It is difficult to understand what to make of Congress' allegations that the Narendra Modi government is involved in a "huge scam" over the purchase of 36 Rafale jets from France and is deferring the Winter Session to save itself from "searching questions".
The Congress, which had been involved in a laundry list of scams during the last few years of UPA-II, is understandably desperate to paint BJP with the same brush. From Rahul Gandhi's "proof" of "personal corruption" against Prime Minister Narendra Modi to Congress' labeling of demonetisation as the "scam of the century", the party has tried hard to dispel Modi's image of incorruptibility. It has so far met with little success.
The question is, do these latest allegations classify as frantic kite-flying ahead of Gujarat elections, or do they carry some merit?
Rahul Gandhi has made some smart quips on social media, insinuating that the prime minister is guilty of crony capitalism, and should be held accountable for "jeopardising national security". Congress spokesperson Randeep Surjewala, in an article in Wednesday's edition of The Indian Express, has repeated the charges and made some elaborate claims of his own. The party's social media team has been busy trending innovative hashtags.
The issues are sure to be featured in a big way in the run up to the Gujarat elections and may also dominate Parliament proceedings.
It is worthwhile, therefore, taking a close look at Congress' key accusations. The contentions can be boiled down to two key issues: One, if the NDA deal is pricier than the UPA deal, causing a loss to the exchequer; and two, whether the government, by letting Reliance Defence Limited join hands with French manufacturer Dassault Aviation, is guilty of crony capitalism.
Has the NDA signed a bad deal?
Quite the contrary. It is possible to show that not only is the deal cut by the central government with France smarter and better, but also more cost-effective. This impression runs contrary to Congress' claims that the per-aircraft pricing of 36 Medium Multi-Role Combat Aircraft (MMRCA) is much more than the deal authored by UPA for procurement of 126 MMRCAs.
To understand how the Congress has been economical with the truth, let us examine what Surjewala writes in his piece. "In August 2007… a request for proposal (RFP) for procuring 126 Medium Role Combat Aircraft for the airforce was issued. Projected to cost $12 billion (Rs 42,000 crore), 18 of these aircraft were to come in a flyaway condition while there was to be a technology transfer (ToT) for 108 aircraft to be made in India by HAL," Surjewala wrote.
Surjewala added that the "MMRCA tender was withdrawn by July, and in September 2016, the NDA government signed a $8.7 billion (over Rs 56,000 crore) deal, with no transfer of technology to India".
Prima facie, it does seem as if NDA had agreed to purchase 36 jets at an inflated price, and has even dealt a body blow to its own 'Make in India' project by scrapping the deal to manufacture the rest at Bangalore. Has it?
In reality, the Congress spokesperson has presented a half truth instead of the full picture. He forgot to mention that while India had been negotiating with France for 126 MMCRAs at a cost of $12 billion, this was a "projected" figure, not the actual one, because the UPA did not sign a deal with Dassault Aviation. The contract never went through. In fact, pricing was one of the key areas where negotiations were stuck, because the French manufacturers were unwilling to comply with some of the Request For Proposal (RFP) terms and conditions.
So in effect, Congress took a "projected cost" (Surjewala's words), created an impression that it was the "final" figure, benchmarked NDA's deal against it (which is naturally higher since it includes a lethal weapons package, performance-based logistical support, 13 India-specific capabilities, associated supplies and the works) and from that point, levelled charges that NDA has sold India short. Neat.
The package cost of 126 Rafale jets (of which 18 were supposed to be off-the-shelf and 108 to be manufactured in India) cannot in all fairness be compared to the per-aircraft pricing of 36 fly-away MMRCAs, because not only are we comparing a non-finalised deal with a finalised one, but the comparison also doesn't take into account the deliverables.
In his piece for The Quint, Air Marshal (Retd) Bejoy Pandey, former air officer commanding-in-chief of Training Command, writes, "The total value of the contract would be subject to the additional demands placed by the IAF pertaining to product support, weapon systems, state-of-the-art avionics, upgrades, and training… Thus, for an accurate price comparison, it would be necessary to factor in the additional demands by the IAF. In any case, price comparison between the two contracts would not be relevant as the one for 126 aircraft was never finalised, and hence the final costing had not been done."
