Controversy in high places: The Rafale deal - Broadsword by Ajai Shukla - Strategy. Economics. Defence.
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Wednesday, 7 December 2022

Controversy in high places: The Rafale deal


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Parrikar, the canny politician, took pains to credit Modi, lauding the purchase as “a great decision taken by Prime Minister Narendra Modi on better terms and conditions


 

Flying Lies: The Rafale Deal

Authors: Ravi Nair with Paranjoy Guha Thakurta

Publisher: Paranjoy, 2022

Pages: 532

Price: Rs 795/-

 

In the run-up to the 2019 general election, the alleged “Rafale scandal” dominated the political headlines. The Opposition, led by the Congress Party leader Rahul Gandhi, mounted a high-decibel campaign accusing Prime Minister Narendra Modi of corruption and mismanagement in the purchase of medium fighters for the Indian Air Force (IAF). Television news channels repeatedly debated whether the purchase of 36 Rafale fighters from French aerospace giant, Dassault, for a whopping Euro 7.8 billion was within the rules; or whether Modi had sacrificed IAF interests to allow Anil Ambani and his business empire to enrich themselves from offsets, namely building Rafale fighter parts in India. The debate eventually lost momentum and, by the time votes were cast, died down entirely. But not for Ravi Nair and Paranjoy Guha Thakurta, the two authors of this book – The Rafale Deal: Flying Lies – who have doggedly stayed the course and eventually produced a compendium of the subject, analysing the Rafale deal from multiple perspectives.

 

Their work will prove invaluable to future students of Indian defence procurement. 

 

An important contextual aspect the authors bring out is the IAF’s long-running love affair with Dassault combat aircraft. Since 1953, the IAF has always had at least one Dassault fighter in its inventory, having successively flown the Ouragan, Mystere and the Mirage 2000. The IAF continues to fly the last of these, even as the IAF and French company, Thales, are extending the life of the fleet with advanced avionics. In August 2000, after the Mirage 2000 proved itself in the Kargil conflict, the IAF proposed acquiring six squadrons (126 fighters) of Mirage 2000s, built in India after transferring the Mirage 2000 factory from France. In March 2001, the IAF submitted the proposal again, arguing that the Mirage 2000 was more cost-effective than the technologically superior Rafales and Eurofighter Typhoons, both of which would remain underutilised as the IAF’s requirement was for a smaller aircraft. New Delhi rejected that proposal in June 2001, as it was a single-vendor acquisition. Having burnt its fingers in the Tehelka tapes scandal, the government instead ordered competitive tendering that conformed to the Defence Procurement Procedure (DPP). 

 

In Dec 2001, the IAF submitted the proposal for the third time, this time suggesting the acquisition be considered a repeat purchase. In 2003, the IAF declared the Mirage 2000 was the best option: Similar to Rafale, Eurofighter and Gripen, but less costly. Dassault even proposed supplying the Mirage 2000 on a single source basis through an inter-governmental agreement (IGA) between the two governments. After deliberating for a year, the MoD rejected the IAF’s proposal and ordered competitive tendering. The die was cast and, in 2004, the IAF initiated a global tender for 126 fighters: the Medium Multi-Role Combat Aircraft (MMRCA). 

 

The authors vividly recount how Prime Minister Narendra Modi decided to scrap the tender for 126 MMRCA and instead buy 36 fully-built Rafales, leaving Defence Minister Manohar Parrikar holding the baby. A week before Modi left for a nine-day tour of France, Germany and Canada, Parrikar was summoned to the prime minister’s office (PMO). There, Mr Modi revealed that he and French President Francois Hollande would announce the 36 Rafale acquisition. Mr Modi charged Parrikar with managing the media and fielding the inevitable questions until he returned from his trip. Over the next fortnight, Parrikar batted on behalf of his PM, defending a decision he neither understood nor agreed with, which was taken over his head, and which his senior MoD bureaucrats warned him would be difficult to defend.

 

Parrikar, a canny politician never once acknowledged any role in the decision to replace the 126 MMRCA deal with the purchase of 36 Rafales. Instead, he took pains to credit Modi, lauding the purchase as “a great decision taken by Prime Minister Narendra Modi on better terms and conditions [than negotiated earlier.]”

 

Inevitably, the book focuses on what India paid for the 36 fully built Rafales and how that compared with the price that the MoD’s negotiating committee had hammered out. To Doordarshan on April 13, 2015, Parrikar said: “When you talk of 126 [Rafales] it becomes a purchase of about Rs 90,000 crore”, i.e. Rs 715 crore per fighter, inclusive of all costs. Taking gross figures, the government paid Euro 7.8 billion (Rs 58,000 crore), which amounts to Rs 1,600 crore per aircraft – more than double the price Parrikar stated on Doordarshan.

 

To be fair, the 2016 contract for 36 Rafales includes elements that did not feature in the 126 MMRCA tender --- including a superior weapons package and performance-based logistics (PBL) that requires 75 per cent combat-readiness at all times. Even deducting Euro 2.8 billion [for the weapons and PBL] from the Euro 7.8 billion negotiated cost, the Euro 5 billion price tag puts the ticker price of each Rafale at over Rs 1,000 crore.

 

The book is comprehensively indexed and footnoted, something that guarantees it the status of a reference work. There is also an excellent 44-page interview, in which one of the key protagonists of the Rafale contract, Air Marshal Raghunath Nambiar, answers a range of questions that cover practically every dimension of the decision-making in this procurement. That alone makes the book a worthwhile read. 


2 comments:

  1. 715 crores per unit for 126 units vs 1000 crores per unit with a more advanced package and 75% avaailability etc. Does not look like the final deal was bad for only a small increase in unit price , even though the number of units is dramatically lower.

    I am sure this compares favorably to the aircraft carrier that India bought from Russia for supposedly 1 dollar, but ended up paying more than a billion in addition to the cost of mig29s.

    Sometimes it is better to make a decision, than to draw out the decision to satisfy everyone.

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  2. India needs more Rafales to counter the increasing threat of an overly agressive China not to mention the threat of a two front war. What is the price of securing our sovereingty ? A country with a GDP of over $3.5T can afford $20B to protect it's borders. End of argument.

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