Rafale: The albatross around the Prime Minister’s neck?

Why is the government shying away from disclosing the price when it disclosed it in 2016 and in 2018? What has changed?

Photo courtesy: PTI
Photo courtesy: PTI

Bhasha Singh

A beaming Eric Trappier, CEO of Dassault Aerospace, addressed a press conference at a Dassault facility. Present on the occasion were the Indian Ambassador to France and the chairman of Hindustan Aeronautics Ltd. The Indian Prime Minister Narendra Modi was visiting France in a fortnight and Trappier spoke at length on how happy Dassault was and how privileged at the chance of working with HAL, which was to manufacture in India 108 Rafale fighter planes while 18 more Rafale planes were to be supplied off the shelf.

On the eve of Prime Minister Modi’s visit to France, Foreign Secretary S Jaishankar told the media at the customary briefing that talks between Dassault and HAL were ‘ongoing’ and had little bearing on the visit of the Prime Minister.

But the foreign secretary clearly had no idea that barely three days after Trappier’s press conference, a new company Reliance Defence Ltd. was incorporated in Mumbai on March 28, 2015 with an authorised as well as paid up capital of just half a million (five lakh) Rupees. And just 13 days later on April 10, the Indian Prime Minister made the dramatic announcement that India would now buy 36, and not 18, Rafales off the shelf and HAL would no longer be involved in any transfer of technology. Instead, Reliance Defence Ltd. would do the honours.

On April 11, 2015 Reliance Defence Limited became the main partner of Dassault to ensure the 50 percent offset clause under which Dassault and other related French parties are to invest half the contract value back in the country. It provided a lifeline to ADAG which had a mounting debt burden and was gasping for survival.

“Aerospace sector is opening up and the private sector will inevitably come in. And competition is ultimately good for everyone. But I can confidently say that Hindustan Aeronautics Ltd. has competition in the country with itself,” says former HAL chairman R.K. Tyagi. Chairman till January, 2015, he was not present at the press conference on March 25. His successor was. But Tyagi recalls that HAL had prepared the ground for expansion and continues to be baffled at the Government denying the PSU the opportunity.

No explanation has been given on why HAL was dumped after three years of negotiations. And no explanation has come on how a private company less than three weeks old and with no experience in the field was cleared to collaborate with Dassault.

A perceptive tweet from a senior journalist sums up the issue. “The key issue in Rafale is cronyism. PM personally negotiated HAL out of the deal & let Rafale bring in Anil Ambani with no experience. Cronyism is not about immediate exchange of consideration. It is about long term IOUs exchanged between power and money!”

Says former Defence Minister AK Antony, “Sure, the foreign partner has the liberty to decide who will be the offset partner; but there is a condition that the partner should have enough experience in manufacturing the defence equipment in question.”

The price of the Rafale that India is paying cannot be disclosed for reasons of national security, said both the Prime Minister Narendra Modi and the Raksha Mantri Nirmala Sitharaman in Parliament. Curiously both the Raksha Mantri and the MOS (Defence) had offered to disclose the price and MOS did.

HAL, he points out, had helped manufacture hundreds of Sukhoi fighter planes for the Indian Air Force under a licence of production. “In India, only HAL has the expertise and the experience,” he says and adds that Defence Production Procedures seem to have been flouted with impunity in the Rafale deal.

Eric Trappier was back in India in March, 2018. He had been visiting India and had been to Nagpur, where Reliance and Dassault are setting up a facility. In an interview to India Today, Trappier made a series of curious statements. “The price of the Rafale is about the same for every customer. What is different is the scope of the contract, the number of aircrafts, the definition of the aircraft, the bases, the type of support you are buying, and the support and spares…In the pricing that we are performing for India, it is roughly the same for Egypt and Qatar,” he asserted in reply to a question.

In reply to a supplementary question, however, the Dassault CEO said, “We are not saying the order for India is worth 7.9 (billion Euros). We are despatching the book of our finances to the market. It is a market obligation. So, I am the only one who knows how much it is with the Mirage, how much for the Rafale, and we do not disclose this information. Not to India, not to the public.”

The price of the Rafale that India is paying cannot be disclosed for reasons of national security, said both the Prime Minister Narendra Modi and the Raksha Mantri Nirmala Sitharaman in Parliament. Curiously both the Raksha Mantri and the MOS (Defence) had offered to disclose the price and MOS did.

She also cited the interview given to India Today by the French President, who said that operational and technical details of the deal were naturally confidential. Sitharaman, however, did not read out in Parliament the part of the interview in which Macron had maintained that the French Government would have no objection if the Government of India wanted to share commercial details with Parliament or the opposition.

Minister of State for Defence Subhash Bhamre told Parliament in 2016 as well as 2018 that the price of a Rafale came to ₹670 Crore. Defence expert Ajai Shukla found the cost of Rafale aircraft working out ₹917 Crore per aircraft. “₹917 Crore per aircraft is too steep a cost,” he wrote.

Former Defence Minister AK Antony appears bemused at the Modi Government’s steadfast refusal to share details of the deal with Parliament. He told NH, “I revealed details of defence deals at least on four occasions related to INS Vikramaditya, the aircraft carrier, Sukhoi , the Mirage and the Kaveri engine.”

IAF “spokesmen” have been justifying the Rafale purchase because the package includes the Meteor air-to-air missile. The Meteor is the new game changer in the air. It increases the “no-escape” zone for a hostile aircraft by about three times. The Meteor is an active radar guided beyond-visual-range air-to-air missile (BVRAAM) developed by MBDA,” says Mohan Guruswamy responding to justifications offered for the high price of Rafale.

“It was even said on a RSTV panel discussion in which I took part by an Air Vice Marshal who has found second wind as a strategic expert. The fact is that the Swedish Gripfen has now been integrated with the Meteor and open sources indicate that the IAF too is contemplating integrating the SU-30MKI and Meteor. Even the Tejas can be fitted out with Meteors. So, we are not buying the Rafale for the Meteor,” he added.

Guruswamy concluded by pointing out that Missile purchase could never be part of the capital cost of a fighter plane. Since they are “expendable, and presumably mean to be expendable”, they should be part of revenue expenditure, he pointed out.

This article was updated at 10.45 am on July 30, 2018 to correct minor grammar and language errors

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Published: 26 Jul 2018, 7:00 PM