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Tip Of The Iceberg

Tip Of The Iceberg

Defence Minister Nirmala Sitharaman’s refusal to place all facts on the Rafale fighter jet deal with France’s Dassault Aviation in the public domain makes one suspect the deal is rotten. What stops Sitharaman from revealing the details of the initial and renegotiated deal? Revealing costs cannot affect strategic preparedness. No one is asking for details on the function or potential of each component, only its price.

Sitharaman’s claim that defence price has to be a secret has no meaning as the Government needs to submit details of the expenditure to the Comptroller and Auditor General of India, which has to make a report to be examined by Parliament’s Public Accounts Committee. Her predecessors have made cost disclosures on aircraft, ships and weaponry in Parliament too.

In any case, it would be naïve to presume potential enemy nations have to wait for Government disclosure to know about India’s combat capabilities. One need only read Jane’s Defence Weekly for this. Every bit of explanation on Rafale by NDA ministers seems misleading, incomplete or incorrect.

IAF’s Demand : In 2000, the Indian Air Force informed the Vajpayee Government that it needed 126 modern fighter jets to retain the highest level of preparedness for a two-front war. However the NDA Government now tells us 36 planes will do.

After the UPA Government chose Rafale manufactured by Dassault Aviation, the original deal was for 18 aircraft in ready for use condition, while the remaining 108 was to be made by Hindustan Aeronautics Limited under a licence from Dassault.

When the new deal was questioned, Sitharaman spread misinformation on HAL, which few have questioned because of ignorance. HAL’s capability in making aircraft is not in doubt. It makes Sukhois and Mirages. It has been a profit-making company till recently. Sitharaman’s myth has been lapped up by many because they confuse HAL inability to indigenously build and patent a combat aircraft with its ability for licensed manufacture of fighter planes of foreign companies. 

Benefits for HAL : The UPA deal specified that Dassault would transfer technological know-how to HAL, which could then become a partner for Dassault by manufacturing components and supplying aircraft by assembling them for fresh IAF orders or any foreign order Dassault could win.

There was also an ‘offset deal’. An offset deal is when a beneficiary company makes obligatory investments in a nation worth a high percentage of total money earned from the nation for a particular deal. It is something like corporate social responsibility. Since Dassault’s area of specialisation is aircraft manufacturing, its offset commitment envisaged partnering HAL in the manufacture of civilian aircraft. Dassault and HAL had almost completed negotiations on the offset deal too when it was cancelled.

Time & Experience : Since HAL would be manufacturing the Rafale aircraft for the first time, it was estimated to take more time and the initial cost of each Rafale estimated to be higher than each of the 18 readymade ones. However, manufacturing cost was estimated to come down by the time the 108th aircraft would be ready, with the average cost per plane estimated to be lower than the readymade one.

UPA Deal In A Nutshell : The UPA deal meant 18 readymade planes +108 planes manufactured in HAL, technology transfer for HAL and offset investments for HAL. It meant several thousands of direct and indirect jobs for Indians too.

The deal was almost sealed when the negotiators discovered ‘life-cycle cost’ was not factored in. It is the cost for maintaining an aircraft, including changing spares.

When this was pointed to Defence Minister A K Antony, he realised that the cost would be more than the publicised cost of Rs 550 crore per aircraft, for which the Finance Ministry had not made budgetary provisions. Antony did not want to face the allegation hidden costs were added. Also, he thought it was unethical for an outgoing Government to conclude a deal with additional costs. Hence, Antony recalled the file ready for signing and noted that the deal may be concluded by the new government after completing negotiations on life-cycle costs.

NDA Deal : The aforesaid was the deal that the Narendra Modi Government inherited. Not one detail that Antony has said on Rafale has been contradicted by his successors Arun Jaitley, Manohar Parrikar, Nirmala Sitharaman or anyone else.

HAL, Dassault, the Defence Ministry and the Foreign Secretary have all said that the Rafale deal was ready, bar the signature, just before Prime Minister Narendra Modi embarked on his France trip in 2015. The note of the Cabinet Committee on Security also indicated that no one had an idea about a changed deal.

Configuration Logic : However, after Modi met Hollande, he announced a renegotiated deal, where HAL disappeared, while Anil Ambani’s Reliance became an offset partner. India would not manufacture any planes but buy 36 planes off the shelf instead of 18 because ‘we needed them urgently’. The media told us the planes were cheaper than negotiated by UPA. The ministers continue to say so. But no one is placing the two deals for comparison. Years after the deal, not even a single plane has arrived either, despite ‘urgency’.

After it became clear that each of the plane would cost Rs 1,650 crore in the new deal — approximately Rs 1,100 crore more per plane — more misinformation came up in the media. Reports said that the two deals were ‘not comparable’ as the ‘configuration of weapons were better’ in the Modi deal.

Such reports died down after Antony demanded that the whole weapons configuration of both deals be made public along with the price of the aircraft and the total price with the weapons. Later, Congress President Rahul Gandhi busted the ‘better configuration’ myth when he read out a portion of the Modi-Hollande joint statement: “The two leaders agreed that the aircraft and associated systems and weapons would be delivered on the same configuration tested and approved by Indian Air Force.” So, apparently there is no better configuration for the planes in the new deal!

Then came news that Reliance Entertainment promised to fund 3 million euros for a movie which had Hollande’s partner Julie Gayet as a co-producer. This was followed by Hollande’s claim that the new offset partner was chosen by the Government of India and neither the French Government nor Dassault had a choice but comply. Hollande’s statement contradicted claims of Sitharaman and others that Dassault had chosen Reliance on its own.

The more the Modi Government tries to ‘clarify’ the less it looks convincing in the perception war with the Congress. If the Government has nothing to hide, what stops it from clearing the air by placing all facts of the deal on the table?

(Published on 01st October 2018, Volume XXX, Issue 40)