Thursday, 30 August 2018

Jaitley’s 15 questions on the Rafale deal... and the opposition's position on each



By Ajai Shukla
Edited version in Business Standard
30th August 18

On Wednesday, Finance Minister Arun Jaitley wrote a Facebook post, challenging the Congress and Rahul Gandhi on accusations they have made about the purchase of 36 Rafale fighter aircraft, for Euro 7.85 billion, after an agreement between French President Francois Hollande and Prime Minister Narendra Modi in April 2015.



Jaitley posed 15 questions to Rahul Gandhi. Here they are, with the Opposition position placed alongside each of them.



Jaitley’s questions
Opposition’s charges
On delay
1.
The UPA suffered from decision-making paralysis. Wasn’t the decade-long delay in the Rafale purchase due to UPA’s incompetence and indecisiveness?
There was no “decade-long delay”. From 2004 to 2007, the Indian Air Force (IAF) framed the fighter’s requirements; from 2007 to 2011, the IAF conducted flight tests and only in 2011 did the IAF select the Rafale and Eurofighter. In 2012, the Rafale was found cheaper and price negotiations began with Dassault. The role of the government began only in 2012.
2.
Did the UPA’s delay compromise national security, given the IAF’s urgent need for fighters?
If the UPA’s delay had compromised national security, why did the NDA wait for more than one year before buying the Rafale in 2015? In fact, security was compromised by reducing the number of Rafales from 126 (in the UPA tender) to just 36, and doing away with the “Make in India” component.
3.
Was UPA’s failure to buy the Rafale motivated by “collateral considerations” like in Bofors?
The UPA did not buy the Rafale, so there is no question of bribes. If there are questions of “collateral considerations”, they relate to Anil Ambani, and how he mysteriously replaced Hindustan Aeronautics Ltd (HAL) in the deal.
On facts
4.
How has Rahul Gandhi given contradictory figures for cost of the Rafale: variously Rs 700 cr, 520 crore, 540 crore and 526 cr.
Why is the government refusing to release the real figures, both of Dassault’s 2007 bid and the cost of the current contract. The defence minister had vowed to release the figures, but then backed off, citing a secrecy agreement with France, which does not even apply to commercial aspects.
5.
Is Congress aware of the Rafale price that Dassault quoted in 2007 in its winning (L-1) bid? An escalation clause in that bid would have raised the price until the last fighter was delivered. Has forex variation been considered?
The Rafale price in Dassault’s 2007 was hinted at by then defence minister Manohar Parrikar, who said in April 2015 that 126 Rafales would cost about Rs 90,000 crore. That comes to Rs 715 crore per aircraft. Why is the government refusing to release the real figures?
6.
Is Congress aware that, comparing basic aircraft price, along with the escalation clause, the NDA has signed the deal at a price 9 per cent cheaper than what the UPA would have paid?
In the absence of official figures from the government, the deal price of Euro 7.8 billion for 36 fighters indicates a far higher cost than what the government claims – a multiple of more than three times higher.
7.
Can Rahul Gandhi deny that, adding on India-specific adaptations and weaponry,would have made the 2007 L-1 price at least 20 per cent higher than what the NDA negotiated in 2016?
The India-specific enhancements are a fiction, meant to hide the full cost of the Rafale. The Joint Statement issued in Paris by Prime Minister Narendra Modi and French President Francoise Hollande in April 2015 mentions that 36 fighters would be in the same configuration as the 126 fighter tender of 2007.
8.
Can Rahul Gandhi deny that the total contract cost of 2016, with add-ons, future supplies and maintenance, is more favourable than the 2007 L1 offer?
The cost agreed to by the government in 2016 is far higher than the 2007 bid. In that respect, it contradicts the Paris Joint Statement of April 2015, which pledged a contract at a more favourable price.
Role of private industry
9.
Can Rahul Gandhi deny that the Government of India has no contract relating to the Rafale with any private industry? All 36 Rafales will be supplied fully built “and there is no manufacturing of these 36 aircrafts in India.”
In abandoning the “Make in India” component of the 126-fighter tender of 2007, where 108 fighters were to be built by HAL, the NDA government has surrendered a great opportunity to build up India’s aerospace industry. These fighters should have been built in India.
10.
Foreign Original Equipment Manufacturers (OEM) under the UPA’s own offset policy can select their own Indian offset partners and the Indian government has no say in this. 
The Offset Guidelines give the defence minister the responsibility to approve all offset contracts. Besides, it is no coincidence that Dassault has abandoned HAL and chosen Anil Ambani, who is known to be close to the BJP.
On procedure
11.
Is Rahul Gandhi aware that there are two ways of acquiring defence equipment -- either competitive bidding or through an Inter-Governmental Agreement (IGA)?
There is a laid down procedure for approving an IGA. This was not followed at the time Modi announced in Paris in April 2015 that he had asked France to supply 36 Rafale fighters.
12.
Can Rahul Gandhi deny that the UPA itself had in 2007 shortlisted the Rafale as technically- acceptable and L1 in price competition? 
The opposition has no quarrel with the selection of the Rafale. It was a mistake to bring down the numbers from 126 to just 36 fighters, leaving the IAF short of numbers.
13.
Can Rahul Gandhi deny that the urgency of defence requirement caused New Delhi and Paris to “execute the supply of 36 Rafale aircrafts at terms better than the 2007 offer of the UPA?”
The contract for 36 Rafales was concluded on highly unfavourable terms and at a far higher cost than the 2007 offer.
14.
“Can it be denied that both the Price Negotiation Committee and the Contract Negotiation Committee negotiated for 14 months before concluding the deal?”
The cost that was agreed upon was unfavourable to India.
15.
Can it be denied that before the deal was executed, the Cabinet Committee on Security (CCS) approved the transaction?
The CCS did indeed approve the transaction before the contract was signed in 2016, but no CCS approval had been taken by Modi before his Joint Statement with Holland in April 2015, which committed India to buying 36 Rafales.



