Indian Rafale Deal: Ignorance is Bliss!

Ignorance is bliss and controversy sells. Human nature is such that it takes plain and simple truth for granted while it gets more inquisitive and fascinated towards the things ambiguous with the spicy flavour and grey shades. Historically it goes to the account of Thomas Gray, an English poet and scholar of eighteenth century, who first coined the phrase “ignorance is bliss” in 1742 in his Ode (a long poem) on a Distant Prospect of Eton College. It literally means that the lack of knowledge leads to happiness and/or it is more comfortable not to know certain things. The phrase “where ignorance is bliss, ’tis folly to be wise” from his said poem is perhaps among the most misconstrued phrases in the English literature because Gray was actually not promoting ignorance, but simply reflecting the nostalgia of youth when supposedly he was allowed to be ignorant.

However, this phrase perfectly fits and suits temperament and psyche of some present day Indian politicians, bureaucrats and self-proclaimed intellectuals who consciously prefer to remain ignorant of the facts that do not suit them or at least they pretend so by constantly ignoring the truth in furtherance of self and/or collective interests. Otherwise why the chief opposition political party in India and its leaders would indulge in trading unfounded charges and allegations time and again in the recently concluded Rafale deal at the inter-governmental level personally against Prime Minister Narendra Modi who despite his long carrier as the Chief Minister of Gujarat and now as the Prime Minister in the NDA Government has neither ever indulged in nepotism nor is known for the accumulation of personal wealth unlike majority of the Indian political families including the famous Nehru-Gandhi clan.

The author remembers his days as the Director (Budget) during the nineties of the previous century that the Indian Air Force was in dire need of a Medium Multi-Role Combat Aircraft (MMRCA) to meet their critical deficiency and augment their combat readiness to mitigate any eventuality with the two potentially powerful and hostile adversaries at the western and north-eastern borders. From 1996-97 onwards, the Air Force had constantly projected the minimum additional requirement of 126 aircrafts to meet the challenges on both the frontiers due to existing deficiency and depleting strength of fighter (generic term) aircrafts due to aging and obsolence.

In 2001-02, the NDA government under Mr Atal Bihari Bajpai accepted the need for the procurement but even ten years long tenure of the UPA government led by the Indian National Congress remained insufficient to ink an agreement with any potential supply source. Finally, under the tremendous pressure from the Air Force pressing their demands under the security compulsions, the NDA government decided to purchase of-the-shelf 36 Rafale Fighter Jets under an inter-governmental agreement (IGA) route with France. But even before materialization of the supply of a single aircraft, the deal has been vitiated by the opposition parties, baiters and critics levying the enormous yet ambiguous charges about cost, competition, technology transfer and cronyism with some of them citing it as the biggest ever scam.

The term ambiguous has been consciously used in the foregoing paragraph by author because even though citing it a major scam, most critics are not sure even about the basic facts of the aircraft deal. For illustration, during the last few weeks the Congress President and his colleagues have talked about multiple prices of the aircraft at different occasions while trying to justify the earlier inconclusive deal-in-process by own party government in 2012 with the Dassault Aviation of France. The fact is the UPA government could never reach an agreement with the manufacturers contrary to what is now being claimed by the party leaders. It is of common knowledge that traditionally in defence deals the governments does not reveal component cost and vital parameters of equipment for the strategic reasons. It is sad that an excellent fighter jet deal after a sound technical and financial evaluation is being sullied at the cost of national security and honour.

MMRCA – A Synopsis

It took almost two decades since the requirement of the MMRCA was projected by the Indian Air Force for 126 numbers (seven squadrons) and an IGA was inked between the Indian and French government for the reduced number of 36 (two squadrons), with a provision of 18 more on the same terms and conditions. After the initial go ahead approval in 2000 and a formal acceptance of necessity in June 2001, the process for the Request for Information (RFI) for the Multi-Role Combat Aircraft (MRCA) was initiated by the Air Force. This normally requires ascertaining the detailed information and data from vendors such as OEM details including if government sponsored; financial details like annual turn-over, manufacturing infrastructure, employees strength and past contracts; quality assurance; and product or equipment details including technical literature, production capacity, equipment deployment and so on.

Due to various issues, this step itself consumed considerable time and an updated and revised RFI was issued in 2004. The competitive multi-role combat aircraft (MRCA) tender featured six aircrafts namely Boeing F/A-18E/F Super Hornet, Dassault Rafale, Eurofighter Typhoon, Lockheed Martin F-16 Fighting Falcon, Mikoyan MiG-35 and SAAB JAS 39 Gripen. In the past three decades or so, Russian Mikoyan (MIG series) and Sukhoi, joint Anglo-French SEPECAT Jaguar and French Dassault Aviation Mirage-2000 variants had been inducted in the Indian Air Force including the transfers of technology, licensed production of some of these in India, personnel training, supply of spare parts, maintenance and upgrade.

