This needless controversy and continuous criticism of the purchase of Rafale combat aircraft from Dassault Aviation is akin to playing into the hands of vested interest groups that want to jeopardize India’s security.
The
acquisition of 36 Rafale fighter aircrafts by India has unfortunately been put
through an unnecessary controversy, where innuendo and mud throwing have taken
the place of reasoned debate. India needed a Medium Multi Role Combat Aircraft
(MMRCA) and the process for its acquisition started as early as 2001, when the
Ministry of Defence put in a request for information (RFI). Subsequently, a
request for proposal (RFP) for 126 MMRCA was issued six years down the line in
August 2007 to meet the urgent requirements of the Indian Air Force. Of these,
18 aircraft were to be purchased in a fly-away condition and the remaining 108
were to be manufactured by Hindustan Aeronautics Limited (HAL) under transfer
of technology.
Four years
later, there were six contenders for supplying the MMRCA to India: Boeing’s F/A-18E/F Super Hornet, Lockheed’s F-16
Fighting Falcon, Mikoyan’s MiG-35, Saab’s JAS 39 Gripen, Eurofighter Typhoon, and Dassault Aviation’s Rafale. After extensive trials, two
aircraft that passed all technical specifications were short listed in 2011—
the Eurofighter Typhoon and Dassault’s Rafale. On 31st January, 2012
it was announced that Dassault Aviation had won the contest on account of lower
life-cycle costs and contract negotiations commenced thereafter. However, by
2014 these negotiations had reached a total impasse. While Dassault was willing
to give a guarantee for the products it supplied in a fly away condition, it
was not willing to give a similar guarantee for the products manufactured in
India by HAL, making the then Defence Minister, Mr Manohar Parrikar remark that
the ‘deal was as good as dead’. But that did not take away the fact that India
still needed an MMRCA.
To address
the acute shortage of fighter aircraft, as seen in the dwindling fighter
squadron strength of the Indian Air Force, the BJP-led NDA government scrapped
the 126-jet MMRCA contract and decided to purchase 36 new Rafale fighter jets
from Dassault Aviation through an inter-governmental (G-to-G) agreement. From a
projected strength of 44 fighter squadrons, the Air Force is down to 32 and
this number too is going down with the retirement of MiG 21 and Sukhoi fighters
that are nearing the end of their life expectancy. The delay in the Tejas
programme too has contributed to this unhealthy state of affairs.
The present
controversy pertains to direct purchase of 36 Rafale aircraft through the G-to-G
route. Arguments put forward against the deal pertain to cost, competition and
cronyism. Why, for instance, was an equal opportunity not given to Typhoon, to
quote its best rates that could have forced Dassault Aviation to quote more
competitive terms? The answer to that is simple. The Defence Procurement
Procedure (DPP) of 2016, in para 104, clearly states that in a G-to-G route,
‘geo-strategic advantages that are likely to accrue take precedence over
competition, transparency and accountability’. Now the opposition parties are seeking
to know the specificities of these advantages, but the very nature of such
deals means that they have value only if cloaked in secrecy. We would do well
to remember that major defence deals between two countries are also an
instrument of a nation’s foreign policy objectives and are invariably a
part of a larger package, wherein both sides have certain obligations with
serious security implications. Such agreements between two nations are never
made public. G-to-G deals come with sovereign guarantees, and the seller
government provides logistic, training and exploitation support. Also, such
deals are clean and do not involve payment of slush money. It is sad to note
that every time India tries to acquire game-changing defence capability, a
controversy is deliberately created by inimical forces. Such forces need to be
exposed.
On transfer of technology, the situation is more complicated. Writing in the Quint, Abhijit Iyer-Mitra postulates that viable transfer of technologies which were possible upto four decades ago are no longer so as the ground situation has now changed dramatically. Given the extraordinary division of labour that has happened since the 1980s, many of the aircraft components are outsourced to small and micro industries, which means that transfer of technology of those parts are not available for the aircraft manufacturer to give away. In addition, the complex nature of a plane, the limitations of technology transfer and the fluid nature of technology with fast obsolescence rates means that, ‘even if technology is given, forget setting up manufacture, even before the technology is mentally absorbed by domestic engineers, it is obsolete’.
