Big increase in Rafale's price came because a deal bypassing

mandated procedures and made in the face of official objections

resulted in €1.3 billion ‘non-recurring’ cost attributed to the ‘Design and
Development’ of 13 India Specific Enhancements being spread over
36 instead of 126 aircraft
Prime Minister Narendra Modi’s decision, announced out of the blue in Paris
on April 10, 2015, to buy 36 Rafale fighter jets from France instead of the
126 asked for by the Indian Air Force for seven squadrons pushed the price of
each fully fitted, combat-ready aircraft up by 41.42%.
My Comments : This 41.42% malicious calculation. I will explain this in later
sections of the article.
It was the National Democratic Alliance government’s acceptance of the cost
of €1.3 billion claimed for the ‘design and development’ of 13 India Specific
Enhancements (ISE), and the distribution of this ‘non-recurring cost’ over 36
instead of 126 bare-bones aircraft, that was the major reason for the big
increase in price.
The NDA government has refused to disclose even to a privileged committee
of Parliament full information on the pricing of a Rafale aircraft, contending
that its agreement with France on the ‘Exchange and Reciprocal Protection of
Classified or Protected Information’ stands in the way of such disclosure. The
French government, however, has made it clear that this inter-governmental
agreement is there only “to protect the classified information provided by the
partner, which could, in particular, impact the security and operational
capabilities of the defence equipment.” The restriction clearly does not
apply to the disclosure of pricing details.
My Comment 1: Just to make it clear, the bold and underlined interpretation
is coming from N. Ram and not from French Govt. Pricing of Rafale deal has
already been shared by Govt. at a broader level. Govt. stand point is itemized
price or detail break up that price will not be shared due to i) the
confidentiality clause mentioned in the agreement and Frech Govt. statement
and ii) keeping national security in mind.
In fact, a scan of news media coverage reveals that there has been selective
background briefing by military and civilian defence officials on technical
and other supposedly sensitive details of the deal and that these briefings have
helped answer some, but not all the critical questions being asked about the
Rafale deal, chiefly on the pricing of these medium multi-role combat aircraft
(MMRCA).
My Comment 2: Media collecting technical configuration (ISE or others) in
from various sources offline is completely different from Govt. confirming
those or broadcasting those details. In internet it is possible to find technical
configuration of past, present or future defence equipments of most of the
countries (including India), but no Govt. will confirm or deny those. It is just
a ploy to keep enemies guessing while assuring their citizens of combat
power and rediness of defence forces. Also such info. obtained offline from
sources by media/others does not breach confidentiality clause of the
agreement
This article, based on information exclusively available to The Hindu,
focusses on the interesting question of how and why the price per Rafale
fighter jet of the F3-R standard, with practically the same configuration and
capabilities, changed substantially over three points, in 2007, 2011, and 2016.
In 2007, five years before M/s Dassault Aviation was declared the L1 vendor,
that is, the Lowest Bidder and the presumptive winner of the tender floated by
the United Progressive Alliance government for the supply of 126 Rafales (18
flyaway plus 108 to be manufactured, under licence, in India by Hindustan
Aeronautics Limited), the price quoted by the vendor for one flyaway bare-
bones aircraft was €79.3 million. By 2011, the escalation cost factor had
taken this per-aircraft price up to €100.85 million. In 2016, the 9% discount
on the 2011 price obtained by the NDA government for the 36 Rafales it was