Despite the procurement process initiated around 2002 on formal acceptance of necessity (a mandatory stage in procurement), the Request for Proposal (RFP) could be issued to six participant vendors only in late August 2007. In the event of critical shortages and prevailing security scenario in the Indian sub-continent, such inordinate delays should have not occured. If there are some delays on the part of Service, the civilian establishment must also look into these aspects as the ultimate responsibility rests with them. However, the stated lapse of time was ascribed to accommodating the factors like the Life-cycle Costs and Offset policy in the RFP under the new Defence Procurement Procedure implemented in 2005. The Total Life-cycle Cost had been introduced for the first time in the defence procurement, which was arguably the chief reason for the delay. The bidders were required to submit their formal proposals within six months from the release of the RFP. Later the period was extended by another month on the request of bidders who felt this necessity due to stated complexities in the RFP.

This followed the mandatory process of technical evaluation and field trials of the six shortlisted aircrafts by the Indian Air Force. Reportedly, the process of the technical evaluation of jets was completed by May 2009 and a rather long drawn field trials/rigorous testing procedure continued till December 2010. Consequently, two fighter jets namely Eurofighter Typhoon and Dassault Rafale were shortlisted by the Air Force in April 2011 for the opening of commercial bids and further negotiations. By 31 January 2012 it was officially known that the Rafale had won the competition on overall basis compared to the Typhoon on the lowest commercial quotes and the lower life-cycle cost on factors like fuel consumption and simpler maintenance requirements subject to further negotiations on issues such as the technology transfer, production of remaining 108 jets at Hindustan Aeronautics Limited (HAL) and offset provision. The government sources also indicated that the final value of MMRCA deal for 126 aircraft was likely to remain about $20–$25 billion.

However, an early deal could not be finalized due to disagreements over the total cost and jet production in India. Another point of contention was the provision of offset whereby Dassault was required to reinvest 50 percent of the Rafale deal’s earnings into India’s defence sectors through purchases and/or technological expertise. While the Indian government wanted the Dassault to be solely responsible for the sale and delivery of all 126 aircraft, the company was reportedly not willing to take responsibility for the 108 HAL-manufactured Rafales because of their apprehensions about the time and cost overrun as also the ability of HAL to absorb and accommodate the complex manufacturing technology of the aircraft.

Consequently, despite several rounds of negotiations, the stalemate over the HAL inter alia including the lack of political will to intervene and resolve, the contract could not be inked till early 2014 though the deal still remained open for negotiations. The policy-paralysis and hesitation of the then political leadership is understandable. The entire tenure of the UPA-II regime under Manmohan Singh was plagued with the controversies and multiple scams like Coalgate, 2G Spectrum, Common Wealth Games, AgustaWestland VVIP Chopper and kickbacks in other defence deals. As the General Elections for the Indian Parliament were also due in April 2014, the UPA government did not take a final call in the matter.

While the negotiations with the Dassault Aviation were still underway, there was another significant development in February 2012 when the Dassault Aviation and Reliance Industries Ltd (RIL) formed a joint venture to explore joint opportunities in the Indian defence sector. Eric Trappier, CEO of Dassault Aviation, in July 2013 also indicated that their partner Reliance will be engaged in producing a certain number of components for the Rafale in the private sector while the only partner for the manufacture of the Rafale in India would be HAL. But, obviously, there were reservations and pending issues that could not be resolved stalling the progress and the contract did not take final shape during the tenure of the UPA-II regime.

The RFP was initially issued in 2007 and even after lapse of seven years, the critical issues like transfer of technology, production of the fighter jet in the HAL and offset were still unresolved; the two sides had almost reached deadlock and the cost of the project had also considerably increased due to in-built escalation provision. In the meantime, the government changed in May 2014 after General Elections. Despite efforts by new regime, the negotiations remained inconclusive due to differences over final costs, technology transfer and make in HAL. According to official reports, Dassault remained adamant to accept liability for the 108 Rafales to be manufactured under licence by HAL, expressing doubts on the potential of the Indian defence industry i.e. HAL to handle aspects of the sensitive technologies being supplied with the Rafale, including its electronically scanned AESA radar, and consequent time and cost overruns.

It was not possible under any rule or procurement provision to officially re-open negotiations on the previously eliminated vendors in the MMRCA competition, thus leaving only two distinct alternatives: one, the deal is inked for the Rafale jets compromising on certain aspects; the other, the entire MMRCA process is scrapped complying punitive provisions, if any, after putting in efforts of over a decade, and a fresh global tender or RFP is issued. Needless to mention, the sufferer in the process would have been the Indian Air Force and vital security needs of the nation. In the process, the Indian Air Force was increasingly getting frustrated and restless with the continued impasse.

