The Narendra Modi government’s decision to accept the cost of €1.3 billion for the design and development of 13 India-specific Enhancements was the major reason for the increase in per-aircraft price in the Rafale jet deal, The Hindu reported on Friday.
Modi’s announcement of the inter-governmental agreement pushed the price of each jet, with practically the same specifications as the deal agreed to by the previous government, up by 41.42%, the report claimed.
On April 10, 2015, during his visit to Paris, the prime minister had made a surprise announcement that India will purchase 36 fully-fitted, combat ready Rafale jets from France instead of the 126 jets negotiated by the United Progressive Alliance government in 2007.
The Indian Air Force had asked for 126 Rafale aircraft for six quadrons, following which the UPA government had floated a tender for the supply. French firm Dassault Aviation was declared the vendor, and a deal to supply 18 flyaway jets and 108 jets to be manufactured by Hindustan Aeronautics Limited was agreed upon. The price quoted for one flyaway bare-bones aircraft was €79.3 million. By 2011, the price had gone up to €100 million due to escalation in prices.
In 2016, the price per aircraft was brought down to €91.75 million after 9% discount on the 2011 price obtained by the Modi government. However, Dassault claimed it was charging a non-recurring amount of €1.4 billion for enhancements specified by the Indian Air Force. The cost was later negotiated down to €1.3 billion. The design and development cost now, distributed over 36 Rafale jets, shot up from €11.11 million per aircraft in 2007 to €36.11 million.
According to The Hindu, three Defence Ministry officials on the negotiating team had objected to the surge in prices for India-specific Enhancements. However, four other members on the team, including the deputy chief of air staff, had overruled the objection.
After clearing several aspects of the proposal for the procurement of Rafale jets, the negotiating team submitted a report on August 4, 2016. However, in the government notes on the decision-making process submitted to the Supreme Court during the Rafale hearing, there is no reference to any further role of the Defence Acquisition Council, which was headed by then Defence Minister Manohar Parrikar. According to the report, Parrikar had passed on the matter to the Cabinet Committee on Security, which is chaired by the prime minister.
Eurofighter Typhoon jets
Moreover, the NDA government in 2016 had passed over another offer that promised deliveries of combat aircraft, which was cheaper than Rafale jets. The offer was for deliveries of Eurofighter Typhoon jets, that are manufactured by a consortium of leading aerospace and defence companies from Germany, the United Kingdom, Italy and Spain that are represented by Airbus.
In 2012, both Rafale and European Typhoon were found compliant to India-specific requirements made by the Air Force. However, negotiations were initiated with Dassault Aviation due to lower price offered at the time of bidding, The Print had reported in August 2018.
In July 2014, in a letter to then Defence Minister Arun Jaitley, Domingo Urena-Raso, head of Military Aircraft, Airbus Defence and Space, made a revised offer. Airbus offered a 20% reduction in the total price for 126 Eurofighter Typhoons, “compared to the numbers previously submitted”.
However, the letter suggests, the Indian government might have reached out to the rival bidder with an offer. In his letter, Urena-Raso says, “The interest of the Indian Government to replace its existing fighter aircraft fleet has continually attracted our full engagement and we are hence delighted to respond to your request as conveyed through our Nations’ Ambassador.”
However, the Indian government did not pursue the offer saying the offer was against the Central Vigilance Commission’s guidelines as it was made after the bidding closed.
Congress claims government compromised security
Senior Congress leader P Chidambaram on Friday blamed the Centre for “compromising national security” by denying the Air Force the required number of aircraft. “In the light of new facts and revelations in The Hindu, the question gains greater urgency: Why did the government buy only 36 Rafale aircraft instead of 126 aircraft required by the Air Force?” he asked.
Congress leader Jyotiraditya Scindia also asked Modi why the price of the aircraft had increased. “The PM’s unilateral decision to buy 36 Rafales resulted in a price escalation of 41.42% per jet,” he tweeted. “When will the prime minister answer?”
Communist Party of India (Marxist) General Secretary Sitaram Yechury said the decision to buy 36 aircraft instead of 126 had compromised security. “No doubt that the deal for 36 Rafale fighter jets with France was done in a great hurry by Modi for the benefit of his crony businessman, at the cost of India’s national security and at a heavy cost to the Indian exchequer,” he tweeted. “It is crystal clear now, and no amount of spin will help.”