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Contrary to Congress’s claims,Modi Govt saved over Rs 12,600 crore in Rafale deal

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The Rafale deal negotiated by the Modi government resulted in a substantial eruro 350 million reduction for 36 aircraft in flyaway condition as compared with terms that were being considered by the UPA and there is a further euro 1,300 million saving for weapons, maintenance and training.

Refuting the main opposition Congress’s allegations that costs for acquiring the French fighter ballooned under NDA, well placed sources said a comparison of aircraft being purchased in flyaway condition shows savings adding up to a tidy Rs 12,600 crore and also pointed out that there had, in fact, been no deal under UPA.

Congress spokespersons have alleged a sharp and unexplained increase in cost of manufacturing after NDA assumed office which meant the government could only afford to buy 36 aircraft without much-needed transfer of technology. The opposition suggested that cost per aircraft rose from Rs 526 crore to Rs 1,570 crore and said the government was uneasy over sharing data.

Sources said a comparison of aircraft to be procured in flyaway condition demonstrates NDA’s success in bettering the terms. Under the 126-aircraft contract contemplated by UPA, 18 aircraft were to be delivered in flyaway condition. NDA’s reworked contract is for 36 aircraft in flyaway condition. UPA was getting 18 fighters for around 100 million each and the cost now is around 90 million per fighter. The current government also procured the Meteor missile that makes the fighter much more effective.

In details revealed to TOI, sources said a major success of hard bargaining with Dassault Aviation, makers of Rafale, was favorable commercial terms for India. Payment terms for the 126 Rafales under the previous MMRCA (medium multi-role combat aircraft) project was based on a fixed escalation figure of 3.9%. The 36 Rafale fighters contracted by the Modi government are linked to a limit of 3.5%. This ensures an additional saving of around 200 million while it could add up to around 1 billion euros.

The government has also argued that Dassault Aviation was unwilling to take responsibility of quality control of production for the 108 aircraft in India under terms negotiated by UPA. “While Dassault provisioned for 3 crore man hours for production in India, HAL’s (Hindustan Aeronautics Ltd) estimate was three times higher, escalating costs manifold,” said a source.

Sources challenged the claim that technology transfer was being considered and said what was on offer was just licence manufacturing technology. There was no agreement on crucial terms. Under the current deal’s procurement offsets, the inter-governmental agreement states the French party will facilitate implementation of ‘Make in India’ by the industrial supplier, notably through offsets for 50% value of the supply protocol.

Reacting to claims that a deal was nearly sealed when the Modi government assumed office, sources said there was no agreement and if there had been one, there would be debate. “The acquisition of aircraft would have commenced,” said the source. Apart from prolonged contract negotiations, there were reports that then defence minister A K Antony decided the approach of the contract negotiation committee needed to be examined and UPA was unable to close the deal despite request for proposal being issued in 2007.

It has also been argued that PM Modi did not jump the gun in referring to the Rafale deal during his visit to France in 2015 as the joint statement said the two leaderships had agreed to conclude an inter-governmental agreement for supply of aircraft on terms that would be better conveyed by Dassault Aviation as part of a separate process underway.
There would be a longer maintenance responsibility by France.

It has been asserted that proposals were presented to the defence acquisition council thrice and thereafter a Cabinet Committee on Security nod was received following by the inter-governmental agreement in 2016. The government claims Dassault improved the terms while reducing delivery time frames.

Source : Times Of India

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