At this juncture the Indian Prime Minister took over the mantle of leadership to resolve the deadlock even though hard and bold decisions were required. During his France visit in April 2015, in the joint press statement of Prime Minister Narendra Modi and President François Hollande on 10 April, the Indian Prime Minister declared that India will purchase 36 Rafales directly from France and the contract to this effect shall be sealed soon. On 31 July 2015, the Defence Minister too gave a statement in the Upper House of Parliament that the ongoing process for 126 MMRCA was officially withdrawn by the government.

This followed negotiations and understanding with the French government at the officials level for about a year on the subject. During this period, the approval of the Defence Acquisition Council (DAC), due inter-ministerial consultations and approval of the Cabinet Committee on Security (CCS) was taken with due process. Finally, on 23 September 2016, Indian Defence Minister Manohar Parrikar and his French counterpart Jean-Yves Le Drian signed an inter-governmental agreement (IGA) for the purchase of 36 off-the-shelf Rafales in a deal worth €7.8 billion with an option for 18 more at the same inflation-adjusted price. The first Rafales under the agreement are expected to be delivered by late 2019, and entire delivery will be completed within the next six years. The comprehensive deal includes aircraft, associated equipment and weapon systems, India-specific adds-on, spares, training, logistics and maintenance.

Opposition Charges and Allegations

Ever since the IGA was signed between the two governments for of-the-shelf supply of 36 Rafale in September 2016, the Congress President and his party colleagues have constantly taken potshots at the NDA government, more particularly targeting Prime Minister (PM). Recently, this attack has become bitter, scathing and sharper  personally implicating PM (by name) in the alleged mega scam. In November 2017, he tweeted: “Self ‘Reliance’ is obviously a critical aspect of Make in India.” “Can you explain ‘Reliance’ on someone with nil experience in aerospace for Rafale deal?” Recently in a debate in Parliament on No-Confidence Motion, he stated that PM is personally “Bhagidar” (accomplice) in the mis-doing and cannot see him eye-to-eye due to his involvement.

Gandhi scion also alleged during the No-confidence motion debate that Defence Minister (by name) had earlier said that she would reveal the cost of Rafale to the country. However, later she denied it citing a secrecy pact between the two countries (India and France). He added that in his meeting with the French President about this secrecy pact, the latter denied of the existence of any such pact and even stated that he has no issues in making the cost public. A former Defence Minister of the grand old party added that the price details are scrutinized by the Comptroller & Auditor General of India and Public Accounts Committee; hence the government must reveal price details and explain why a private company (Reliance) having no experience in manufacturing aircraft was selected as partner which is benefited by crores (one crore = ten million). Yet another Congress stalwart made a scornful remark that the government owes an explanation in Parliament why Modi and Sitharaman misled the nation on the price issue.

The other point that the chief opposition party has been raising is that the deal negotiated under the UPA regime was much cheaper than the contract signed now by the NDA government. The Party claimed that the unit aircraft price negotiated by them was Rs 520 Crore and the one inked by the present government is 1,600 crore. The allegation made of impropriety personally against the Prime Minister is significant because several scams have surfaced in India regarding the procurement of the military equipment and warfare systems ever since the purchase of the Bofors Guns from Swedan in the 1980s. Another allegation is that the NDA government has ignored the requirement of the transfer of technology. The opposition politicians have repeatedly made allegation that PM has sacrificed the interest of the HAL by helping the Reliance Defence Limited, a private company owned by the tycoon Anil Ambani, in getting contract to produce the fighter jet as part of the offset obligation. They also say that the NDA government has not followed the Defence Procurement Procedure (DPP) in Rafale purchase from France.

Some retired bureaucrats and defencve analysts have also spoken and written against the Rafale deal in the past few months. The issues could broadly be categorized under the cost, competition and cronyism apart from the transfer of technology and procedural issues. There is another prevailing counter view: when the NDA government opted for the terms of the procurement from “Technology transfer” to “Direct Import”, they should have given equal opportunity to the Eurofighter Typhoon also to quote their best rates to obtain better competition and rates. It is also alleged that the Typhoon is a superior aircraft compared to Rafale in terms of weight-thrust ratio, maneuverability, agility and speed. An allegation of the double-speak has also been made in that the press release of the government (MoD) on 7th February, 2018 stated that no offset partner has been selected by the Dassaut Aviation, while the RIL has gone on record dated 26th February, 2017 that “the offset contract is being executed by Rafale”. Thus according to critics, the cost, competition and cronyism together have made the deal highly opaque and suspect.

