National Democratic Alliance government intentionally violated the Defence Procurement Procedure (DPP) and bypassed the interests of PSU Hindustan Aeronautics Limited (HAL).
According to a report by The Hindu, Mr Surjewala further alleged, “On April 10, Prime Minister Modi visits France and announces the deal for purchase of 36 fighter aircraft in a flyaway condition. This was done unilaterally without following the DPP, without any inter-governmental agreement and in the absence of India’s Defence Minister. However, Mr Anil Ambani, owner of Reliance Defence Limited was present in France during the Prime Minister’s visit.”
The Congress also alleged that PM Narendra Modi’s government has caused the exchequer an insurmountable loss by signing the deal at Rs 58,000 crore (8.7 billion euros).
This is what noted lawyer Prashant Bhushan of Swaraj India party tweeted:
For BJP to justify #ModiRafaleScam by saying that price of Aircraft had to be tripled to enable servicing&training of pilots,is as absurd as Adani claiming:He had to buy power equipment of 5KCrs from China through his Dubai Co at 5 times price,since his Co gave extended warranty! https://t.co/g3Mp2Dl3dj
— Prashant Bhushan (@pbhushan1) November 17, 2017
Reliance has threatened to sue the opposition
On the other hand, the Anil Ambani-led Reliance Defence Limited has threatened to sue the opposition party. Reliance Defence has called the allegations baseless and unfounded and asked the party to correct its facts or to face legal action.
The Reliance Defence has warned of legal action against the opposition if it does not withdraw the allegations. According to a report by the NDTV, the company said in a statement that, “Government policy issued on 24 June 2016 allows for 49% FDI in the Defence Sector under the automatic route without any prior approval. No approvals from the Union Cabinet or the CCS was required for the formation of the aforesaid Joint Venture company under the automatic route.”
For doing a front-page story on the same issue, Reliance Group of Companies have sued Mint’s Publisher HT Media Limited and nine others in the Bombay High Court on 2 October 2014.
Rafale deal is with India’s defence industry: France
France has categorically rejected the allegations made by the Congress party that the Narendra Modi government has negotiated an overpriced deal with French company Dassault to supply 36-state-of-the-art Rafale fighter jets.
According to a report by the Livemint, a French diplomat said, “It is certainly not benefiting one single player. The Rafale Omni-role fighter jet has been selected for its outstanding performance and competitive price. It has been selected after a fully transparent procedure compliant with the rules and regulations of the country. I am not going to enter into domestic political matters and I strongly believe that this is a domestic political matter.”
Under the agreement, the French side has made a 30-percent offset commitment for military aerospace R&D and the rest 20 percent for manufacturing the components of the Rafale aircraft in India.
“The Rafale deal is cheaper and better”
One significant rebuttal to the Congress accusation that the Narendra Modi government negotiated an overpriced deal to buy 36 Rafale fighter jets from France comes from the Chief of Air Staff Air Chief Marshal BS Dhanoa. According to a report by the Economic Times, he said, “It is not overpricing…We have negotiated for 36 French fighter aircraft Rafale at a price lower than that in the contract. The government has negotiated a very good deal“.
He further stressed the fact that it was a government-to-government deal and that the Indian Air Force was getting 36 Medium Multi-Role Combat Aircraft (MMRCA) at a “greatly negotiated” price. He further added, “It is definitely a better deal, it is lower than what was there in the contract.” Dhanoa said two aircraft had been purchased in a fly-away condition as an emergency measure.
Arguments by the ruling party
The BJP declared these allegations as baseless, calling out it as a media stunt to divert public attention from Rs. 3600 crore AgustaWestland VVIP chopper deal scam, occurring while NDA was in power.
BJP spokesperson G V L Narasimha Rao said, “The Congress party has made baseless allegations over the Rafale deal to divert public attention and to cry political vendetta. None of these stunts will work and they must be ready to answer who took bribes in the AgustaWestland VVIP chopper deal as the money trail is going to become known after the extradition of Carlos Gerosa.” Carlos Gerosa was one of the three alleged intermediaries in the chopper deal and he got arrested in Italy in October.
Law Minister Ravi Shankar Prasad rubbished the allegations levelled by Mr Gandhi. “They are finding it difficult to accept that that there is no case of corruption in the three-year rule of the Narendra Modi government,” said Mr Prasad, according to a report by The Hindu.
However, Subramanian Swamy of the ruling party has publicly spoken against and written a letter to PM Modi to stop this deal.