Can Modi explain this fundamental contradiction in Centre’s stand on the Rafale deal?

Until now, the bulk of the accusations against the conduct of Prime Minister Narendra Modi and his government in the acquisition of 36 Rafale fighter jets from France was based on deduction and assumptions. That is because, despite the government promising complete transparency, it has refused to come clean on many aspects of the deal. New revelations, including a document submitted by the Centre to the Supreme Court, now make it even clearer: there is a fundamental contradiction that Modi will find it hard to explain.

The Rafale case is quite complex, as indeed any major defence acquisition would be. In short, under the previous Congress-led government, India had been planning to buy 126 Rafale fighter jets from France’s Dassault Aviation, through a deal in which the bulk of the aircraft would be built in India. Negotiations on the deal took years and were not concluded by the time Modi came to power. In 2015, on a visit to France, Modi suddenly scrapped that deal and announced an agreement to buy 36 planes directly from France, with all of them built in that country.

All of the questions around the Rafale deal spring from this dramatic change in plans. How come the number went from 126 down to 36 planes? Did the Indian Air Force approve of this? How come the per-plane cost appears to be higher, even though the aircraft are all being built in France, with no technology transfer? Why did the government permit Dassault to switch its local partner from the public sector Hindustan Aeronautics Limited to a private player like Anil Ambani’s Reliance group, which is in massive amounts of debt?

Read this explainer on the debates over the price of the aircraft, and another on what Anil Ambani has to do with the deal to get more of the background in the case. Another important moment to look back to is Defence Minister Nirmala Sitharaman insisting, in November 2017, that she would reveal all the pricing details because public money was being used and that the difference between the current government and the previous one is transparency. Despite that claim, the government has insisted the price details are confidential.

Fresh details

Three new details have added to the understanding of the Rafale deal:

• In a three-part series for Business Standard, defence analyst Ajai Shukla obtained the 2007 Request for Proposal, which is essentially the tender issued by India with the specifications of the deal. According to his report, the 2007 document included many of the enhancements that the Modi government is citing as the reason for the 2015 deal to be more expensive per plane. The reports conclude that the 2015 deal is 40% more expensive than the 2012 bid by Dassault, even though the new one doesn’t include any technology transfer or planes being built in India.
  
• The reports also include one key revelation that has a bearing on the accusations of corruption in the Rafale deal. During the process, the Defence Ministry changed its policy on offset clauses, which require the foreign manufacturer to invest a portion of the contract amount back in the Indian market. Under the earlier process, the government had to pre-vet and clear the offset investment. But the ministry in 2015 altered this to let the company submit its offset proposal years after winning a defence contract.
  
  This is why Defence Minister Nirmala Sitharaman is able to claim that she does not know who Dassault is working with, since it only has to officially submit offset details in 2019. Every other indication suggests that the government not only knew about Dassault’s partnership with Reliance, but also that the Centre – according to former French President Francois Hollande – actually proposed Anil Ambani as partner to the deal. The government has not denied this but insists Dassault was free to pick any company.
  
• On November 12, the government submitted a document to the Supreme Court detailing the process it took to procure the 36 Rafale aircraft. The portion about pricing was given in a sealed cover, but the Centre also provided a 16-page note about its decision-making on the deal. The document makes one crucial assertion. It says that the government did not feel the need to go through the regular acquisition processes, including technical evaluations, since those had already been done for the 126 aircraft in the older deal.
  

Contradictions

Looking at these three details together, it becomes clear that the government is being dishonest, one way or the other. The 2007 document makes it seem as if the specifications for the jets are the same as those that Modi eventually accepted. If that is true, why is the cost 40% higher, without any technology transfer? Benefits of a higher price would accrue to Dassault and also its offset partner, Reliance, even as the government changed the policy to remove pre-vetting of these partners.

If instead, as the government has argued, the new deal has technology that is significantly different from the earlier one, why was the Centre willing to rely on the earlier technical evaluation? If, as Bharatiya Janata Party spokerspersons have argued, the new deal features aircraft that are dramatically more powerful than the “barebones” ones of the previous deal, should India not have issued a fresh bid and sought to find a manufacturer with the cheapest offer?

Either the jet specifications are more or less the same as they were previously, meaning Modi agreed to India paying more for the same planes, benefiting the manufacturers in the process or the government has not followed the evaluation process. Both cannot be true. Modi has to explain this contradiction.

Also See:

Rafale explainer: How are Anil Ambani and Reliance involved in the controversial deal?

Rafale explainer: Is India paying more for the fighter jet than it would have under UPA?