The Cabinet Committee on Security (CCS) had cleared the Rs 58,000 crore Rafale deal in August, 2016, nearly 16 months after the announcement of its procurement was made by Prime Minister Narendra Modi during his visit to France in April 2015, according to details provided by the government in Parliament today.
Minister of State for Defence Subhash Bhamre said the cost of each Rafale aircraft is approximately Rs 670 crore but did not give details of prices of associated equipment, weapons and services. A similar response was given by him in November 2016 on the cost of each jet.
“The inter-governmental agreement (IGA) for procurement of 36 Rafale aircraft with the French government was accorded approval by the Cabinet Committee on Security (CCS) on August 24, 2016 and signed on December 23, 2016,” Bhamre said in a reply in the Rajya Sabha.
The minister’s written response came to a question by Congress MP Vivek Tankha who specifically asked whether the CCS approval was sought at the time of announcement of the deal in France. A joint statement issued on April 10, 2015 after Modi’s talks with the then French President François Hollande had said India conveyed to the government of France that in view of the critical operational necessity for multirole combat aircraft for the Indian Air Force, Government of India would like to acquire 36 Rafale jets in fly-away condition as quickly as possible.
“The two leaders agreed to conclude an Inter- Governmental Agreement for supply of the aircraft on terms that would be better than conveyed by Dassault Aviation as part of a separate process underway,” the statement said.
It also said associated systems and weapons would be delivered on the same configuration as had been tested and approved by the Indian Air Force, and with a longer maintenance responsibility by France. The Congress has been demanding details of the deal including cost of equipment and weapons, alleging that the deal negotiated under its rule was much cheaper than the contract signed by the Modi government.
On many occasions, the Congress had asked the government whether the CCS clearance was taken before the PM announced about the procurement of the jets during his visit to Paris in April 2015. Last week, quoting from the annual report of Dassault Aviation, the makers of the fighter aircraft, the Congress said while 36 Rafale jets were sold to India at 7.5 billion Euros in 2016, 48 jets were sold to Qatar and Egypt at 7.9 billion Euros in 2015.
According to the Congress, this amounted to Rs 1,670.70 crore per aircraft to India and Rs 1,319.80 crore to Egypt as well as Qatar. There was a difference of Rs 351 crore for each aircraft, the party claimed. The government has been refusing to give an item-wise cost and other details about the deal in Parliament citing confidentiality provisions of a 2008 Indo-France pact.
Bhamre also said it was not correct to say that there was an “upward price escalation” in the deal, insisting that no price was finalised during negotiations for the original proposal to procure 126 Rafale jets by the UPA regime. He said this to a question on why there has been an escalation of prices from Rs 526 crore per jet as negotiated by the previous government against the cost of Rs 1,570 crore per Rafale jet.
“It had not been possible to finalise the terms and conditions for acquiring 126 aircraft even after protracted process from the period of issue of Request for Proposal in 2007 to unsuccessful commercial negotiations up to 2014,” said Bhamre.
He was asked whether it is a fact that the previous government had negotiated a USD 10.2 billion deal for the 126 jets whereas the current regime finalised purchase of 36 Rafale aircraft for USD 8.7 billion without the provision of transfer of technology. The then UPA government had floated a tender in 2007 for purchase of 126 medium multi-role combat aircraft (MMRCA) for the Indian Air Force and post negotiations, Dassault Aviation’s Rafale and EADS’s Eurofighter Typhoon remained in the reckoning. However, the deal could not be finalised by the UPA regime.
“As such, the terms and conditions between the earlier exercise to procure 126 aircraft and procurement of 36 Rafale in direct fly-away condition including cost per aircraft cannot be compared,” said Bhamre. He said acquiring transfer of technology for only 36 aircraft would not have been cost effective.
Asked whether it is a fact that a joint venture agreement regarding Rafale jet was signed between Dassault Aviation and Hindustan Aeronautics Ltd was subsequently annulled, Bhamre said “no”. He said due to inability of the (previous) government to conclude the contract, there was no such agreement between Dassault Aviation and the HAL.