Tuesday, 12 February 2019

Rafale will fly, but the excuses won’t



By Ajai Shukla
Business Standard, 12th Feb 19

The controversy around Prime Minister Narendra Modi’s unilateral decision to buy 36 Rafale fighters from France, which picked up steam in late-2017, initially seemed a quixotic political attack by Rahul Gandhi, centred on allegations of over-payment and crony capitalism to favour the Reliance Group, headed by Anil Ambani, who is allegedly close to Mr Modi. However, over the last one-and-a-half years, a seemingly endless dribble of analyses and exposes have added credibility to a “Rafale scam” narrative, raising questions of impropriety, bypassing of procedures, modifying (no pun intended) standard contractual terms to suit foreign vendors and riding roughshod over the defence ministry’s concerns. The Congress Party president, initially alone in attacking the Rafale procurement, now has the entire Opposition chorusing his allegations.

During this period, the Bharatiya Janata Party (BJP) and the government have won pretty much all the big Rafale battles. The Supreme Court tossed out a group of writ petitions, notably one filed by Yashwant Sinha, Arun Shourie and Prashant Bhushan. The apex court order relied on government arguments submitted on an unsigned piece of paper. The Central Bureau of Investigation has not initiated any investigation, despite urging by citizen groups. On Tuesday, the Comptroller & Auditor General (CAG) is expected to submit an audit report, which is already somewhat discredited after the Supreme Court mistakenly cited it, before it was made public, to clear the government of wrongdoing (this has been justified as a grammatical error, where future tense was confused for past tense). And on television news debates, as in Parliament, government and BJP spokespersons successfully confuse the issue with technical and procedural jargon.

Notwithstanding all these victorious Rafale battles, the Rafale war continues causing attrition on Mr Modi. That is because of continuing revelations about procedural violations that are clearly emerging from deep within the government, apparently leaked by officials who resent having been pressured to toe the line laid out by powerful decision-makers in the prime minister’s office (PMO). This discontent is widespread. Even before three ministry of defence (MoD) officials in the Indian Negotiating Team (INT) on the Rafale deal in 2015-16 dissented in writing about how “the basic requirement of financial prudence” was being thrown to the winds, this writer had reported how Mr Modi’s unilateral decision to replace the acquisition of 126 Rafales under the Medium Multi-Role Combat Aircraft (MMRCA) tender with the procurement of 36 Rafale fighters, had taken the Indian Air Force (IAF) and then-defence minister Manohar Parrikar by surprise. Both the IAF and Mr Parrikar are today defending the deal for different reasons. The IAF, desperately short of fighter aircraft, fears that, if the Rafale allegations stick, they might end up without even 36 Rafales. Meanwhile Mr Parrikar walks a fine line, messaging that this was Mr Modi’s idea, not his own, but he would grit his teeth and defend it as a loyal minister. 

With much water having flown under the bridge, let us summarise the arguments since then. The first is the charge that the French vendors, Dassault (aircraft) and MBDA (weapons) were allowed to get away with charging the IAF significantly more per Rafale than what the 126-MMRCA deal would have charged. This writer revealed that Dassault had bid Euro 19.5 billion for 126 Rafales in 2007, some 40 per cent cheaper per fighter than what the IAF is paying in the Euro 7.87 billion contract for 36 Rafales, signed in 2016. The government has argued that the Rafales are now coming with “India-specific enhancements” that make them far more capable, but it then emerged that those added capabilities were also a part of the earlier procurement. Further, the MMRCA contract included the extra benefits of technology transfer to build 108 Rafales in India, which would have galvanised India’s aerospace industry.

The government has privately sought to discredit such reports, but has declined to divulge official figures. Defence Minister Nirmala Sitharaman had promised to make them public, but then backtracked citing a secrecy agreement with France. Meanwhile, party spokespersons have argued that the price being paid for 36 Rafales cannot be compared with the 126-MMRCA tender, since that never resulted in a contract. In fact, the two are directly linked through the Modi-Hollande joint statement, which explicitly stipulated that the price for 36 Rafales would be less than what Dassault had quoted in the MMRCA tender. This linkage is even more direct in the cost negotiations, where Indian officials used Dassault’s price bid in the MMRCA tender to establish a “benchmark price” for negotiating the cost of 36 Rafales.

Another point of controversy, also first reported by this writer, was over the selection of Reliance Group as Dassault’s primary partner for offsets – which requires vendors to invest 50 per cent of their contract value in India’s defence industry. Offset rules required vendors to submit their offset plan for advance scrutiny by the MoD. However, after negotiations with Dassault began, an amendment on August 5, 2015 absolved the MoD from its responsibility to pre-vet and sanction offset proposals. The government says the changes were made earlier and notified only now, though it is difficult to verify that. This has allowed Ms Sitharaman to argue that Reliance Group was Dassault’s choice, notwithstanding its weak financial standing and inexperience in aerospace manufacture. Mr Hollande, now retired, has publicly stated that New Delhi had stipulated that offsets must be routed through Reliance Group. However, Dassault – its contract in the balance – gamely took responsibility for the decision.

