RAFALE DEAL

RAFALE DEAL

Kamaraj IAS Academy | RAFALE DEAL
  • October 11, 2018, 4:26 pm

IN NEWS

The Supreme Court asked the Centre to submit details of the decision-making process in the Rafale deal with France in a sealed envelope by October 29. It however, clarified that it was not asking for information on the price of the fighter jets and technical particulars.

RAFALE DEAL CONTROVERSY

Major allegations of corruption and crony-capitalism have been levelled on the Narendra Modi government for the deal related to the purchase of 36 Rafale fighter jets.

Defence minister Nirmala Sitharaman’s told the Parliament that the details of the deal regarding the Rafale fighter jets can’t be made public since an inter-governmental agreement makes it ‘classified information’.

ROOTS OF CONTROVERSY

The roots of the Rafale deal go back to 2007 when the United Progressive Alliance (UPA) was in power. In August 2007, for the Indian Air Force, a tender had been floated by the UPA government for the purchase of 126 twin-engine ‘Medium Multi-Role Combat Aircrafts’. Dassault Aviation’s Rafale had won the contract.

In late 2012, Dassault agreed to sell Rafale at a base price of approximately ?54,000 crore.

The things that were finalised in the deal were:

1. 18 out of the 126 planes would be imported in a ‘fly away condition’.

2. 108 of them would be manufactured by Hindustan Aeronautics Ltd (HAL), India’s public sector aerospace and defence unit. However, Dassault was required to transfer its technology as per the agreement. The company also had to invest half of the transaction money in India.

The agreement between Dassault and HAL was signed on March 13, 2014.

NEW DEAL

In April 2015, Narendra Modi made a state visit to France as the Prime Minister. Over there, an announcement was made by him that 36 Rafale aircrafts in ‘fly-away condition’ were going to be bought. Interestingly, Reliance Defence Limited (RDL) owner Anil Ambani accompanied the Prime Minister during the state visit.

The agreement signed in March 2014 was cancelled in July 2015. Another deal was signed with Dassault Aviation in September 2016 for the purchase of 36 Rafale fighters jets, priced at ?58,000 crore.

Interestingly, the price for 128 Rafale jets as per the agreement with the UPA government was turning out to be ?4,000 crore less than the price for 36 Rafale jets, under the Modi government.

It must also be noted that Dassault Aviation no longer had to transfer the technology, as per the new agreement. Reliance Defence Limited undertook the offset obligations of ?30,000 crore with Dassault Aviation. HAL was no longer required to manufacture any of the fighter jets.

In October 2016, RDL partnered with Dassault for a venture of joint defence production. An agreement regarding this was signed in February 2017.

CRITICISM OF NEW DEAL

1. The BJP has been accused of promoting the interests of Reliance Defence Limited at the cost of a public sector unit (Hindustan Aeronautics Limited).

2. The Congress has claimed that the new deal is in violation of the Defense Procurement Procedure, since an announcement had been made by the Prime Minister regarding the purchase of the jets without any inter-governmental agreement and in the absence of the defence minister.

3.Congress alleged that the deal signed with France does not cater for technology transfer and has caused an 'insurmountable' loss to the exchequer. The Rafale deal has a 50 percent offset clause, a large part of which is to be executed by a joint venture company of the Anil Ambani owned Reliance Defence

PROCUREMENT PROCESS

There was no agreement on the terms of Technology Transfer previously. What was on offer was just Licence Manufacturing technology. Under the current agreement, the 36 Rafale procurement offset proposal supports the 'Make In India' initiative of the Indian Government through Article 12 of the IGA. It states that the French Party will facilitate the implementation of 'Make In India' by the industrial supplier notably through offsets for 50% value of the supply protocol.

RAFALE JETS

Rafale is a twin-engine medium multi-role combat aircraft, manufactured by French company Dassault Aviation. Dassault claims Rafale has 'Omnirole' capability to perform several actions at the same time, such as firing air-to-air missiles at a very low altitude, air-to-ground, and interceptions during the same sortie.

The aircraft is fitted with an on-board oxygen generation system (OBOGS) which suppresses the need for liquid oxygen re-filling or ground support for oxygen production.

It carry out a wide range of missions: Air-defence/air-superiority, Reconnaissance, close air support dynamic targeting, Air-to-ground precision strike/interdiction, anti-ship attacks, nuclear deterrence, buddy-buddy refueling.

WHY not HAL?

Transfer of Technology remained the primary issue of concern between the two sides. Dassault Aviation was also not willing to take the responsibility of quality control of production of 108 aircraft in India. While Dassault provisioned for 3 crore man hours for production of the aircraft in India, HAL's estimate was nearly 3 times higher, escalating costs manifold.

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