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In Depth: All You Need To Know About The Rafale Deal And The Controversy Around It

Posted by Sourodipto Sanyal in Politics
February 9, 2018

The Indian National Congress president Rahul Gandhi had issued a notice to speak at the Lok Sabha today on the issue of the purchase of 36 Rafale fighter jets from a French company by the Narendra Modi government.

This comes a few days after defence minister Nirmala Sitharaman’s told the Parliament that the details of the deal regarding the Rafale fighter jets can’t be made public since an inter-governmental agreement makes it ‘classified information’.

Major allegations of corruption and crony-capitalism have been levelled on the Narendra Modi government for the deal related to the purchase of 36 Rafale fighter jets.

Now, What Is The Controversy All About?

The roots of the Rafale deal go back to 2007 when the United Progressive Alliance (UPA) was in power. In August 2007, for the Indian Air Force, a tender had been floated by the UPA government for the purchase of 126 twin-engine ‘Medium Multi-Role Combat Aircrafts’. Dassault Aviation’s Rafale had won the contract.

In late 2012, Dassault agreed to sell Rafale at a base price of approximately ₹54,000 crore.

The things that were finalised in the deal were:

1. 18 out of the 126 planes would be imported in a ‘fly away condition’.
2. 108 of them would be manufactured by Hindustan Aeronautics Ltd (HAL), India’s public sector aerospace and defence unit. However, Dassault was required to transfer its technology as per the agreement. The company also had to invest half of the transaction money in India.

The agreement between Dassault and HAL was signed on March 13, 2014.

Decisions Made By The Narendra-Modi Led Government

In April 2015, Narendra Modi made a state visit to France as the Prime Minister. Over there, an announcement was made by him that 36 Rafale aircrafts in ‘fly-away condition’ were going to be bought. Interestingly, Reliance Defence Limited (RDL) owner Anil Ambani accompanied the Prime Minister during the state visit.

The then defence minister Manohar Parrikkar declared in May 2015 that 126 Rafale jets weren’t required and were ‘economically unviable’.

The agreement signed in March 2014 was cancelled in July 2015. Another deal was signed with Dassault Aviation in September 2016 for the purchase of 36 Rafale fighters jets, priced at ₹58,000 crore.

Interestingly, the price for 128 Rafale jets as per the agreement with the UPA government was turning out to be ₹4,000 crore less than the price for 36 Rafale jets, under the Modi government.

It must also be noted that Dassault Aviation no longer had to transfer the technology, as per the new agreement. Reliance Defence Limited undertook the offset obligations of ₹30,000 crore with Dassault Aviation. HAL was no longer required to manufacture any of the fighter jets.

In October 2016, RDL partnered with Dassault for a venture of joint defence production. An agreement regarding this was signed in February 2017.

Why The New Deal Has Come Under Criticism From The Opposition

1. The BJP has been accused of promoting the interests of Reliance Defence Limited at the cost of a public sector unit (Hindustan Aeronautics Limited).

2. The Congress has claimed that the new deal is in violation of the Defense Procurement Procedure, since an announcement had been made by the Prime Minister regarding the purchase of the jets without any inter-governmental agreement and in the absence of the defence minister.

Interestingly, the BJP has not yet issued a fact-based response justifying its decision to buy the fighter jets at such a high cost.


Image source: Narendra Modi/ Facebook, Wikimedia Commons