Rafale Deal: Best Bargain

Source: The Hitavada      Date: 09 Feb 2018 10:44:26

By ANIRUDH PRAKASH,

 

The new deal is far more expensive compared with the previous bid. It is quite ridiculous to compare the two deals. Further, it is an accepted fact that major defence deals are an instrument of a nation’s foreign policy goals. They do not take place in isolation and are not negotiated purely in terms of commercial activities. Therefore, the Rafale deal should not be viewed as a standalone agreement.


QUITE unexpectedly, Prime Minister Narendra Modi, while on a tour of France in April 2015, announced that India had decided to negotiate the purchase of 36 “ready-to-fly” French-made Rafale fighter jets in a Government-to-Government contract to meet emergent requirements of the Indian Air Force (IAF). It was claimed that the terms of the deal would be better, deliveries would be faster, maintenance responsibility of France would be longer and the configurations would be as had been earlier approved by the IAF. Detailed terms and conditions were to be mutually discussed and finalised between the officials of the two countries.

As the urgency of the acquisition was well appreciated by all, no questions were ever raised about the appropriateness, earnestness and sanctity of the deal for over two years. After prolonged negotiations, the deal was concluded in September 2016. The deal carries the stipulated offset obligations of 50 per cent of the contract value and contains a five-year maintenance guarantee.


Ideally, the IAF should have a fighter strength of 45 squadrons; with the minimum inescapable requirement being 39.5 squadrons. With dwindling assets (all MiG-21s and MiG-27s are due for phasing out), the IAF projected a requirement for 126 Medium Multi-Role Combat Aircraft (MMRCA) in 2001. Consequent to the issuance of a request for proposals (RFP) in August 2007, six manufacturers submitted their proposals.

While 18 aircraft were to be purchased in fully-built-up condition, the balance quantity was to be manufactured in India by Hindustan Aeronautics Limited (HAL) under transfer of technology. After extensive trials, two platforms (Rafale and Eurofighter Typhoon) were found technically acceptable. Finally, Rafale emerged the winner due to its lower life-cycle cost. The announcement was made on 31 January 31, 2012 and contract negotiations commenced.


By 2014, negotiations had reached a total impasse with no signs of a possible breakthrough. In addition to overly escalating cost, two critical issues proved highly problematic. One, Rafale’s manufacturer Dassault declined to stand guarantee for the 108 fighters to be built by HAL. According to the media reports, Dassault felt that HAL was too mired in mediocrity to be able to produce ultra-modern fighters.

Two, differences emerged regarding the interpretation of scope and depth of technology transfer. India wanted complete and unrestricted access to the latest technologies as it was paying for it. Reportedly, Dassault was ready to part with limited technology for licence manufacture only and not the design technology.


As the IAF was pressing hard for new fighters, the only viable course open to the Government was to abort the MMRCA proposal formally and start anew with the issuance of a fresh RFP. That would have meant a delay of 10 years. Hence, Mr. Modi’s order for 36 Rafale aircraft was a desperate measure to boost the IAF’s diminishing strength. A number of India-specific improvements, avionics and weaponry have been sought in the new deal.


As per articles appearing in the media and statements made by some political leaders, the Rafale deal suffers from several major infirmities. The deal for MMRCA was prematurely closed by the Modi Government. By 2014, it had become evident that the deal was beyond redemption. Without total technology transfer and Dassault’s guarantee for the aircraft built in India, the deal had become meaningless and hollow as these two aspects were the keystones of the proposal.

With no solution in sight, the then Defence Minister A K Antony rightly considered it prudent to let the deal stay in deep freeze. By the time Modi came to power, both sides appeared reconciled to the impasse. The deal was dead to all intents and purposes, except for an official announcement to that effect. The new deal is far more expensive compared with the previous bid. It is quite ridiculous to compare the two deals. Further, it is an accepted fact that major defence deals are an instrument of a nation’s foreign policy goals. They do not take place in isolation and are not negotiated purely in terms of commercial activities. Therefore, the Rafale deal should not be viewed as a standalone agreement.


In addition to this Rafale deal, a total of 17 pacts were signed between India and France during Mr. Modi’s visit. They included agreements on the stalled nuclear project in Jaitapur in Maharashtra and French investment of 2 bn euros in India. One is not aware as to what other assurances the French Government has given India. Needless to say, a great deal of quid pro quo is inherent in such packages; it is always a win-win situation for both sides. The operational capability of a strategic platform depends on its configuration and it has to be a closely guarded secret.

No country reveals such details. It is strange that some experts want the Centre to release an item-wise comparative cost table. Demand for transparency cannot be carried to such ridiculous limits. In the case of large value deals, the Government-to-Government route is by far the best way of doing business. Such deals carry an assured cost advantage with a certain degree of sovereign guarantee for quality-cum-performance features.

In addition, the seller Government provides logistic, training and exploitation support. Most importantly, there are no middlemen and no slush money. The Rafale deal is no exception. The indigenous defence industry is in a dismal state. The sole reason for such an appalling state of affairs is the absolute domination enjoyed by the public sector. Every effort to integrate the private sector is thwarted by the patrons of the public sector. As has been seen in the past, controversies are generated by losing competitors and other stake holders to stall or abort contracts by alleging irregularities. At times, stories are planted to raise suspicions regarding the earnestness of the entire evaluation process. It is a highly widespread ploy in the world arms market.


Indian media should remain wary and not let itself be used by vendors to settle scores. It owes it to the nation to encourage private sector companies to make India self-reliant in defence production. Unfortunately, adverse coverage in the media, wittingly or unwittingly, deters decision making and delays procurements. No functionary wants his honesty and diligence questioned. Even the boldest and the most conscientious officers fear subsequent enquiries. The media must certainly highlight acts of corruption and misdemeanours, but it is not necessary to smell a rat in every defence deal. (INAV)