The Rafale battle has begun, how will it end?

The government has a lot to answer after former French President Francois Hollande’s revelation that the Anil Ambani group was favoured in the Rs 58,000 crore fighter jet deal

The Rs 60, 000 crore Rafale fighter deal can no longer be dismissed as a politically motivated controversy invented by the Opposition to embarrass the Narendra Modi government. Former French President Francois Hollande’s startling revelation on September 20 that the Indian government had "proposed” the name of Reliance Defence, a company owned by the Anil Ambani group, for inclusion as the new offset partner to replace the public-owned Hindustan Aeronautics Ltd (HAL) has added a new dimension to the already contentious aircraft contract between India and France.

In fact, Hollande’s disclosures have raised several questions, allegations and concerns. Here are some of them:

  • Is it true that Reliance Defence was unduly favoured at the cost of HAL? Was a contract, approved by the air force, in the final stages of negotiations scrapped and a new one quickly finalised to facilitate this?
  • Is there truth in the allegation that the company’s case was pushed by persons high up in the Indian establishment since the Prime Minister was the driving force behind the scrapping of one deal and replacing it with another.
  • There are many who feel that Reliance Defence may not have been the preferred choice of Dassault Aviation, the manufacturers of the Rafale. Isn’t it likely that it was influenced, as suggested by Hollande, to accept the Indian company as its offset partner to clinch the deal?
  • The new contract was finalised without consultation, due procedure or transparency. It came as a surprise to even the defence establishment. Was such haste and opaqueness justified?
  • Shouldn’t the Rafale deal be investigated since a probe alone can establish if any quid pro quo was involved in the favours shown to the Reliance group company.

A curious case of two contracts

Unlike other defence deals, the Rafale became a curious and complex case of two contracts for the same product from the same manufacturer. The first of these was drawn up under UPA-11 but not inked. However, it was pursued and further processed after the Narendra Modi government came to power in 2014. The agreement envisaged the procurement of 126 fighter jets for the air force of which 18 were to be built in France and the rest manufactured in India by HAL under a transfer of technology arrangement. This contract was in its concluding stages of being finalised by early 2015. In fact, Eric Trappier, the chairman of Dassault Aviation, the French manufacturer of the Rafale, even announced at a press conference on March 25 that the deal was “95% complete.” Little did he know that the contract he was so optimistic about would be scrapped in about a fortnight’s time and replaced by another.

Indeed, contract-II came like a bolt out of the blue. It all happened during Prime Minister Narendra Modi’s Paris visit the following month. On April 10, 2015 he sprung a surprise when he declared at a joint press conference addressed with Hollande that the old Rafale deal was defunct and that a new procurement plan had been drawn up. Under it, India would buy only 36 `ready to fly’ fighters from France with no transfer of technology clause. HAL would have no role in the contract and the new offset partner would be a private player--Reliance Defence.

Even when it was announced, many security analysts were intrigued by the plan since it was not as favourable to Indian interests as the earlier contract. Not only were the number of jets trimmed from 126 to 36, but there was also no transfer of technology clause. This meant Rafales could not be manufactured indigenously in the future. Moreover, the cost per aircraft was more than double of what it was under the earlier plan. But above all what shocked many was the inclusion of Reliance Defence, a company with no experience in aerospace manufacture as the offset partner.

Hollande’s disclosure has thrown light into why Anil Ambani’s company was chosen by Dassault. The former President did not name the person who held a brief for Reliance but was fairly explicit that the suggestion came from Delhi. In fact, Hollande told the French website Mediapart as much: “We didn’t have a say in that. It was the Indian government that proposed this service group (Reliance) and Dassault Aviation (the manufacturers of Rafale) who negotiated with the Ambanis. We didn’t have a choice, we took the interlocutor given to us.” The subtext of what he said was that Reliance was virtually thrust into the deal at the last minute by the Indian side. It was not on Dassault’s or the French government’s insistence.

What makes Hollande’s assertion difficult to ignore is the fact that he has neither denied his statement nor has he taken refuge in the excuse that he was misquoted. On the contrary, when the Financial Times, London approached him for confirmation, his spokesperson reiterated that the former President stood by all that he had said. This makes the denials issued by the Indian and French governments as well as Dassault Aviation a mere face-saving exercise.

The Rafale deal is fast turning out to be an albatross round the NDA government’s neck. Its spokespersons have been trying to counter criticism with explanations that defy logic or go against their previous statements. Meanwhile, Opposition parties have stepped up their demand for a Joint Parliamentary Probe into the deal. The Rafale Battle has just begun and will not die down immediatley.

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