The Government Response

The government and PM Modi have generally been cool and non-reactive but have given a measured response in the Parliament and outside. One NDA Minister recently clarified that the base price of each aircraft negotiated by the government with France is at 91.75 million Euro, about nine per cent less than the 100.85 million Euro the UPA government had reached in the inconclusive deal. As the sensitive matters overlap the price details such as the import of weapons from the USA and imports of defence items and missiles from Israel, the previous government (UPA) on many earlier occasions too did not disclose them on the floor of the House citing public interest. He further elaborated when the UPA had invited quotes for 126 aircraft in 2007, the estimated price quoted were Euro 79.3 million with in-built escalation mechanism. When the bid was opened in 2011, the proposed cost in the bid document was Euro 100.85 million per aircraft.

The Minister went on to add that the aircraft’s basic cost was placed in the Lok Sabha on November 18, 2016, and in the Rajya Sabha on March 12 and March 19, 2018. Divulging more details of the jet would essentially reveal its capabilities, something India would not like to happen as it would give lead to take counter measures by an assertive China and forever foe Pakistan. In a press note on 7 February 2018, the Ministry of Defence too asserted that “unfounded allegations” were being made regarding the 2016 IGA to procure 36 Rafale aircraft from France. Such misleading statements are causing massive damage impinging on the national security when the approximate acquisition cost of the Rafale aircraft has already been provided to the Parliament. The provision of exact item-wise cost and other information would reveal details regarding various customizations and weapons systems specially designed to augment effectiveness and lethality of assets. Besides, such details would also come under the ambit of Security Agreement signed with France in 2008 by the UPA government. It went on to add that in 2012, the then Defence Minister AK Antony himself had exercised unprecedented personal veto on laid down institutional process then underway for procurement of 126 MMRCA.

Author’s Analysis & Take

There is no doubt that the timing of this vicious campaign coincides with the next General Elections which are due early next year in a few months from now. It is everybody’s knowledge how the Bofors Guns scam uncovered by VP Singh (then Defence Minister) had a severe negative impact on the prospects of Rajiv Gandhi in 1989 elections. The following factual analysis would reveal how the opposition parties and critics are playing in the muddy waters not really with any hope or aim to unearth any scam but to discredit and tarnish the clean image of the PM and government by creating doubts and suspicion in the mind of people through generic charges and allegations.

Cost:

It is true that the unit price of the aircraft is more than what was originally estimated. Besides, there are several aspects of the deal leading to the escalation of the overall cost which is skillfully or through sheer ignorance is being constantly ignored by the opposition leaders and other critics of the deal. When RFP was issued in August 2007, the approximate cost of each Rafale was Rs 520 crore which escalated to Rs 700 Crore plus per plane in 2015 and thereafter. With the provision of inflation-based escalation in-built in the deal, even a layman can predict and understand the dynamics of cost escalation simply by considering the Euro-Dollar-Rupee ratio in 2007 and subsequently when the deal was finalized. While the Rafale had emerged as the lowest bidder in 2011-12 but the deal could not be finalized by the UPA government and by the time the government changed in 2014, it was completely deadlocked with the Dassault Aviation refusing to certify key components of the jet which were to be built by the HAL unless a series of specific conditions were met.

The Defence Procurement Procedure (DPP) does not permit negotiations with the next lowest bidder (Eurofighter Typhoon); thus the government had not much choice left in this case. With no deal in the offing and the Air Force and respective Air Chief(s) since long impressing the government about the depleting strength of the aircraft fleet and critical deficiencies in India’s air defence without the jets being inducted, the Prime Minister embarked on the option of an off-the-shelf purchase from France during his visit to Paris in April 2015. It appears when the government-to-government talks commenced, initially the French side had quoted a much higher price for the comprehensive deal for 36 Rafales which was initially cut down to Euro 8.6 billion, and eventually further brought down to 7.8 billion ($ 8.8 billion) after hard bargain. On face the deal might appear to be highly priced but seems to be quite favourable on the following counts.

As specific details in such deals are never officially revealed particularly during the operation of the contract due to mutual obligations, it appears the initial MMRCA deal was being made for 126 Rafales, without the provision of the complete weapons package, adds-on and maintenance. As against that the current agreement includes 36 Rafales in fly-away condition, weapon package with adds-on including simulators, spares, maintenance and performance based logistics support for the specified years. The weapon package has not been officially divulged with but it may include the Meteor beyond-visual-range air-to-air missile, SCALP missile, AESA radar etc. In addition, as against the provision of a minimum 30 percent offset in the DPP 2016, an offset of 50 percent has been agreed to by the French Government thereby facilitating a business worth about 3 billion euros for the Indian industry generating thousands of new jobs and technology benefits. France will also provide logistics and ground support to ensure that at least 75 percent aircrafts are operationally available at any time. It is understood that as a goodwill gesture France is also providing some old 32 Jaguars and 2 Mirage-2000 which may not be air-worthy but the spares and sub-systems may certainly be useful for the repair and maintenance of the aging Indian fleet.

