Rafale Jet Deal: Mother of all defence scams

The Indian Air Force’s (IAF’s) glorious feats in wars since 1947 have been in consonance with the force’s motto of “Touch the sky with glory.” However, the process of its latest acquisition, Rafale, a 4.5 generation omnirole combat aircraft manufactured by Dassault Aviation, France, is so opaque, nepotistic and shrouded in secrecy, that it may turn out to be the mother of all defence scams in the history of India.

It was in September 2016 that the deal for 36 aircraft for ₹58,000 crore was finalised with the signing of the Inter- Governmental Agreement (IGA) by then Defence Minister Manohar Parrikar and his French counterpart Jean-Yves le Drian in New Delhi. It had been announced a year earlier by PM Modi in Paris. Basically, India would pay a whopping ₹1,611 crore for each of the planes, the same planes for which the UPA government was paying ₹526 crore per unit. The UPA government had floated a tender to purchase 126 medium multi-role combat aircraft and the Rafale was chosen over five other competitors.

The irony is that while inflation plus weapons package cannot justify this huge difference in per aircraft cost, the UPA’s price included transfer of technology (ToT), under which 108 aircraft would have been built by the state-owned Hindustan Aeronautics Limited (HAL). Under this current deal, there is no ToT as all 36 planes have been ordered on a fly-away basis. So, several questions arise. Why were orders for seven squadrons cut down to two? Why is there such a massive price escalation in spite of no transfer of technology? Where is this money going? Why is Dassault partnering with Reliance Aerospace in India and, in the absence of ToT, what are the offset obligations of Dassault? And there are many more such questions. Till date, the Narendra Modi-led BJP government has not answered any of them.

Incumbent Defence Minister Nirmala Sitharaman’s written reply to Parliament on February 5 this year that the government is not aware of the Indian partner of Dassault Aviation has taken what was murky into the realm of the unreal. When the joint venture company of Dassault and the Anil Ambani-led Reliance Aerospace laid down the foundation stone of its facility in Nagpur in October, 2017, BJP leaders like Maharashtra Chief Minister

Devendra Fadnavis and Union Minister Nitin Gadkari were present. The JV was formed 13 months before the deal was announced and it’s in the public domain. So why this denial?

What is perhaps most crucial is the betrayal of national interest on part of the Modi Sarkar by superseding the public sector HAL, which has extensive experience in the aer¬ospace industry in favour of the Anil Ambani-led company, which has zero experience in the defence sector. Under the deal mooted by the erstwhile UPA government, HAL was to get a ₹30,000-crore business share in the project, which would have kept its production lines alive. It had signed an agreement to this effect with Dassault on March 13, 2014.

Pallam Raju, former MoS of Defence, told National Herald, “By deleting HAL from the deal, the Modi government has destroyed the whole ecosystem which we had created through the UPA’s offset policy. Thousands of jobs and working hours would have been added if the government had gone forward with the older deal. The deal exposes the sham of Modi’s ‘Make in India.’ Otherwise, he would not have deprived HAL of the chance of producing 108 of these planes.”

HAL has a 32,000-strong workforce but no order post -2020. NH spoke to many senior scientists and officials at HAL who were involved in the Rafale project. They unanimously said this was akin to betraying national interest. They said they had multiple direct meetings with Dassault officials and had the nitty gritties mapped out. The fact that no reason was given by the government for throwing HAL out of the equation has hurt them more.

And it is not just this. A senior aerospace deal expert told NH that when the Eurofighter consortium learnt that the older deal was off, they approached then Defence Minister Arun Jaitley with a 20 per cent discount on their price. She says, “If the government wanted to truncate the Rafale deal to a 36-aircraft buy, why did it not go for new price bids? It should have invited Eurofighter as well as that would have created a competitive procurement process with two rivals bidding for the project. Why did the government give a walkover to Dassault in the shape of a single-vendor contract?”

Senior defence expert Ajai Shukla speaking on the deal and the massive price difference says, “That largesse, in the form of defence offsets, is flowing to Reliance Defence, headed by Anil Ambani, a Gujarati industrialist with no experience in aerospace manufacturing but perceived to be close to the PM…No ministry or Cabinet body was consulted before Modi committed India to the Rafale purchase on April 10, 2015. The CCS sanction was processed and obtained later.”

