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BJP govt rejects allegation in Rafale deal, says to wait for CAG report

As the firestorm over Rafale deal raged further, the Defence Ministry on Friday said that it has given the CAG access to all the files relating to the contract and it would be best to await the report of the national auditor on the issue. The ministry also dubbed as “factually inaccurate” a newspaper report which claimed that the Prime Minister Narendra Modi’s decision to buy 36 Rafale jets, instead of 126 as negotiated by the previous UPA government, while bypassing mandated procedures pushed the price of each aircraft up by 41 per cent.

The article is factually inaccurate. It does not adduce any new argument. All the issues have been answered in detail by the Government at various fora and most recently by the Raksha Mantri in an open debate in Parliament, a defence ministry spokesperson said. The official also said that the Supreme Court has gone through the details of pricing and commercial advantage but has not found anything adverse in the deal and refused to order an investigation into it.

The Comptroller and Auditor General (CAG) has been given access to all the files related to Rafale deal. It is best to await the report of an authoritative agency like the CAG. The ministry also stuck to its earlier position that the pricing details of the deal cannot be revealed as the contract is covered under a Indo-French agreement of 2008, the spokesperson said.

The report in The Hindu said that the Euro 1.3 billion cost claimed for the ‘design and development’ of 13 India Specific Enhancements (ISE), and its distribution over 36 jets instead of 126 bare-bone aircraft, pushed the price up in a significant way. However, the official said that the report compared the un-escalated price of 2007 with the price of 2016 without considering the escalation factors inherent in the price bid. The UPA government had started the process of procuring the jets in 2007.

The ministry spokesperson said that the India Specific Enhancements were part of the requirements of the Indian Air Force to achieve tactical superiority over our adversaries. These were part of the 2007 bid and continued to be part of the 2016 deal. The cost of the India Specific Enhancements was on a fixed basis in the 2007 bid which was negotiated down in the 2016 deal. The official at the same time, added that to compare the cost for previous contract which never materialized with the cost of the 36 aircraft procured in 2016 is “fallacious”. A negotiation, especially between two countries, is a comprehensive deal and by selectively picking certain aspects while ignoring others, creates doubts by vested interests on a matter of vital national security.

It was learnt that at least two members of the Indian negotiating team had objected to the price finalised for the deal. The defence ministry spokesperson said that all views were aired and recorded and a collegiate decision taken after considering such opinions. Decisions on the deal were taken after due process of inter-ministerial consultation.

Asked about an offer of 20 per cent discount per aircraft by European aerospace corporation EADS, the official said that its acceptance after declaration of the L1 (lowest bidder) would have been violation of the laid down norms.

The issue of benchmarking and the offer of EADS to give a 20 per cent discount are related. Even the UPA government had rightly rejected the EADS offer of 20 per cent discount in 2012 after opening of bids as violative of procedure. He further added that, consideration of the offer would have again made the government subject to charge of violating basic procedure. It is best to avoid the pitfalls of a corporate battle which has been going on since 2012 which has adversely affected the capabilities of the Indian Air Force. The controversy should be put to rest in the interest of national security.

The Congress has been ramping up attack on the government, alleging a massive scam in the Rs 58,000-crore deal. The party has accused the PM of increasing the ‘benchmark price’ of the deal from 5.2 billion Euros to 8.2 billion Euros and alleged that the NDA government paid over Rs 1,600 crore per aircraft against UPA’s negotiated price of Rs 527 crore.

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