Opinion

Unanswered questions over the Rafale deal

Bidanda Chengappa | Updated on November 13, 2018 Published on November 13, 2018

In the eye of the storm   -  AP

At the centre of the controversy is Dassault’s choice of Anil Ambani’s firm as joint venture partner, over the experienced HAL

The Indo-French Rafale fighter aircraft deal is often compared with the Bofors Howitzer contract between India and Sweden that haunted the political leadership in the 1980s. A major difference between the two arms contracts is that fighter aircraft deals are truly mega deals given the price per aircraft, number of aircraft and life cycle costs.

The Rafale basic aircraft costs around ₹650 crore per aircraft, besides almost another ₹1,000 crore for armaments with spares, services and infrastructure for each aircraft. While the Rafale deal has attracted charges of crony capitalism, the Bofors scandal was over illegal payments to middlemen and politicians.

The political leadership cannot be accused of corruption in the Rafale deal, but perhaps of crony capitalism because of the involvement of Anil Ambani’s Reliance Defence.

Considering that the company has absolutely no track record in aeronautics design, development or production, its choice as a major offset partner raises several questions. The Ministry of Defence (MoD) and the Indian Air Force (IAF) cannot afford to let Dassault select offset partners autonomously as our long-term national interests are at stake. The offset involves buyback from Indian companies of 50 per cent of the aircraft procurement value, which in this case is approximately ₹30,000 crore.

The products and services to be chosen under the offset contracts and the capability, credibility and reliability of selected offset partners to deliver them is critical for supporting the Rafale serviceability over the next three decades.

Therefore, New Delhi cannot suggest that Dassault selected the Anil Ambani company — independently without intervention from the MoD/IAF.

Fortunately, some products and services reportedly chosen under the offset contract in the Rafale deal were under consideration earlier in the UPA regime.

These include technology critical items like Kaveri engine upgrade, avionics and aero-structures for Rafale life cycle support, besides propulsion and weapon systems. Clearly, Dassault on its own may not have included these items and would instead promote its products and services, rather than support genuine transfer of technology. The BJP-led government erred in abruptly terminating the ongoing procurement process of the UPA regime which involved HAL.

HAL’s creditable record

The fact that HAL with all its strengths, opportunities, weaknesses and threats has produced several fighter, transport, helicopters of foreign origin under transfer of technology and license agreements speaks volumes.

HAL, despite such a track record, has become a victim to New Delhi-sponsored propaganda that Dassault was “unhappy” with the state-owned Indian aeronautics major and that the contract negotiations for the production of Rafale aircraft by HAL had completely “broken down”. Invariably, every arms contract negotiation runs into rough weather due to divergences in techno-commercial interests. Importantly, Dassault and HAL have jointly worked together on the Mirage 2000 fighter aircraft upgrade. The then Dassault Chairman Eric Trappier and the other French partners even showered praise on HAL’s contribution in the upgrade programme. Therefore to imply that Dassault was unhappy with HAL and broke the contract lacks logic.

Under the previous government, the IAF undertook extensive flight testing and evaluation of six fighter aircraft from different international aeronautics majors and short listed two aircraft namely the Euro Fighter Aircraft (EFA) and the Rafale after completion of its assessment in 2012.

Dassault clinched the deal by virtue of the Rafale being the cheaper offer and subsequently HAL and Dassault initiated contract negotiations. These negotiations were in progress and reached the final stages when the BJP assumed office in May 2014.

The then HAL Chairman TS Raju and his Dassault counterpart Trappier are on record that the contract negotiations were on track despite differences as on March 2015. However, the BJP-led government within a month, ordered a direct purchase of 36 Rafale aircraft in a government-to-government deal in 2015.

Suddenly in September 2016 the Dassault-Anil Ambani Reliance Group joint venture was signed and announced in October 2016, in tune with the Make in India plan to promote private sector participation in defence production. Considering the MoD drives all armament/aeronautics deals under political direction, it should be clear that Dassault would not logically make any major moves independent of New Delhi.

Dassault’s only rationale for the selection of Anil Ambani’s Reliance Group, according to its press release in September 2018, was that it owned land close to a runway. Surprisingly technological competence with a proven aeronautics track record was ignored in such a high-tech venture.

Why did Dassault not consider an established Indian business entity in this field?

The writer is a Professor, International Relations/Strategic Studies at Christ Deemed to be University, Bengaluru

Published on November 13, 2018
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