The Congress has also been raising questions on NDA's decision to buy 36 MMRCAs off-the-shelf instead of the UPA-era deal of buying 18 jets and making the rest within India through transfer of technology (ToT). While the move does go against the 'Make in India' project, the eventuality was thrust upon India due the policy paralysis that affected the fag end of the UPA-II regime. Beset with allegations of scams, an extra-cautious Congress started scrutinising and re-scrutinising every procurement, creating hurdles in the path of defence acquisitions, while the IAF started raising red flags due to its rapidly depleting fleet.
In his book Securing India, defence analyst Nitin A Gokhale wrote, "The UPA government, under the overly cautious AK Antony, instead of imposing a deadline for the French manufacturer to comply with the terms of the RFP, dragged its feet and allowed Dassault Aviation to get away with obfuscation… Antony instructed MoD officials to bring the file back to him after concluding the CNC to re-examine the integrity of the process…, creating confusion and doubt in the minds of the officials who were negotiating with the manufacturer," according to excerpts reproduced on Swarajya.
Dassault, meanwhile, ran into huge trouble with HAL, and differences between the French and Indian manufacturers, over manpower hours for completing the 108 jets (under the UPA deal), resulted in a stalemate.
Vishnu Som wrote in NDTV, "By the time the BJP-led government came to power in 2014, the deal was completely deadlocked, with Dassault refusing to certify key components of the jet which were to be built by HAL."
For then defence minister Manohar Parrikar, who was facing intense pressure from the IAF to procure combat-ready jets, the choice was between trying to poke at a deadlocked deal without an escape hatch, pay a hefty penalty to scrap the deal and call for fresh tenders (a hugely expensive and time-consuming process); or procure the jets off-the-shelf to meet IAF's immediate needs.
Gokhale wrote that in his briefing to Modi, Parrikar had suggested that the best thing would be to "scrap the tender and buy a minimum number of Rafale jets off the shelf to fill a critical gap in the IAF's inventory. The prime minister agreed and decided to talk to the French president about such a possibility during his upcoming visit to Paris in April 2015. The 'Cabinet Committee on Security (CCS)' also gave its approval to the new proposal before Modi left for Paris on 9 April, 2015," he wrote.
It is conceivable that for off-the-shelf purchases, the question of transfer of technology doesn't arise. It also brings us to Congress' other key accusation — that the Modi government, in excluding HAL in favour of Reliance, has indulged in "crony capitalism".
Why Reliance, instead of HAL?
It is inconceivable that the Congress is unaware of the toxic relationship between HAL and Dassault. The trouble arose when the French manufacturers chanced upon a confidential cable written in 2010 by Timothy Roemer, former US ambassador to New Delhi. The cable, which was part of the documents released by Wikileaks, carried some damning allegations against the Bangalore-based HAL.
According to London-based Financial Times, Roemer wrote that the "potential for HAL to successfully partner with US firms on a truly advanced aircraft remains untested and suspect", because India's aviation industry was "two to three decades behind the West".
Quoting sources, Chandan Nandy wrote in The Quint that Dassault officials demanded to visit HAL's Nashik unit after going through the Roemer report and "once permission was granted, based on Dassault's study of HAL's Nashik facility", the French government conveyed its displeasure over quality control once it was discovered that there were production-related problems. Dassault's conclusion was that the company "could not risk its global reputation" by partnering with HAL as the latter's production facilities in Nashik were "in shambles".
It was Dassault that had expressed an interest to partner with Reliance instead of HAL. Moreover, Reliance Defence Limited's role will be restricted to meet the offset commitments, and as French officials have subsequently pointed out, "This will contribute positively to the entire Indian defence industry, not just one company", and around 500 companies "would be involved in this process".
It is quite clear that Congress' aim through these fantastic allegations is to throw mud in the hope that some of it sticks in election season and the Modi government's halo of moral uprightness in defence procurements is punctured. The tactic involves an assumption that Indian citizens are severely lacking in intelligence.
Published Date: Nov 23, 2017 08:52 AM | Updated Date: Nov 23, 2017 14:59 PM