Cost Analysis:

As the component-wise cost has not been officially revealed or readily available from a reliable or undeniable source, an accurate analysis may not be feasible. However, based on the unofficial sources and private reports, a tentative component-wise description is given below which may not be absolutely accurate but represents a fair and approximate position of the break-up cost of jets.

36 Rafale Jets (Total cost = €7.8 billion)

(1) The contracted price averaged out to €91.7 million (Rs 686 crore or Rs 6.86 billion) per Rafale.

(2) This includes the purchase of 28 single-seat jet for €91.07 million (Rs 681 crore/Rs 6.81 billion) each; and eight twin-seat each priced at €94 million (Rs 703 crore/Rs 7.03 billion).

(3) Total cost of 36 jets = €3.3 billion.

(4) India-specific enhancements for €1.7 billion.

(5) Weaponry such as Meteor and SCALP missiles for €700 million.

(6) Spare parts and engines for €1.8 billion.

(7) Performance-based logistics for €350 million to ensure that at least 75 per cent of the Rafale fleet remains operationally available all the time.

(8) (3) + (4) + (5) + (6) + (7) = €7.85 billion.

The India-specific enhancements supposedly include a ‘radar warning receiver’ to detect enemy radar and ‘low band jammers’ to foil it; a radio altimeter, Doppler radar, extreme cold weather starting-up (cold start) devices for airfields like Leh, and ‘helmet mounted display sights’ that let pilots aim their weapons merely by looking at a target and some more. These items appear essential, however some people may debate whether the ‘India-specific enhancements’ should already be a part of the Rafale operational platform with price included. Qatar is yet another buyer of Rafale aircraft and they signed a deal for 24 Rafales at the cost of €6.3 billion ($7.02 billion) barely few months before the Indian agreement. Keeping their deal in view, it appears that by paying additional only $1.78 billion dollars, India is getting 12 more aircraft. Then before politcal approval such as that of CCS (i.e. Cabinet Committee on Security) is accorded, the proposal passes through an elaborate procedure of scruitiny on file by the respective Executive, Administrative and Finance Wings in the Ministry of Defence, and approved by the Defence Acquisition Council (DAC). The author wonders if the stalwarts making hullabaloo about the cost have any inkling about this procedure. If some of them claim to know this procedure but still cry foul without substantive lead or evidence, either they do not have trust in the system and own knowledge or understanding or they are consciously doing it keeping an agenda in mind.

Those against the deal may disagree but the above analysis appears quite sensible and realistic taking into account what PM Modi stated on 10 April 2015 in Paris in a joint-conference with French President Francoise Hollande: “Keeping in mind the critical operational necessity of fighter aircraft in India, I have discussed with the President the purchase of 36 Rafale fighters in ‘fly-away condition’ at the earliest through an inter-governmental agreement. We have both agreed that these would be supplied on better terms and conditions than were offered to India in a separate procurement process.” The ‘separate procurement’ was a reference to the ongoing tender process initiated in 2007 for 126 MMRCA. Those who have some knowledge of the “dynamics of the Defence expenditure and equipment” worldwide would also know how the respective governments keep these details under wrap for the strategic reasons and India is not an exception for the past many decades. The author does not endorse opacity but is aware for sure that this culture is not the gift of the present NDA government but a product of the bueaucratic working evolved during long Congress rule. An inter-governmental agreement rules out the intervention of the middlemen which are the chief link and source of corruption and kickbacks in international deals.

In fact, a for more relevant question would be to explore when almost equally good fighter aircraft in the form of Sukhoi-MKI and variants are available at almost half of the cost and indigenous manufacturing capacity, why India should in the first place be eager for much costlier Rafale or any other Western aircraft of similar potential. One reason, of course, is the Indian Air Force has been keen for having a fleet of medium multi-role combat aircraft for the tactical and ease-of-operation reasons. Size and dimension-wise the Sukhoi falls in the heavy built category being almost one and a-half time bigger than the Rafale. The other reason could be that the Russian fleet is prohibitively expensive through maintenance cost due to lower in service-life and frequent mean time between failures (MTBF) of the spares and sub-systems like engines, radars, avionics, missiles etc. Besides, Russians have a tendency of making high profits on the supply of spares after the initial sale. Then politically also Russians are no more as dependable as they used to be prior to disintegration of the USSR and they are now re-newing and warming up their relations and military cooperation with India’s chief adversaries China and Pakistan in the region.