The current revelations, which are being spearheaded by The Hindu, centre on the apprehensions recorded on file by several MoD officials about PMO interference undermining India’s negotiations with the French, especially on the issue of sovereign guarantees. Eventually, Paris got away with handing India a legally dubious “Letter of Comfort” instead of a cast-iron sovereign guarantee, which would have bound the French government to intercede on India’s behalf in the event of any glitch in contract implementation. Such apprehensions were endorsed even by the defence secretary of the time – the senior-most MoD official – and even Mr Parrikar did not dismiss the officials’ concerns.

Monday’s revelations were even more worrying. Documents indicated that, well after the Cabinet had approved the 36-Rafale contract document, the government diluted several contractual clauses, doing away with mandatory penalties for the use of “undue influence”, use of “agents/agency commission” and other mandatory clauses stipulated in the Defence Procurement Procedure, the rulebook for defence capital procurements. This raises troubling questions: why would the PMO intervene to remove an anti-corruption clause from a contract the Cabinet had already cleared? Did the French negotiators ask for the “integrity clause” to be removed, or was it an Indian initiative? Why did the PMO intervene to strike out the “integrity clauses”?

Even with further revelations, only a money trail would establish criminal culpability in the Rafale affair. Without that, judgment can only be pronounced in the court of public opinion. Yet, great damage has been done. Procedures and institutional mechanisms have been severely undermined and the already fraught process of defence procurement complicated further. We may never know whether there has been corruption in the Rafale deal. But the evidence of unforgivable incompetence is everywhere.

22 comments:

Anupam Das said...

Any decision that benefits India, even if circumventing colossal and outdated procedures, are always welcome. That's why strong leaders are elected to office. As a common man, I would not want to see indecisiveness and policy paralysis that was witnessed during the UPA era. Opposition can flog the dead horse as much as they want, but in the process they are actually damning India.

VIKRAM PRASAD said...

Why were the Germans not considered....

Anonymous said...

NSR says ---

*****************We may never know whether there has been corruption in the Rafale deal. But the evidence of unforgivable incompetence is everywhere. *****************

Welcome to the cutthroat world of arms business...
There are no saints on other side either...and also in armed forces like former IAF chief Tyagi...People like him should have been court martialed and maximum penalty imposed …

Whateve happens, India needs to order additional 36 or 54 aircrafts with India specific improvements already built in...
So the per unit ccost will be lot less...

Rafale with Meteor and other armaments will strike terror in the hearts of Pakistan and China...

So order 36 ot 54 more immediately...

VIKRAM PRASAD said...

Was the threat perception so grave that all procedures were set aside ...like KARGIL

OR IS IT THAT the AIRFORCE WANTED THE METEOR MISSILE SYSTEMS DESPERATELY

Or else why would a government bend backwards and fast track a govt to govt deal.

Surely the 20% discount by euro typhoon could have been used to hard bargain with France. Needless to add rafale had few orders back then.

In the tender they had exited and wete brought back subsequently...

Rahul Samanta said...

I am literally shocked as to what extents our USA paid journos and politicians like Rafool Gandhi can go to prove themselves as deshdrohis by trying to implicate Modi as Chowkidaar Chor Hain and by acting as "lobbyists" for loosing vendors of MMRCA 1.0....

AS, do u really believe giving up the anti-corruption clause was wrong in an IGA deal? How come there will be any corruption in an IGA deal between two govt's absence of any middlemen like Michael Mama? What is the need for such corruption guidelines in that case? Are u seriously not aware of such clauses being removed as guidelines from an IGA contract was done by UPA 2 in 2013 by modifying DPP 2013?

As for other "BOGUS" points being raised by journos on cost and offsets, I request other readers of this site to check out this link published today....

http://idrw.org/rafale-part-9-rafale-saga-the-conclusion-and-the-game-of-520-526-540-620-700-vs-1640-crores/

I am though not expecting my comment to be published or getting a response from the author becoz of the proverbial Bengali idiom: "ThakurGhar e ke?" "Ami to Kola khaini".....

Hansraj Surana said...

Why PM has not spoken a word on this? Instead of deputing inefficient soles persons who cut sorry figures, the PM should clarify reasons for overlooking procedures.

randhir said...

What surprises me is the response from people, as if they are desperate to save their knight even if the shining armour is rusted and full of holes. The repercussions will further impact the threadbare military. Surely there a place in hell for these apologists

Anonymous said...

Fixed price of india specific enhancement could only be economic with a repeat order of Rafale. Possibility of the same goes grim with the present controversy. We will now buy anything but Rafale, which will increase cost, inventory and limit interoperability. Sad state of Indian defence procurement.

Any defence procurement file would have similar notings by MoD officials. They aŕe best in putting "legitimate objections on valid requirements".

