Thread by @ikkmurugan

The Rafale Deal or Scam?

Please take time & read this one!

Firstly, Calling it a INC deal is half truth.

In the year 2000, the BJP led central government begun the process of acquiring 126 Medium multi role combat aircrafts.

Between 2001 & 2004, the IAF submitted proposals thrice to acquire 18 aircrafts on a ready to fly basis & to manufacture 108 aircrafts in HAL by transferring technology from Dassault.

The then BJP government rejected all these proposals.

In January 2004, IAF was directed to float RFP for competitive bidding.

So it is evident that the then Vajpayee led BJP government did not violate the Defence procurement procedures to favour Dassault.

BJP lost the election in 2004 & Congress took over. It took the congress government 3 years and 6 months to float the tender.

Dassault was insisting to supply the aircrafts on a single vendor basis but later agreed to participate in the competitive bidding process.

After reviewing the RFPs

In May 2008 : Dassault was rejected by Technical evaluation committee as they were non compliant to 14 Air staff qualitative requirements.

March 2009: Decision to reject upheld by TEC (twice) And later Ministry rejected Dassault’s proposal.

And now the somersault:

In April’09, suo moto representation was made by Dassault for reconsideration. Defence minister asked TEC to re-evaluate.

TEC approves it May’09 & was approved by defence minister too.

This was violating the defence procurement procedure. Who cares??

Now let’s get to the cost quoted by INC: Which is obviously wrong

Between the technical evaluation and the price bid opening it took 2 years.

Dassault and EADS qualified in the technical evaluation.

Yeah Dassault which was rejected qualified later.

The price INC has been quoting is the 2007 base price quoted by Dassault & the was subject to escalation. Both Dassault and EADS violated the RFP conditions;

But the minister approved them as compliant to terms.

It is evident that the congress government favoured Dassault both in the technical & commercial evaluation.

Despite several flaws, Dassault was declared L1. You can compare these with the kickback allegations between 2004 & 2013

Now will explain why the cost of 526 Crores per aircraft quoted by congress is wrong.

1. Cost quoted is 2007 base price. Does not include cost of escalation.

2. Capital expenditure cost for transfer of technology was not quoted by Dassault.

3. 77.8% of the cost quoted by Dassault was for the transfer of technology to HAL. HAL estimated that the man hours required for manufacturing is 2.7 times more.

₹409 Crores (77.8% of ₹526 Crores) multiplied by 2.7 will be ₹1104 Crores.

2007 base price per air craft would have been ₹1221 Crores per aircraft & not ₹526 Crores.

Several such negligence resulted in stalemating the negotiations.

In 2012, when Francois Hollande visited India, he assured that there was no middlemen involved in the deal. Why did he mention that??

AK Antony had wilfully slowed down the finalisation as the atmosphere did not seem suitable to take the deal forward.

BJP came back to power after 10 years.

Aug 2014 : BJP said they will take the Rafael deal forward. They had no idea till then.

March 2015: BJP said they cancelling the RFP and had cited the reasons for saying so.

Dassault was not L1 and was not compliant.

An inter governmental agreement for purchase of 36 aircrafts (2 Squadrons) basis of DPP 2013 between India and France was signed after Dassault agreed to comply with all the ASQR.

Will comeback to why BJP did not float RFP again.

Let’s look at the cost, technology transfer and guarantee aspect of the new deal.

The CAG compared the cost of the 2007 quoted by Dassault as against the 2015 price; And they concluded that Indian government saved 2.86% than the previous deal.

The question of Technology transfer did not arise as the 2016 IGA was for outright purchase.

The Indian government went ahead with the IGA for purchase of 36 aircrafts as our fleet was totally outdated in terms of technology.

A new RFP would have only caused delays.

The Supreme Court also echoed the same opinion in their 2018 judgement quashing the petition to hold the IGA for 36 aircraft procurement.

The MMRCA and Rafael are not unique. The Rafael aircrafts procured now are superior to 5th generation Chinese J20s.

Now on the guarantees:

The negotiation in 2012 reached a deadlock. One of the reason was the performance guarantee. It is contrary to what congress claims.

Dassault did not accept to the performance guarantee clause.

Now the Sovereign Guarantee

The previous contract was between Dassault Aviation & the Government of India. Hence a sovereign guarantee was needed.

Now it is an inter governmental agreement between two sovereign nations. Govt of France had already issued a Letter of comfort

Offset partner:

Enough debates on this. Even the Supreme Court in their judgement established that that Reliance was chosen as offset partner in 2012 and by Dassault.

The groups merged, Mukesh Ambani gave it to his brother Anil to handle this business.

Conclusion:

2007 price with a validity of 25 months cannot be compared to 2016 prices.

Between 2015 and 16, 72 meetings were conducted to finalise this deal. GOI did not want to waste time any further.

If there were any favours, it was before 2014 and not post that.