Competition:

A view has been put forth by some that as the government opted for the procurement from “Technology Transfer” to “Direct Import”, they should have given equal opportunity to the Eurofighter Typhoon also to quote their best rates to obtain better competition and rates. It is also alleged that the Typhoon is a superior aircraft compared to Rafale in terms of crucial performance parameters.

With his own experience as Director in MoD handling budget, planning and systems way back and considerable experience of working for the  Defence Services all along, the author would like to clarify at the outset that technically it would be more appropriate to say that the government opted for the procurement from the “Buy and Make” category to “Buy” of-the-shelf under the IGA route. Transfer of technology would be relevant in a scenario when equipment is produced in India in collaboration with an Indian firm. In the instant case, 36 Rafale jets are under procurement to meet the urgent operational requirement of the Air Force facing critical shortages for long; hence the exercise should at best be regarded as an “emergency procurement”. In the past, India had signed several government-to-governmnet (G-to-G) agreements with the Russia for decades and even more recent P-18, C-17, Apache Helicopter etc.deals with the US under the Foreign Military Sale (FMS) route are in many ways akin to G-to-G route with the sovereign backing.

As the author has mentioned in the preceding paragraphs, the Air Force has been constantly projecting the need of 126 MMRCA to meet their operational requirements since 1996-97 throgh the annual and perspective procurement plans: however, in-principle clearance in 2000 and formal acceptance of necessity by the government was accorded in 2001-02; RFI led to considerable delays; RFP was issued in 2007; the Air Force identified Dassault Rafale and Eurofighter Typhoon as worthy aircrafts in 2010 meeting benchmark qualifications and field trial; Rafale selected for final consideration on the price alone (being lowest); and the deal thereafter deadlocked due to the Vendor’s reservations on the capability of the HAL to produce besides the policy-paralysis of then government in decision making. It is a well-known fact that the most foreign procurement contracts provide for an in-built escalation mechanism and if timely decisions are not taken, the cost is bound to increase at times beyond affordable reach. This could be the chief reason why the number of aircrafts has now been reduced to 36 only.

Going for a fresh competition between Rafale and Typhoon on price alone would not only have vitiated the process but also have thrown open fresh political, technical and financial issues to resolve. While India has a long history of understanding and cooperation with France, the same is not true with other European countries. In fact, both Rafale and Typhoon are excellent fighters of fourth generation plus category with minor technical and operational differences and edges over each-other. For instance, in an overall basis the Rafale has a slight edge over the Typhoon in terms of ground-attack versatility, dog-fights, radar capabilities and maneuverability at high-loads while the Typhoon has similar edge in the air-superiority role due to its superior high altitude performance and thrust-to-weight ratio.

The author personally examined comparative parameters and several reports available in the public domain. On paper, the Typhoon appears to have a slight edge over the Rafale on overall basis but in its performance the latter has excelled over the former internationally on several occasions. In this context, a report of the Swiss government of 2009 vintage is relevant. The Swiss Air Force apparently wanted to buy new fighter planes and a duly constituted Technical Committee had prepared a report on the contemporary fighters taking Boeing F-18 as the base aircraft. Ordinarily, such reports are secret but this was leaked and reportedly later endorsed by the Swiss government. The relevant result at the scale of 1-10 is reproduced below:

Data in the given table are self-explanatory. The author feels that the technical aspects and suitability of an equipment or warfare system should be best left to the technical experts and actual users i.e. the Air Force in this case; the generalists need not force their choice and opinion in such case. Ultimately, it is the man behind the machine that really matters. The case in point is 1965 Indo-Pak war wherein much advanced and superior American F-86 Sabre jets were out-maneuvered and outclassed by the diminutive and for slower Indian Folland Gnat in several dog-fights, and were consequently nick-named Sabre-Slayer.

Cronyism:

As per the tender condition, the HAL was provided as the lead integrator; hence the partnership with them by the OEM was mandatory. The Congress leaders, detractors and critics have made allegations that the government has failed to protect interests of the HAL and deliberately favoured a private company (now Reliance Defence Ltd) as the offset partner of Dassault despite their zero experience – a clear case of ‘crony capitalism’. The allegation is misplaced and reflects poorly on the knowledge and understanding of the case by such people for the following reasons:

The Dassault Aviation was not opposed to partnering HAL since beginning. Initially, they were inclined to work with HAL and technology transfer to the tune of about 70% for the subsystems like the engine (Snecma M-88), AESA radar, Radar Warning Receiver etc. However, after initial interface on related technical issues and site visits at the HAL Bengaluru and Nashik Divisions, the Dassault concluded it extremely difficult to work with HAL and give commitment for the manufacture of 108 aircrafts fearing serious time and cost overrun. The main reason was a wide variation in the man hours i.e. 30 million MHRs per unit fixed by Dassault as against about 90 Million MHRs estimated by HAL that would have serious cost and time overrun. Then the Dassault was also unwilling to take responsibility for the quality control of the aircraft manufactured by the HAL because they had serious apprehension about the ability of the HAL to absorb complex manufacturing technologies. Almost simultaneously leaked confidential report of the former US Ambassador to the US government about the competence of the HAL partnering the American companies in MMRCA project might also have some adverse implication.

