THE NDA government negotiated procurement of 36 Rafale fighter jets from France, under a government-to-government deal in 2016, for a price lower than the one negotiated by the previous UPA government under a commercial bid by Dassault Aviation, top government sources have told The Indian Express.
Sources said that the figure of Rs 525 crore or approximately Euro 79 million per Rafale aircraft which Opposition parties have been citing — they have claimed that the NDA government paid more than what Dassault Aviation had quoted earlier — is based on the manufacturer’s 2007 bid at the then exchange rate (I Euro = Rs 66.60).
This, sources said, was the cost of a “bare” Rafale, without weapons, avionics, radars, missiles and other specific customisations for the IAF.
“The IAF told us that because we were buying only 36 Rafale and not 126, they needed them to be more potent. Meteor missiles, 75 per cent serviceability and some special requirements were insisted upon by the IAF. It even asked for two separate maintenance support flights for redundancy. These imposed additional costs which were not even thought of in 2011. They are two separate packages,” government sources said.
Meanwhile, a senior IAF officer told The Indian Express that a Rafale meets 100 per cent of IAF expectations of a modern fighter aircraft and another 36 Rafale jets would have been ideal for the IAF fleet, in terms of operational capability and reduced logistics support footprint.
But official sources said the NDA government had no intention, as of now, to buy more Rafale fighters anytime soon, and had not initiated any discussion with France on the subject. The decision on buying more fighter aircraft, sources said, had not been taken yet.
The IAF is authorised 42 squadrons of fighter aircraft but is down to 31 squadrons. If no new acquisitions are made, the number will be down to 27 by 2032 and 19 by 2042.
After extensive trials lasting years, the IAF in 2011 found that only the Eurofighter, offered by a consortium of UK, Germany, Italy and Spain, and the Rafale qualified its stringent norms. The deal was to be for 126 aircraft, out of which 18 were to be procured in fly-away condition while the rest were to be assembled in India by public sector HAL.
The 2007 bid from Dassault Aviation remained in a sealed cover when it was opened in 2011, along with that of the Eurofighter. The Rafale was found to have made the lower bid and was chosen for price negotiation by the Ministry of Defence.
As per the in-built escalation formula, the 2007 bid for each of the 18 Rafale would have amounted in 2015 to Euro 100.85 million (Rs 765.4 crore at 2015 exchange rate of 1 Euro = Rs 75.90), sources said. Similarly, the 2007 bid price for every Eurofighter would in 2015 have worked out to be Euro 102.85 million, higher than that of the Rafale.
In comparison, the price of each of the “bare” 36 Rafale bought in 2016 was Euro 91.7 million (Rs 696 crore at the 2015 exchange rate), lower than both the earlier Rafale and Eurofighter bids.
The additional costs were for the weaponry (Euro 710 million), spare parts (Euro 1,800 million), weather and terrain compatibility fits (Euro 1,700 million), and performance-based logistics support (Euro 353 million), sources said.
Under the 2007 bid, sources said, a fixed escalation of 3.9 per cent per year was envisaged for the entire delivery period of five to six years, while the negotiation in 2015-16 lowered it to an index-based escalation factor of 3.5 per cent. Sources claimed that this resulted in an assured saving of at least Euro 200 million to the exchequer.
“We didn’t negotiate with Eurofighter as it would be against the CVC guidelines to deal with the second-lowest bidder. The full price discovery of Rafale had already been done and audit of every sub-component concluded. Going with Rafale was the easiest and the fastest option,” the government source said.—(With ENS, New Delhi)
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