Anonymous said...

We are well aware as to why the whole chorus of incompetent and corrupt politicians are supporting Rahil Gandhi in his attacks on the Modi government.

As regards the integrity clause, maybe Col Ajai Shukla can clarify as to whether this clause is applicable when a contract is given to a private company and is also applicable in a government to government transaction. The purchases of the Kamov helicopters, ULH etc can be taken as reference.

monotonous said...

God save this country

Unknown said...

ajai nice pc. of detaling the on goings of this saga but one thing is there modi has proved to cong. that SAU(100) SONAAR KI AUR EK(1) LOHAR (CHOWKIDAAR) IN TEACHING A LESSON OR 2 TO ALL OTHERS THAT HOW ONE SHD DO UNDER-TABLE JOBS BEING THE MOST VOCAL ANTI OF THE SAME.ONE THING IS FOR SURE WHAT EVER RULERS ARE DOING TO DIVERT ATTN. OF MASSES, WILL NOT SUCCEED AS HIS CON TRICK WILL NOT WORK IN VOTING,HENCE WE ALL CAN HOPE THAT THIS UGLY NIGHTMARE WILL BE OVER IN 2 MONTHS OR SO.FINGERS CROSSED.JAI HIND.

Ebenezer Guna said...

In Nagpur Anils Smithshop,which Dassault given as free,not single screw will produced for Rafale.It's a Falcon repair workshop.Falcon is executive jet.do indians money spend for Military Jets or Executive Jet repairing.

Anonymous said...

Good point !

MAGNUS said...

Mr Das all points agreed but here’s an interesting bit you may NOT be aware about. Whether Reliance or a so called Nav Ratan company “manufacturers” the remaining aircraft, is a moot question. Ajay will bear me out though even he may not know. We lacked what was then (1975-85) known as poor metulergy capabilities. Tank factory Avadi was unable to make tank road wheels. And we were unable to even make a gun barrel. Yes with passage if time we are better. Fair enough. But to build extremely hi tech aircraft service them and be truly consistent is being very very naive. No Country in the World makes ‘every’ part that goes into its products. Rest is up to you to judge. You see I was there. And yes have operated both the tank family and the helicopters. And knew both machines very very intimately.

Anonymous said...

NSR says ---

Economic Times - article...


'4 In ..

Read more at:
//economictimes.indiatimes.com/articleshow/67987267.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

IAF did not want 4 India specific upgrades but Dassault put it in …

Is this true?????

I guess France may want us to pay for the technology they can't afford to develop on their own...
Israel does this to India too...
Wow...we fly outdated arms and they get cold cash and develop technology to dominate amrs world...

Saptarshi said...

Meanwhile this "bullet train" government is also "finishing" an aircraft carrier for the last five years. Expected to take two more years.

Unknown said...

who says they were not?

Unknown said...

So now EF is suddenly cheaper? Lol. Read how EF bribed Austrian government to sell their poorly made aircraft. Eurofighter has many flaws. Last thing IAF would need is an unfamiliar, expensive white elephant.

Unknown said...

I agree: all these are puppets of Eurofighter consortium trying to derail Rafale deal. In the process, doing grave harm to IAF.

VIKRAM PRASAD said...

Rafale will bid substantially lower training and logistics as it has a head start ... airbase being set up and computer training in france is in the works

Anonymous said...

The table on time taken to decide on waepaons systems in CAG report is enlightening. The max time was 105 months, amazing.
This clearly shows whole system stinks.
Rafale took just 18 months start to finish. Great job.
Lesson:
Simplify process . We don’t patented process (MMRCA1)
simplify requirements (buy a million AK 103 or use .308 round for frontline infantry)
Is this true : IAF took 6 years for ASQR of BAT and expected HAL to churn it out in 5 !

go for proven concepts (oh my god multi caliber rifle !!!!)
Go to governments that have a proven history of supporting India in times of need (France, Russia , Israel)for critical weapons.
Build up more than sufficient war reserves
Not all weapons need be cutting edge (maybe just 15 % like in case anti tank missies buy Milan 2)
Make most in India, don’t either over pennies (see the F**** happening in FICV)

Anonymous said...

Do you know that it has a new engine kaveri M88 combo which produces 75 KN dry thrust , you know how much it costs to built the engine. The engine is undergoing testing and you would come with new engines in September. This gives Rafale sustained supercruise ability with more payload and longer legs. My suggestion is buy 36 more which would be cheaper and buy 100 F35 for 80 million a pop and devlop Tejas production. The sub units be supplied by the tier one suppliers with wires etc. fitted and HAL should do final assembly on the rigs so that the time on rig can be reduced to six months and then instead of 16 planes 32 planes can be rolled out. In 2022 when old planes retire there would be sufficient number of planes to replace those. Tejas MK 1 A is lethal platform and I feel India must have atleast 200 of those.
Built prototypes of AMCA and start flying it.

TIMBAKTOO