Being unsure about the HAL’s capability and competence to absorb technology and maintain quality standards expected in the production of the Rafale jets, the Dassault developed cold feet refusing partnership in joint production of the aircraft in India. The deal reached deadlock over the manufacture of aircraft under licence in the HAL and not for the transfer of technology per se. That their apprehension and fears were not entirely misplaced is also vindicated by the fact that another totally government owned agency DRDO took almost three decades to reach production stage of the Light Combat Aircraft (LCA) with a dismal record on engine (Kaveri) development. Few people would know that the Dassault was also engaged as consultants in 1987 to assist the design and system integration of the LCA.

The other issue is about favouring a private company (Reliance) over the HAL with a malafide intention of providing financial and commercial benefits to the former. It is alleged that in the earlier contract, the 50 percent offset obligation was to go to the HAL and the remaining 50 percent to the private companies like Tata, Larsen and Toubro etc. Though the Congress and other detractors outrightly blame present PM for ‘crony capitalism’, the fact is that the Dassault had already signed a MOU with the Reliance Industries Ltd as back as early 2012 during the UPA regime. Should this too be taken as crony capitalism against the UPA regime? The point to keep in mind here is that the transfer of technolgy and manufacture of aircraft in HAL and performance of offset obligation were two different obligations under the deal that did not materialize. In the present agreement, 36 aircrafts will be received from OEM in fly-away condition, and thus transfer of technology and manufacture in India is not involved. The OEM is free to select its Indian offset partner(s) as per the provision of DPP and submit offset proposals to MOD including Partner(s) thus selected in the stipulated timeframe.

Actually, the history of the foreign direct investment (FDI) and private participation in manufacturing in Indian defence sector is not very old and defence industry for the big ticket manufacture and trade is still under the nascent stage whether it is Tata, L&T or Reliance. Reliance Naval and Engineering Limited is operational since 2005 under the flagship company RIL and engaged in ship building, heavy engineering products and repair works. The Indian Navy has awarded a contract of Rs 26 billion (US$ 380 million) in 2010 for the construction of five offshore petrol vessels. Reliance Defence Limited is a company incorporated a little over three years back. The growth, performance and maladies of the public sector in India since Independence is a separate subject to deal with but the author is pretty sure that many worthy politicians, serving and retired bureaucrats are well aware of all this. A company should not be written off simply citing the lack of experience; even our mainstay the HAL or BHEL had also started at some point with zero experience and technical base.

This leaves the alleged double-speak in the context of the Congress allegation and other reports that the Indian company with zero experience has been chosen as the offset partner in the deal. Actually, with the advent of the electronic and social media world-wide a lot of things are reported in the print and electronic media, often based on pre-mature or even fake information. What the government (MoD) press release in February 2018 mentioned was technically and officially correct position that “no Indian offset partner for ’16 deal for 36 Rafale Aircraft so far selected by vendor (DA). As per DPP guidelines, the OEM is free to select Indian Offset Partners & provide their details at the time of seeking offset credits, or 1 year prior to discharge of offset obligation”. The statement indeed raises ethical overtone but officially it cannot be faulted because it is only after the formal receipt of an offset proposal, the government (Defence Minister as CFA) will be required to acknowledge and answer it.

There is every likelihood that the government (MoD) indeed has not received any offset proposal so far from the OEM as claimed in the February press release. Actually the Opposition allegation on Offset has oversimplified the whole issue in the psyche of interested people giving impression as if Reliance Defence Ltd is the sole beneficiary as an offset partner. Earlier, France had expressed their willingness to revive so for unsucessful Kaveri engine project for the LCA (Tejas) and some other high-end collaborations. The fact is the French side has committed about 30 percent for the military aerospace research and development programmes and the remaining 20 percent for the various components and spares for the said aircraft. By implication, this would mean that apart from the Reliance, the DRDO and several other big and small Indian companies would most likely get business opportunities during the next 4-5 years out of an estimated Euro 3 billion value. The main objective of the offset is to leverage capital acquisitions for the development of the indegenous defence industry and research.