19 comments:

Sadish Kumar said...

Good informative article Sir. Sir I carried this article on our site without your permission, but have credited you and have not edited a single word of it. Hope you dont mind. If its not ok, you can ask me to take it down.

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Teewsbby said...

Question number 14 was the crux of the matter. “Can it be denied that both the Price Negotiation Committee and the Contract Negotiation Committee negotiated for 14 months before concluding the deal?”
"The cost that was agreed upon was unfavourable to India"

That is the genisys of the entire problem which is why AK Anthony did not sign the dotted lines. That and the refusal of Dassault to accept the point of being responsible for HAL's quality. There is no way that 126 Rafales could have been bought for $12Billion. AK Anthony knew it and he deferred. Hence the call had to be taken on a completely fresh RFI or buy a small number. That is why we still have a new RFI for 110 aircrafts. This is now nothing but a political mud slinging between the 2 parties.

Naishadh Vyas said...

Brilliant.

ajax said...

Once Mr. Shukla himself said, Dassault not ready to manufacture jets with HAL as it cannot guarantee its product. Its time Mr. Shukla focuses on journalism rather than politics.

Manu Singh said...

Shookla!! Your answers to Jaitley's questions are quite ironic.

1. On your blog, you have given the price of Rafale at USD 105 million, umpteen times and even iterated the list of India-specific enhancements. All of this pricing mechanism is available through parliament answers which you have quoted twice. So why do you create this confusion on price intentionally??

2. Your irritating focus on lack of CCS clearance is another misguided missile. What Modi concluded in 2015 was an MoU where HAL Chief was also present. The CCS clearance is only necessary before signing the contract. Why would Modi seek CCS clearance in 2015 then?? There was a gap of nearly two years between the MoU and the contract, during which French President made two unsuccessful visits. French defense minister was probably always on call to come to Delhi to conclude the deal. An excruciating negotiation took place with Dasault under the leadership of Air Marshal Sinha and you trivialise the efforts of entire team. That's a low blow.

