A senior officer in the Ministry of Defence, who was part of the Contract Negotiations Committee, had raised questions about the Rafale deal’s benchmark price and put his objections on record almost a month before the deal was signed in September 2016, The Indian Express reported on Thursday.
Under the deal, New Delhi agreed to buy 36 Rafale aircraft worth Rs 59,000 crore.
The officer was then joint secretary and acquisition manager (air) in the defence ministry and the one meant to initiate the note for the Cabinet’s approval.
Unidentified officials said his objections delayed the Cabinet note approving the deal and its signing. The deal was finally signed after the officer’s objections were overruled by another senior ministry official – director general (acquisition), the newspaper reported.
The note by the joint secretary and acquisition manager is currently with the office of the Comptroller and Auditor General, which is examining the deal. Unidentified officials told the newspaper that the central auditor is likely to submit its report before the Winter Session of Parliament. The report is likely to refer to the note containing objections to the deal and mention how the objections were overruled.
Objections raised by the officer
One of the objections raised by the official was the benchmark price for the Rafale aircraft in the new 36-jet deal, which had been pegged higher than the benchmark price for the 126-jet proposal, The Indian Express reported. The benchmark price is decided to provide a reference to the Contract Negotiations Committee on the lowest price quoted by a supplier.
In June 2015, the proposal to buy 126 Rafale jets, which was part of the Medium Multi-Role Combat Aircraft tender issued in 2007, was cancelled. Under the MMRCA tender, the Indian Air Force conducted trials of fighter aircraft of six firms. In 2012, negotiations began with Dassault after its bid, along with that of Eurofighter.
The officer’s note pointed that EADS, Germany, which makes the Eurofighter – the second aircraft which qualified in the Indian Air Force trials – had offered a 20% discount on its bid price to the Indian government in July 2014. The note said a 20% cut should be applied on the price of 36 Rafale jets since a competitor was offering a discount.
The note also reportedly observed that the Indian Air Force fleet consisted of Russian Sukhoi Su-30 MKI, which were manufactured by Hindustan Aeronautics Limited in India. It said the Air Force could get more Sukhoi aircraft from HAL for the same amount.
According to officials, the note was considered by the Defence Acquisition Council, chaired by then Defence Minister Manohar Parrikar in mid-August 2016. That council meeting was convened to approve the deal to procure 36 Rafale aircraft and initiate the process of preparing a note for Cabinet approval.
Following the council meeting, the objections in the note were overruled by the director general of acquisition, who said the benchmark price had to be compared with the price offered for 18 Rafale aircraft, as part of the MMRCA proposal, which were to come in flyaway condition from France.
The director general (acquisition) was supported by the Indian Air Force, which justified the need for Rafale aircraft over the Sukhoi jets.
The officer then went on a month’s leave and the Rafale deal was approved by the Defence Acquisition Council in the first week of September 2016. The Cabinet note was initiated by another official holding charge of joint secretary and acquisition manager (air) and was approved by the Cabinet in the third week of September. Parrikar and French Defence Minister Jean-Yves Le Drian signed the Rs 59,262-crore deal on September 23.
The Rafale deal has been at the centre of a heated debate, with Opposition parties urging the Central Vigilance Committee and the Comptroller and Auditor General of India to investigate alleged irregularities in the deal.
On September 21, French media outlet Mediapart quoted Macron’s predecessor Francois Hollande as saying that the Indian government proposed the name of Anil Ambani’s Reliance Defence for an offset contract with Dassault Aviation, which manufactures the jets. India’s Ministry of Defence, the French government and Dassault Aviation have contradicted his claim.