Other miscellaneous charges are why the government resorted to the IGA route instead of well laid down competitive procurement process and that the provisions of DPP have been violated. The answer for the first question is plain and simple that the long drawn competitive procurement process did not yield intended result in spite of the lapse of almost ten years and reached a deadlock, seriously impinging upon the operational preparedness of the Indian Air Force and national security; hence the present government and PM took recourse to IGA route with France being a traditional friendly and trustworthy nation. As for the violation of DPP, the charges are ambiguous and unspecific but the government denies any such violation. People both politicians and others appear ignorant or at least pretenting so when they sing merits of the HAL while levying charges of croynism because the manufacture of aircraft in India and the discharge of offset obligations by the OEM are two distinct and unrelated activities. During all this controversy and mud-slinging, the diplomatic sources of France quoted, “This fighter jet has been selected for its outstanding performance and competitive price. It was selected through a fully transparent and competitive process”. Regarding the Congress allegations they maintained that it was “a domestic political matter” and they would not like to enter.

Some Hind Sight

In the concluding part, the author has only few observations and suggestions. After independence when the country opted for the mixed economy, certain key sectors like Defence, Infrastructure, Communication, Nuclear energy and Space Industry were exclusively retained for the public sector. After the decades of protectionism, uncertainty and sluggish growth, the sectors like Infrastructure and Communication were gradually opened for the public-private participation and foreign investment. We all know how these sectors have revolutionized in a little over two decades and contributed to overall employment, technological base, growth and development of the nation as also the quality of life of the common man.

For illustration, let us consider power and energy sector; till sometime back the Bharat Heavy Electricals Limited (BHEL) was the only public sector company with a capacity to build and execute about 7-8K MW annually in the country. With the emergence of the private companies like Larsen & Troubo, Siemens, Alstom, Crompton Greaves, Schneider Electric, and so on as also foreign participation from the countries like Germany and China, the annual capacity building has increased substantially with the demand and supply gaps shrinking to the minimal. So it seems reasonable that the Indian establishment now shed their reservations and inhibitions about the private participation in defence ventures too with a clear roadmap and adequate regulatory mechanism.

During his long stint in the government including defence as senior functionary in various appointments, the author observed that many politicians and bureaucrats would not have reservations in freely mingling and taking hospitalities from the public sector companies. When it comes to the private sector, on face of it they will treat them like untouchables while many of them still maintaining secret parlance and liaison with them. This culture must change as the private companies too, while working for own profit, contribute for the national economy, industrialization, employment and overall development and growth of the country. Is it not a paradox that in India we are opposing private sector while endorsing HAL most often without knowing its obligations and performance while we have no issues in buying sophiticated and expensive defence platforms from the private companies abroad under full patronage of the respective foreign government(s)?

The opposition certainly has the role and privilege of criticizing and peacefully opposing the programmes and policies of the government in a parliamentary democracy. But the opposition parties and more particularly the Congress needs to draw a line when and where to oppose or support the government on merit. They are trying to project Rafale deal as the biggest ever scam in the country without identifying any substantive verifiable or sustainable facts, obviously to derive mileage in the General Elections which are due in a couple of months next year. It is the tradition and irony of the Indian political system, created and perpetrated by the Congress itself during long rule, that often even routine information is withheld by the government in the name of public interest or security perception otherwise what is withheld from the Parliament is often fairly accurately available in the public domain from other inland and international sources, even including broad component-wise break-up of the Rafale deal as already cited by the author in earlier paragraphs.

Epilogue

The allegations made in the instant case are highly subjective as the opposition and critics have directly preferred to put blame on the Head of the Government by name. In my opinion, the people with unbiased minds and independent thinking should prima facie consider the following three critical parameters to make up their opinion about the personal conduct of an individual:

• Whether the person has accumulated assets disproportionate to his earnings in public life;
• Whether the person is involved in nepotism;
• Whether the person has a lavish life style beyond the normal means or call of his office and personal life.

When the opposition is making unsubstantiated allegations on the PM and government in the Rafale deal being an IGA, by default implication it is an adverse reflection on the foreign government too. Such action may have a long term implications and may even jeopardize the future relations with a friendly nation. Now supposedly, if the next government is formed by the opposition parties led by the Congress or the Congress alone, will they continue to honour the IGA on Rafale purchase? If yes, by endorsing the alleged mega scam, are they not becoming party to it? If not, how they will annul, breach or modify it without compromising friendly relations with the country which has a long history of defence cooperation with India, and perhaps the only powerful Western nation which didn’t join the US and UK in imposing long term sanctions on this country after Pokhran nuclear tests in 1998. So it’s always better to eat only what one can easily digest.

Read Also: Rafale Deal Truth Unraveled: Judicial Review

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Dr. Jaipal Singh

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