buying from France through an Inter-Governmental Agreement brought this
per-aircraft price down to €91.75 million.
My Comment 3 : So N. Ram accepted govt. claim that for flyaway cost of
Rafale aifact in the new deal is 9% cheaper than UPA deal. Both Finance
minister Arun Jaitley and N. Sitharaman told this is parliament
My Comment 4 : From 2007 to 2011, cost of flyway aircraft during UPA – II
escalated to €100.85 million. But till 2014, UPA could not conclude the deal.
If we assume that somehow UPA were able to conclude the deal by 2014,
question is whether this €100.85 million would have further escalated (to
adjust inflation between 2011 -2014). It is difficult to confirm or deny
anything about the UPA deal as they did not conclude the deal i.e. it was
NON DEAL, so any data points regarding UPA deal we have to take with a
grain (or sack?) of salt!!!
But that is not even half the story. Dassault claimed a €1.4 billion cost for the
‘design and development’ of 13 India Specific Enhancements, that is,
additional capabilities in the form of hardware as well as software that had
been specified by the Indian Air Force all along, and this cost was negotiated
down to €1.3 billion. What it meant was that the design and development
cost, now distributed over 36 Rafale fighter jets, shot up from €11.11 million
per aircraft in 2007 to €36.11 million when the deal was struck in 2016.
My Comment 5 : €1.4 billion ISE cost was received in 2009. What would
have been the cost with price escalation factored in? ~€1.6 billion as per some
sources?
My Comment 6 : Bet it €1.6 billion or something else, NDA govt. negotiated
and brought it down to €1.3 billion. So it is evident that NDA negotiated to
obtain a better cost than UPA.
My Comment 7 : While distributing this €1.3 over 36 Rafale jet may be a
good mathematical way to determine price per plane, it is definitely not a
good idea to use that as a sole criteria to decide which artifact we purchase
and how many. There are several other factors that play equal or more
important role in the decision making. Let me explain further:
 €1.3 billion is non-recurring cost for ISE. It is clear that if air force wants ISE
this amount has to be paid, else they have to either compromise on their ISE
requirement or completely take it out of the deal. That may have made the
NDA per air craft price cheaper that UPA but would have affected combat
superiority of air force significantly. Is this acceptable to us?
If the argument is NDA should have purchased at least 126 to spread this ISE
cost over 126 and bring price per aircraft down, then on the same line
question can be raised why not purchase 180? That would bring down price
per aircraft further down (as ISE would have been distributed over 180
aircraft and not 36 or 126) and also air force, on paper, will get to its
sanctioned 42 squadron. These are all theoretical propositions and no defence
acquisitions anywhere in the world have ever been done solely based on the
per aircraft price. Negotiating for 126 (or 180) would have been a complete
different deal/ negotiation as majority of the aircraft in that case would have
been built in India which would have completely changed pricing equations
and distribution of €1.3 billion ISE among aircrafts may not have been that
significant cost differentiator (there could have been many many other scope,
and timeline related changes in 126 or 180 aircraft deal, but I am sticking to
cost part only at a broader level as that is what Ram highlighted).
Why only 36 were bought and not 126 (or 180) – That’s simple. 36 were built
in completely in France and bought in a flyaway condition due to urgency
from air force. Building 126 (or 180) completely in France and bought in a
flyaway condition will hurt India’s effort to indigenization in defence
equipment manufacturing. That’s why for rest of the aircrafts a new RFI has
been issues (855 of those air craft will be manufactured in India).

