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Is The Rafale Deal All About Privatising India’s Defence Sector?

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Wednesday was a very absorbing and interesting day for me. The Supreme Court had finally called the Rafale case filed by Sanjay Singh for hearing. With Prashant Bhushan and Arun Shourie backing him, this was never going to be an easy road for the government. What must have relieved the government though was, the Court agreed not to discuss the financial aspects of the deal. But the Attorney General, representing the government had a tough time trying to ride the storm.

What tightened the noose around the AG were two aspects of the deal. One, 95% of the RFP had been agreed in principle between successive governments of both countries and it was this RFP that Modi had scrapped. The reason given was that Hindustan Aeronautics Limited’s (HAL) capability to manufacture the jets were not enough and it would consume more time and cost much higher as found out through an audit. But curiously, back in 2014, the CEO of Dassault aviation had confirmed HAL as its partner in a tweet though it wasn’t confirmed in signing yet.

He wouldn’t have made such a statement unless Dassault had done its due diligence about HAL and was assured about the capability of HAL to manufacture Rafale jets. Now the audit of HAL was conducted by the Ministry of Defence (MoD) this year. Why was this audit not done through all these years? If the CEO of Dassault had confidence in HAL from 2014, why would the MoD go to such great lengths suddenly to do this audit to demonstrate HAL’s incapability?

More dirt from the deal is tumbling out. France had refused to give India a sovereign guarantee earlier. This means the French government would take no ownership or be part of any conflict that arises between IAF and Dassault in the future. The judges showed a keen interest in this aspect – as a business agreement to fulfil a government contract for manufacturing military jets is of the highest order of sensitivity and any lapse on the part of the manufacturing company could hinder the IAF gravely and arbitration at that time would be ridiculous.

But where the court hasn’t gone in detail is in the sudden change of the offset partner and why it has been rewarded to Anil Ambani’s RDL. If HAL does not have the technical capability, RDL does not have even the required manufacturing units. Then why bring RDL into the deal? As I was debating over this on Twitter, someone posted the details of the key aspects of the business plan Anil Ambani’s RDL has submitted to ICICI bank. If he has already approached a bank with a business plan in spite of all the furore around the deal and especially after a case against it in the Supreme Court to initiate a CBI investigation, then he must be having the assurance that the deal will be protected at all costs and by any means. Suddenly this jigsaw puzzle started falling in place.

Why was the number of jets reduced from 126 (7 squadrons) to 36 (2 squadrons) abruptly? Moreover, the 36 jets are to be bought in full fly-away condition, and the deal has been fixed at 40% increase in cost than the previous cost to buy 126 aircraft. Such a purchase would make sense if we were at war with another country or war seems to be imminent. Let’s not forget that these are advanced fighter jets so they can be used only in full-scale wars and are not useful in smaller conflicts and tackling militancy and are not multipurpose vehicles like helicopters. So, what is the urgency here to spend more and acquire less number of fully built jets than what had been agreed upon all along?

The answer lies in how RDL has been brought in as offset partner. Fully developed jets would normally need only maintenance and spare parts. RDL would first build this capability with Dassault’s assistance. Then Dassault would help RDL build its manufacturing capability. Once this is done, MoD will give the contract to RDL to manufacture the rest 108 jets. This is why the government is silent about the missing seven squadrons. IAF hasn’t backed out of its requirement of seven squadrons and hasn’t expressed its satisfaction with two squadrons.

What is more interesting is, even if BJP does not come to power after the next general election, RDL will still get the contract to build the jets as no other enterprise will have the capability in India. Everything that has been unravelling in the Rafale case is simply an exercise to set up RDL and make it the premier defence manufacturing company in India, and thereby privatise the defence sector. After stripping off most of the PSUs (Public Sector Undertaking) and rendering them worthless, it is the government’s turn to target HAL now.

Privatising a public sector enterprise like the defence is a humongous task and impossible if HAL exists, so the Modi government seems to have taken an extremely long winding route to baffle everyone and achieve their objective. In the business plan of RDL, it is showing another such partnership with Emirates Defense Industries Co. How are they able to get into such huge partnerships without having advanced facilities and know how in the defence sector?

Dassault has been accused of bribing and giving kickbacks to obtain contracts in the past. The 284 crores it invested in Reliance Airport Development Ltd. (RADL) must be a similar kickback for obtaining the deal but must have been diverted to RADL as the government wouldn’t want to have a money trail leading back to it especially after accusing the Congress party of kickbacks in the Bofors deal.

Election funding is what connects politics and corporate. But the prime reason for this lies with us only. We vote for political leaders who represent the interests of their parties and not the people’s interests. We vote and make them our elected representatives. They owe no allegiance to their voters which is why they start acting like our rulers and become inaccessible to us once they become ministers. This is where the corporate has stepped in and bought over their allegiance with election funding. Every five years, electoral spending increases exponentially. But ordinary people get no benefit out of this exercise. Troubles of people have only increased in recent years after demonetization and GST implementation. So who funds elections? Corporate. So who expects benefits after elections? Corporate. This is the premise of the Rafale deal.

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Find out more about her campaign here.

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