Rafale deal 2.86% cheaper, saved 17.08% on enhancements: CAG reporthttps://indianexpress.com/article/india/rafale-deal-2-86-cheaper-india-saved-17-08-on-enhancements-cag-report-5581679/

Rafale deal 2.86% cheaper, saved 17.08% on enhancements: CAG report

The CAG report on Capital Acquisitions in Indian Air Force, which includes a price comparison of the Rafale deal, was tabled in Rajya Sabha on Wednesday morning.

Paper aeroplanes
The CAG report on Capital Acquisitions in Indian Air Force, which includes a price comparison of the Rafale deal, was tabled in Rajya Sabha on Wednesday morning.  (REUTERS/Pascal Rossignol/File Photo)

The Rafale deal negotiated by the NDA government was 2.86 per cent lower than the previous one from UPA-era, according to a Comptroller Audit General report. The CAG report on Capital Acquisitions in Indian Air Force, which includes a price comparison of the Rafale deal, was tabled in Rajya Sabha on Wednesday morning.

Compared to the earlier deal, according to the CAG report, in which 126 Rafale jets were to be purchased, the country has saved 17.08 per cent in costs towards the India Specific Enhancements to be fitted in the 36 Rafale jets under the new deal. The CAG also noted that there was an improvement of only one month in the delivery schedule of the 2016 contract in comparison to the 2007 offer.

The report examined the pricing of the deal but did not include the pricing details. The prices were redacted on the insistence of the Ministry of Defence which cited the Indo French Agreement of 2008 and the provisions of IGA (Inter-Governmental Agreement).

Letter of Comfort a drawback

The CAG report, however, highlighted the drawbacks of settling for a ‘Letter of Comfort’ rather than a sovereign guarantee by the French government.
The report noted that the 2007 UPA deal included a 15 per cent bank guarantee against advance payments.

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Highlighting its concerns, the CAG observed that in case of a breach of agreement, India would now have to first settle the matter through arbitration directly with the French vendors.

If the arbitration process goes against Dassault Aviation, the makers of the Rafale jet, and they fail to honour it, India will have to exhaust all available legal remedies, it said. Only after that will the French government make the payments on behalf of Dassault Aviation, it added.

“Instead it provided a ‘Letter of Comfort’ signed by the French Prime Minister in lieu of the Bank Guarantee,” the report said.

India for the first time signed an Intergovernmental Agreement (IGA) with France to procure 36 Rafale fighter jets. It has earlier signed similar IGAs with the US, the UK and Russia.

“In case of IGA for 36 Rafale, the offer of M/s DA (Dassault Aviation) in 2007 had included 15 per cent Bank Guarantee against advance payments, 5 per cent each for Performance Guarantee and Warranty. A Bank Guarantee gets directly and automatically invoked in case of breach of contract by the seller,” the CAG said.

In the 2015 offer with the present government, the French vendor did not furnish any financial and performance bank guarantees, the report stated.

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CAG report exposes Congress’ lies: Arun Jaitley

Meanwhile, Union Minister Arun Jaitley claimed the lies of the Congress and opposition parties stand exposed by the CAG report, which reaffirms the dictum that truth shall prevail.

“It cannot be that the Supreme Court is wrong, the CAG is wrong and only the dynast is right. Satyameva Jayate” – the truth shall prevail. The CAG Report on Rafale reaffirms the dictum,” Jaitley said in a series of tweets.

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He said, the CAG report outlines that 2016 deal terms were lower in terms of price, faster in terms of delivery, while ensuring better maintenance and lower escalation.

“The lies of ‘Mahajhootbandhan’ stand exposed by the CAG Report. How does democracy punish those who consistently lied to the nation?” he questioned in the tweet.

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The Congress has been repeatedly targeting the government over the deal, asking them to reveal the prices at which the jets were purchased from the French side. The party had earlier said asked the Comptroller and Auditor General of India Rajiv Mehrishi to “recuse” himself from auditing the deal, citing “conflict of interest” and “gross impropriety”. The Congress argued that since Mehrishi was a finance secretary between 2014-15 and a part of Rafale negotiation it will be improper of him to audit the Rafale deal.

with PTI inputs