The cost
factor needs elaboration. Allegations are flying thick and fast that the deal
negotiated by the present government is far higher than the one negotiated by
the earlier UPA regime. This flies against the face of facts. There was no deal
done by the earlier establishment as the deal did not fructify. As there was no
deal, there could not have been an agreed price. In any case, a non-deal cannot be compared with a deal and a non-starter
aborted arrangement cannot be used as a datum for price comparison. More
importantly, the earlier quotes were for the platform as such and the add ons
that gave a punch to the aircraft were not concluded. What has been procured
now brings to the fore certain India specific capabilities, and the price paid
is commensurate with those capabilities.
The next
charge is of capital cronyism, where it is alleged that the government has
favoured the Anil Ambani Reliance group by ousting HAL. This charge has more to
do with ignorance or malicious intent than with anything else. For starters, Dassault
Aviation is providing 36 Rafales to India, all of which are being manufactured
in France. There is no question of a partner here, be it HAL or anyone else.
Reliance hence is not making any aircraft. To quote from an article written by
Maj Gen. Mrinal Suman: Fulfilment of offset obligations entails compensating
the buyer country for the outflow of its resources through designated offset
programmes. India’s offset policy has been spelt out at Appendix D to Chapter II of the
defence procurement procedure. Provisions related to the current discussion are
as follows:
Quantum of
Offsets. As per Para 2.2, all ‘Buy Global’ cases of estimated value of more than Rs 2,000
crore have to carry offset obligations equal to 30 percent of the contract
value. Interestingly, India has managed to obtain offsets equal to 50 percent
of the contract value, despite stiff opposition by the French. It is a huge
gain as Dassault has to incur considerable additional expenditure to fulfil
extra offset obligations.
Selection
of IOP (Indian offset partner). Para 4.3 unambiguously states that the foreign
vendor is free to select IOP and the government has no role to play at all.
Responsibility
for Fulfilling Offsets. Para 5.1 categorically states that the foreign vendor
will be responsible for the fulfilment of offset obligations. Failure invites
huge penalty (five percent of the unfulfilled offset obligation with a cap of
twenty percent) and even debarment from future contracts. It is a huge
punishment by all accounts.
Avenues for
Discharge of Offset Obligations (Para 3). The policy specifies six avenues for
the discharge of offset obligations and the foreign vendor is free to choose
any one or a combination of them. The avenues include direct purchase of
eligible products and services; FDI in joint ventures; and investment in kind/technology.
Eligible products/services cover the complete range of defence, inland/coastal
security and civil aerospace products. It is a vast choice.
The above
provisions make eminent sense. If the vendor is responsible for offsets, he
must have independence to select Indian offset partner (IOP) in whom he has
faith. The government cannot dictate IOP and yet hold the vendor responsible
for timely completion. Dassault has chosen Reliance as a major IOP. No one can
question it.
Instead of
running down each and every government purchase, which in turn leads to time
delays and overrun costs, the focus should be on further streamlining our
procurement systems. Why for instance is India dealing with seven different
types of combat jet fighters? On a long term basis, the focus should be on
getting HAL to perform and produce the Tejas Mark I and Mark IA. And in future the
Mark II, all these as per requirement and as per schedule. We should also focus
on getting the indigenous AMCA (Advanced Medium Combat Aircraft) as per
schedule.
Besides
further refining of procurement procedures, we need to see that those in charge
of such procurements are well versed in the procedures. We need to have
officers who have been trained in the subject and who then need to be posted
for long tenures with the establishment. Unless a holistic view is taken of our
procurement needs, we will continue to flounder. Let us also remember that in
the very competitive environment of defence deals, the loser invariably cries
foul, which is then exploited by vested interests. The Rafale deal is a good
one for the country and the matter should rest here.
