The unending saga of Rafale deal.

Through this blog, I would like to put forward my opinion on the present political slugfest going on in India over the Rafale fighter deal with France.This will be a long but all inclusive blog with two parts, i.e 2001 to 2014 and 2014 to present day.

    1. 2001 to 2014

Let me take back to the original MMRCA ( Medium Multi-Role Combat Aircraft) contest. IAF was in need of fighter planes to replace the ageing fleet of its Mig-27 and the Sepecat Jaguar fighters. This was due to the fact that it was getting difficult for the IAF to keep these two types flying due to lack of spares from the OEMs and due to the unreliability of the available spares. In 2001 IAF had proposed a requirement of 126 fighters along with an option of additional 74 and the RFIs were issued in 2004.

After intense scrutiny, in 2011 IAF zeroed in on 2 types 1.Dassault Avaition’s Rafale and 2. Eurofighter’s Typhoon. In January 2012, Dassault Aviation (Rafale) was declared as the L1 bidder, the winner of MMRCA contest. If you consider the time when IAF proposed the MMRCA requirement and the declaration of the winner, this itself took 10 agonising years to conclude.

Since there was no sign of MMRCA deal getting concluded, IAF, in 2013 started the process to upgrade the existing Jaguar fleet to DARIN III stage.

Now starts the commercial negotiation phase of MMRCA and the nitty gritty which troubled the negotiations. What IAF required wasn’t just a plain Jane fighter aircraft. IAF required potent missiles, weapons package, Electronic Warfare systems (EW) and communication suits, all modified and built specific to the requirement of IAF. The prices of these systems were not fully covered in the commercial offer made by Dassault Aviation and this coupled with lethargy and indecisive attitude of then Defence Minister Shri. A K Anthony meant that the negotiations went spiraling down. This continued till the time the UPA demitted office. 

The Govt wanted Dassault/ French govt to guarantee for the of the fighters built by HAL in India.

Dassault had few reservation on this as the Man-Hours envisaged by HAL for assembling the Rafale in India was almost 2.7 times the man-hours Dassault required to built them in France. This, coupled with the lethargic bureaucracy that revolved around the functioning of HAL and history of time over runs in the projects taken up by HAL in the past meant that Dassault would not be ready to be the guarantor for the planes assembled by HAL. Since the RFP was issued to them, Dassault would be sole responsible agency for the delivery, quality, etc.

    2.       2014 to present day.

When the present NDA govt took over and Shri. Manohar Parrikar took over as Def Minister, Dassault was asked to send empowered negotiation committee to conclude the deal as per the RFP.

The deadlock remained over key issue of the man-hours of HAL and the guarantee of 108 jets manufactured by HAL while Dassault insisted that they would stand guarantee only to the 18 jets they supply in flyaway condition, a clear attempt by Dassault to absolve itself from the after effects of HAL assembly. Finally the Govt of the day gave an ultimatum to the French company to comply to the RFP, failing which, the deal stood withdrawn. And ultimately the MMRCA deal was scrapped as it wasn't heading to a conclusion.

After the deadlock, the issues were to either cancel the tender and invite fresh bids to negotiate with new plane maker which, would further take many years. The price of the Rafale was already arrived at by the MMRCA negotiation Committee hence there was no issue in going ahead with Rafale. 

If one takes in to account the different news articles doing rounds till 2016, the price of Rafale had already gone up from the initial price of 2012 to :-

In April 2013- $119 Million and in Jan 2016-    $238 Million.All this was for 126 jets. The NDA opted for only 36 jets in fly away condition and if you take into consideration the reduced economies of scale, NDA govt ended up paying around $243 million for each jet.

The price includes the following.

• Basic Aircraft(The latest F3R Variant) i.e 28 Single Seaters and 8 Twin Seaters (Trainers).
• Weapons System( Meteor BVR missiles, Scalp cruise missiles), this is beyond the standard package.
• Israeli Helmet-mounted display systems and Litening pods.
• SPECTRA EW Suit.
• Cold start devices,Radar warning receiver,Low Band Jammers, Doppler Radar,Radio Altimeter,
• 75% Availability.This is crucial considering the present front line fighter of IAF , the SU-30 MKI has availability of around 60% only.i.e only 60% of the total fleet is available for flying at any given point of time.
• 2 bases for the 2 squadrons (18 Rafales each) at Hasimara and Ambala  with climate controlled hangers for housing the Rafales.
• Structural modification on the air frame to accommodate the Air Force version of Brahmos missile.( Post induction, Rafale will be part of IAF's nuclear delivery duties).
• 5 years spares support at both the bases.
• Free Training of 10 IAF Pilots,additional usage of 60 hours of training and a six months free weapons storage till the time the infra for storage isn't built in India.

For sake of comparison, Qatar bought the Rafales at $292 Million per jet, with very little enhancements but including an array of weapons systems. Egypt bought the Rafales at $246 Million per jet. The advantage India has got here is the 50% offset clause and the enhancements listed above.Considering this, the price of $243 Million NDA is paying per jet is definitely on the better side.

Once the deal was finalised, the opposition started alleging the govt of skipping procedures and approval of CCS (Cabinet Committee on Security).

Article 71 and 72 from the" Inter Governmental Agreement" of  2013 DPP( Defense Procurement Policy) {http://cgda.nic.in/pdf/DPP2013.pdf} doesn't mention any need of approval from CCS, DPB( Defense Procurement Board) and DAC (Defense Acquisition Council) for Inter-Governmental Agreements and talks about the approval of the Finance Ministry(CFA-Competent Financial Authority) only.

Next allegation is about the business cornered by "Ambani-The Friend" in this deal, eliminating HAL.

Dassault, as part of the offset clause is supposed to pump back 50% of the Rs.58000 Cr back to India to develop the aircraft manufacturing ecosystem.

As mentioned earlier, Dassault's reservation about HAL was evident which, even lead to the scrapping of MMRCA deal. HAL was supposed to be integrator or co-producer. Since all the 36 jets were to be delivered in fly away condition, the role of HAL was very much limited or nil.

There are around 72 companies with whom Dassault has tied up as part of the offset clause.

Major names are Dassault Reliance Aerostructures(JV),DRDO, SAMTEL Thales(JV),Reliance Thales(JV), L&T-Thales(JV), Mahindra Group, Kalyani Group, Godrej & Boyce, Snecma-HAL (JV) ,BEL-Thales (JV). All these JVs and other tie ups are done by Dassault and its partners Thales & Snecma. The Dassault -Reliance MOU was signed in 2012 and the then Reliance Infra changed hands from Elder brother Mukesh to younger brother Anil and became "Reliance Defense "(ADAG) post acquisition of Pipavav Defense by Reliance Infra of ADAG. If the Dassault- Reliance Defense deal is cronysm today, wasnt it so in 2012 when UPA was in power?

The opposition is smelling scam in this and if we go by the history of how the likes of Coal gate and 2G gate opened up after the complainant approached the Supreme Court, the opposition by now, should have gone to court and petitioned to keep the deal in abeyance.But what we are seeing are only press conferences and counter press conferences. 

To make the matter worse, the figures coming out from the one who is leading the charge, an unsure Shri. Rahul Gandhi is continuously changing everyday with figures ranging from Rs.527 to Rs.700 cr.

The PM of the day has so far kept stoic silence while the charge has been lead by the current Def Minister and the Finance Minister. The attempt by the govt to counter the allegations have been not assuring also. Meanwhile all this happens, it is for common citizens like us to analyse and understand the nuances of this deal. Hope this blog has helped you to understand the deal better.

Do leave your feedback after reading this blog.

Thank you.