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THE CHOWKIDAR'S FRENCH BHAGIDARI - Part 2

By Varun Hari Prasad
In the earlier blog, I had recorded the broad features of the Rafale deal under the UPA and NDA Governments. In this blog, I propose to place a few facts pertaining to the two questions I had posed in the earlier blog:

  1. What makes the NDA's deal different and controversial?
  2. Why is Mr Modi being called a 'Chor'?
Let us now look at both these questions in detail:

What makes the NDA Government's deal different and controversial?

The NDA Government's deal is different because of the following facts:
  • There is no explanation for how Mr Modi arrived at this number - 36.
  • As of 10 April 2015 (the date PM announced the deal), there was no clue as to what had happened to the RFP (for 126 aircraft) issued by the UPA Government.
  • None of the aircraft were to be manufactured in India under Transfer of Technology
The Government claims that it has purchased 36 aircrafts because there is an 'urgency'. The Air Force, in its demand had stated that it is in need of 126 aircraft, how did this number come down to 36 suddenly? Did the Air Force place a specific demand before the Defence Ministry stating the same? If yes, then why did the Air Chief not mention it in his press conference?

Moreover, this 'urgency' claim has no basis. If the Government had adhered to the original RFP (of 126 aircrafts), 18 aircrafts would have come within two and a half years and the additional also would have starting coming-in by mid 2022. Under the new deal, the Government has admitted in Parliament that the first of the jets will come only by September 2019, that is four and a half years after Mr Modi's 'urgent' announcement. The full 36 will come only in mid 2022.

This deal is different because of an another very important reason: At the time of this announcement, the previous RFP (for 126 aircraft) was still NOT withdrawn. This amounts to a gross violation of the Defence Procurement Procedure. It is also not clear whether the Prime Minister had received the mandate of the Cabinet Committee on Security to negotiate such a deal.

Why is Mr Modi being called a 'Chor'?

  • Price
The price of the aircraft, as negotiated by the UPA was around 520 crore* per aircraft for 126 aircrafts. After the Prime Minister announced the new deal in France, the then Defence Minister Manohar Parrikar, in an interview to Doordarshan (broadcast on 13 April 2015) said: "We must remember that Rafale is a top-end multi-role fighter... but it is quite expensive. When you talk of 126 aircrafts, it becomes a purchase of about 90,000 crores." By virtue of this statement, the price of each aircraft would be 715 crore (perhaps including the escalation cost accumulating every year). This price was also INCLUSIVE of everything.

Later while answering an Unstarred Question (No. 533) in the Lok Sabha on 18 November 2016, the Minister of State in the Ministry of Defence said the price of each aircraft, INCLUDING the weapons, equipments, and services would be 670 crore.

These two statements reveal the following:
  1. The price per aircraft under the UPA Government was 715 crore per aircraft for 126 aircraft.
  2. The price per aircraft under the NDA Government was 670 crore per aircraft for 36 aircraft. This is the price Mr Ravi Shankar Prasad quoted: 7% cheaper than NDA.
Naturally, the price of the NDA deal had to be less because ALL the 36 aircraft are to be manufactured in France itself. There will be NO Transfer of Technology (ToT) as envisaged by the UPA. Because the UPA wanted ToT, the cost was high as it included the cost of setting up a facility in India, etc... 

But the startling fact is that the price of each aircraft is NOT 670 crore, it is a whopping 1670 crore, as revealed by Dassault in its Financial Press Release! All that Mr Modi is being asked is 'Please tell us the price you've paid IN parliament'. The response BJP has given is, 'it is a secret, we are bound by secret pact with France'. If it is indeed a 'secret', then how has Dassault revealed the price? How did their own Minister reveal the price on 18/11/2016?

This hesitation proves that there is something to hide.

  •  Offset issue
As discussed in the earlier blog, the CEO of Dassault Mr Eric Trappier, had told the media on 25 March 2015 that the contract between Dassault and HAL was almost done (read quote in previous blog). 

Suddenly it was announced that it would be replaced by Reliance Defence Ltd., incorporated on 28 March 2015, days before Mr Modi's announcement, was handed a major offset deal, sidelining the HAL.

Recently in an interview, the Former French President Mr Francoise Hollande, the one who negotiated this deal with Mr Modi, has said that Reliance Defence Ltd. was 'proposed' by the Indian Government and that the French side 'did not have a choice'. Reacting to this statement the Government of India said that it was a 'commercial decision' taken by Dassault Aviation.

As a student of Commerce, I fail to understand that explanation! Why would a company, of Dassault's stature, choose a company like Reliance Defence (which had no relevant experience in the field of aerospace, which is admittedly at a loss of 52,342.57 lakh (in 2016-17) and an outstanding debt of 875.319.38 lakh) as its offset partner? Unless ofcourse there is external interference!

When this question was raised, the Defence Minister said that 'she had no information' on whom Dassault had chosen. This is another lie. Clause 8.6 of the Defence Offset guidelines, issued by this very Government, states the following:

"All offset proposals will be processed by the Acquisition Manager and approved by the Raksha Mantri, regardless of the offset value..." 

This means that ALL offset proposals are to be approved by the Defence Minister before the contracts are signed. Therefore, there is NO WAY the Defence Minister cannot know about Reliance Defence Ltd. being an offset partner.

This very shifting of argument all the time shows that something is indeed wrong with this deal!

Questions Mr Modi must answer 

Apart from the questions and shortcomings I have raised above, Mr Modi must also answer the following questions:
  1. Did he have the mandate of the Cabinet Committee on Security to negotiate the Inter Government deal?
  2. Was this agreement on the agenda? If yes, why didn't the Foreign Secretary know of it? 
  3. As admitted by the Foreign Secretary, these are very technical issues. If so, then why was the Defence Minister not accompanying the Prime Minister to France to negotiate the agreement?
  4. Why did the Government suggest the name of Reliance Defence Ltd. to France? Why didn't it push the case of a PSU, the HAL?
  5. If this was an entirely new deal, why wasn't a new tender floated, especially given that the other vendor (cleared by IAF) Eurofighter had offered to reduce its bid by 20%?
  6. In a press conference recently the Air Chief said the HAL had slight tardy in delivery of contract, if that is a reason for sidelining HAL, then how was Reliance Defence Ltd., known for its inability to meet the Indian Navy's timeline, given the offset contract? Assuming for a moment that the Government didn't know of Dassault's choice, why didn't it advise Dassault after it came to know of the deal?
  7. If the price of the aircraft is indeed 7% or 9% cheaper that the UPA deal, why isn't the Government buying 126 aircrafts, as requested by the IAF earlier?
There are only two options before the Government, if it doesn't have anything to hide; it either has to agree for a Joint Parliamentary Committee (JPC) probe, as demanded by the Opposition or it must agree for a multi-agency (i.e. CBI, CVC, and CAG) probe monitored by the Supreme Court.

If Mr Modi doesn't do either of these the Rafale is bound to inflict more electoral damage than what the Bofors did to Mr Rajiv Gandhi.

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