3.It sounds funny when you argue that four years for SQR framing, another four years of flight testing and next four years of protracted negotiation ...all during the Congress regime.. ended in no deal and ended in a complicated/aggravated state of relations between India and France in 2014. Antony made it so convoluted that no one wanted to touch the deal. Whereas, the conclusion of a simplified, cheaper and better deal in two years is 'compromising national security'???

4. Dassault refuse to work with HAL in 2011 itself. They made one visit to HAL factory floor and rejected it outright. Even the man-hours suggested from HAL to make one Rafale was 2.5 times more than Dassault. How convenient now that you sing paeans of an inefficient, money sucking white elephant?? If it is so efficient,how come it has taken last 10 years to produce nine IOC-level LCA ??

This entire episode is basically building castles out of thin air. You and your kind of duplicitous journos are surviving because people of Air Force cannot openly diss your theories and chew your arguments !!! Nevertheless, it makes any airman's blood boil to see this nonsense peddling on Rafale acquisition !!

Anonymous said...

Sir,
If I remember correctly and from your own references HAL was running fully capacity and also Dassualt was never in Favor of HAL even in the UPA time.

"During his tenure as Defence Minister, Antony had said what was being sought to be achieved was acquisition of 18 aircraft in fly-away condition while the remaining 108 jets were to be manufactured through a technology transfer agreement by HAL.

However, the company was not ready to transfer technology under the agreement, Antony had said. "

Even opposition is full of holes, for the govt except for the non disclosure story on which clarity is needed, I would see that we are raking up unnecessary controversy here, specially on a Govt to Govt agreement.





Thommen Jose said...

Well done! Your efforts at compilation are laudable.

Unknown said...

Super brain work. Hope for the country.

Sujeet Deshpande said...

So what is your position on the whole affair or did I miss reading about it?

pseudo sicular said...

author is a known congress supporter...being an ex-army and supporting congress - just does not gel .....

Anonymous said...

Brilliant piece of journalism sir. Reliance caught with hand in the cookie jar.What were they thinking giving a heavily debt laden company,such an important contract.Now all of a sudden,their answers keep changing as more and more holes are found.

Manne said...

Colonel, is that the opposition position or you speaking on behalf of the opposition. The reason I ask is because I am yet to read such a coherent position (irrespective of whether it is accurate or not) from the opposition anywhere else.

- Manne

Broadsword said...

@ Manne

Any resemblance to any other position -- living or dead -- is purely coincidental. :p

Guru said...


If all we are comparing is price, why not benchmark the price India paid for Rafale with other customers who ordered Rafale in recent past-Egypt, Qatar. Then add the cost of Indian enhancements, other components and weapons.

cakewalk for a person with your experience and access to data...

But that is too much hard work, no? And where is the money in that? So this is what comes out....

Indian journalism at its best. No objectivity. No rationale. Please the powers that be and add masala.

Unknown said...

Mr Shukla, your views are nothing but utter rubbish, its the congress pay packet muttering trash.

How long will you keep supporting the nincompoop called Rahul Gandhi.

And if you indeed hv a case, then summon up the guts to file a PIL in the Apex court against the deal, with the help of well known opportunist lawyers like P Bhushsn.

And see your PIL being hit out of the ground like a football.

vijayh123456 said...

https://www.google.co.uk/amp/s/wap.business-standard.com/article-amp/opinion/ajai-shukla-rafale-s-july-take-off-113020500083_1.html

Subhash Saxena said...

Rafelle can be supplied at 1 a month only. So placing order for 126 does not involve payment if $12b in one go. 126 aircrafts would have taken 10 years to supply.
If the govt is sure that their price is lower than before, it is curious that the quantity has been slashed.... ir would have been wiser to increase the quantity

Anonymous said...

Mr Shukla it has analysed clearly.Just to help some close friends 126 A/c is compromised to 36.If the gov is really worried about Nation security than After 4 year also not even a single aircraft added to squardens of IAF. How 36 Aircraft is going to replace the requirements of 126A/c.