In the Defence Procurement Policy, it is clearly stated under clause 4.1 of Chapter 1 that for an entity to be an Indian offset partner, it ought to be ‘engaged in manufacture of eligible products’; in this context, eligible products mean fighter aircraft. HAL has experience in manufacture of fighter aircraft (SU-30MKI, Tejas) but the Anil Ambani-led firm has none. So, the only advantage that worked in Reliance Aerospace’s favour was its chairman’s proximity to PM Modi. So didn’t the Modi government violate the terms and conditions mentioned in the DPP?

The Rafale deal is a clear proof that Modi is ready to sacrifice national security at the altar of a few’s interest. Ashok Rao, Chief Patron of National Federation of Officers Associa-tion of Central Public Sector Undertakings, told NH, “This is the beginning of the making of military-industrial complex in India. This will have a long-term impact on Indian politics. Reliance Aerospace is just a front for foreign companies to gain an eventual chokehold on the defence sector. This company was set up just before the PM’s announcement about this deal.”

Former Army officer-turned IAS officer MG Devashayam thinks “this is a clear cut scam”. He goes on, “The Prime Minister is accountable to the country as he is spending my (citizen’s) money. The government needs to be transparent as the Defence Minister’s repeated U-turns suggest she thinks this is some kind of a game. This is a defence deal, running into many thousands of crores. The DPP clearly states that an Indian JV partner should have experience in the field. Reliance does not know ABCD of defence

manufacturing. So, how did they come into the picture and why is the government batting for them? Is the government’s intention to infuse cash into Anil Ambani’s bankrupt business group?”

A senior official associated with Lockheed Martin also told NH that the deal has sent worrisome signals to India’s defence industry’s private players. “L&T is in this field for more than 40 years, Tatas for almost 30 years. Mahindra has also been a player. But when it came to such a crucial deal, all of a sudden, a new company with zero experience in the sector came to the fore. The presence of senior BJP leaders at the JV’s foundation stone-laying ceremony also reeks of nepotism.”

This comes at an opportune time for the Congress party to launch attacks at the government and more specifically at Narendra Modi who had once famously said, “Na Khaunga, Na Khane Dunga.” The Congress has been repeatedly asking the government to come clean on allegations of vested interest and to justify the price of the aircraft.

Congress president Rahul Gandhi has clearly hinted at a scam and accused the Prime Minister of being the deal-maker. While replying to Arun Jaitley’s statement that Congress-led governments had declined to disclose cost of defence purchases, he mentioned three instances where the Congress had informed Parliament about prices of big-ticket purchases, including the Sukhoi. “You said the UPA never released prices of defence purchases. To nail your lie, here are 3 parliamentary replies by the UPA with full transparency on pricing,” the Congress president tweet¬ed, signalling that his party would not back down from the demand that the government come clean on the ₹58,000 crore deal. “Now do ask our Raksha Mantri to tell India how much each Rafale jet cost,” he said.

Almost all Opposition parties are united on this issue. Momentum is gaining across the country to demand a transparent reply from the govern-ment on the Rafale deal. From Trinamool Congress to Samajwadi Party, from CPI(M) to NCP, they are demanding that the scam around this deal be exposed.

Senior advocate and leader of Swaraj India Prashant Bhushan, while talking to NH, declared this as the “biggest defence scam after Independence”. He added “All due procedures were thrown out of the window to get just 36 Rafale jets. How come Modi arrived at this magical number? Why just 36 and not 126 as was originally planned? Who gave PM this authority? How come the same plane became three times more costly? And how is HAL out and how an entirely new company of Anil Ambani gets the offset deal? The nation should know why was Anil Ambani in France when Narendra Modi announced the deal? It is a scam.”

Incidentally, Anil Ambani also accompanied PM Modi to Russia in 2015 and signed a manufacturing and maintenance deal with Almaz-Antey, makers of the S-400 SAM system. India and Russia signed a deal for the same a year later. Anil Ambani seems to be getting a share of all the major defence deals that India has been signing of late.

Senior Congress leader Salman Khurshid said, “The Rafale fighter aircraft deal with France will prove to be BJP’s Achilles’ heel.” Time will tell if this holds true.