The Hindu has reviewed official documentation which reveals that three
senior Defence Ministry officials on the seven-member Indian Negotiating
Team (INT) objected to the high cost of €1.3 billion (brought down from the
original €1.4 billion) assigned by the vendor, Dassault Aviation, to India
Specific Enhancements for the 36 Rafale fighter jets. Rajeev Verma, Joint
Secretary & Acquisitions Manager (Air), Ajit Sule, Financial Manager (Air),
and M.P. Singh, Adviser (Cost) noted: “The cost of India Specific
Enhancements (ISE) was too high.” (It is also a matter of official record that
the three senior Defence Ministry officials objected to several other aspects of
the proposed inter-governmental deal, including the inflated ‘benchmark
price,’ but these issues need not concern us here.)

Objections overruled
The other four members of the Indian Negotiating Team – the Deputy Chief
of Air Staff of the Indian Air Force, who headed the team; the Joint Secretary
(Defence Offset Management Wing); the Joint Secretary and Additional
Finance Adviser; and the Assistant Chief of Air Staff (Plans) – overruled the
objection. The relevant resolution states: “The seven member Indian
Negotiating Team (INT) concluded by majority decision of 4-3 that the ISE
cost of 1.3 bn euros at May 2015 EC was much better than that in the quote of
1.4 bn euros at EC 2009 in 126 MMRCA case. Further, it was concluded that
ISE cost is a non-recurring cost (NRC) and is not affected by the number of
aircraft purchased. The facts were presented to DAC [Defence Acquisition
Council] which agreed to INT’s viewpoint and it was ratified by the CCS
[Cabinet Committee on Security].”
The official record shows that various aspects of the government-backed
proposal for the procurement of 36 flyaway Rafales were presented or
referred back to the DAC on five separate occasions between August 2015
and July 2016. It is surely significant that every one of the 10 contentious
issues raised within the INT was settled by a 4-3 majority vote. The
negotiating team duly completed its work and its chairman submitted a report
on August 4, 2016.
My comments 8 : I am ready to accept that all the above information is true.
But what does N. Ram intended to say?
If his intention is to just highlight that there was difference of opinion, then I
am fine. Difference of opinion and discussion around that is good for any
decision making process as long as that difference of opinion is properly
recorded (it seems that was done and that’s how N. Ram got this
information). I would be shocked and doubtful if any Govt. says that all
contentious issues were resolved with unanimous decision.
However if Ram is suggesting that since most of the decision was made with
a difference of 1vote and hence either the deal to scrapped or process to be re-
initiated, then I don’t agree. When a contentious issue finally goes for voting,
it is decided purely by number and in this case 4 was greater than 3.
Difference of vote may be 1 but that’s legitimate way to decide, otherwise all
football (or soccer) matches ended as 1-0 have to be replayed, all cricket
matches won by 1 run or 1 wicket have to be replayed and so on…and also by
same logic Vajpayee govt. should have been allowed to continue when they
lost no-confidence motion in 1999 by just 1 vote.
According to the government’s notes on the decision-making process
submitted to the Supreme Court of India and shared with a group of
petitioners in compliance with the court’s orders, “the INT report and the
proposal for obtaining approval of the Cabinet Committee on Security (CCS)
was processed in Ministry of Defence…inter-ministerial consultations [took
place] with Finance Ministry and Ministry of Law and Justice,” and the
proposal was placed before the CCS on August 24, 2016. The proposal
included the matter of pricing as well as other contentious issues relating to
the proposed deal.

DAC's role
It is again significant that there is no reference in the government notes to any
further role for the Defence Acquisition Council headed by Defence Minister
Manohar Parrikar. The DAC was empowered to take a decision under the
Defence Procurement Procedure, but Mr. Parrikar shied away from his
responsibility and “progressed” the matter, in other words, passed the buck, to
the Cabinet Committee on Security, as recommended by the INT chairman.
All this was unsurprising considering that more than a year earlier Prime
Minister Modi had spoken his mind, reversing the course followed over the
previous decade and announcing, through an Indo-French joint statement in
Paris, a decision to buy the 36 Rafale fighter jets in flyaway condition “on
terms that would be better than conveyed by Dassault Aviation as part of a
separate process under way.” The CCS, chaired by the Prime Minister,
quickly ratified the majority decisions of the Indian Negotiating Team.
Thirteen India Specific Enhancements to the Rafale fighter jet were
demanded by the Indian Air Force as part of its urgent strategic requirement
in both the UPA-era bid and the 2016 deal. Besides the additional equipment
to be fitted on the bare-bones Rafale fighter jet, this brought in the cost
assigned by M/s Dassault Aviation to the design and development of these
enhancements so that they could be ‘seamlessly’ integrated in the aircraft.
While the BJP government has refused to disclose what these 13 India
Specific Enhancements are, partly on grounds of national security, it is
extremely unlikely that this information can remain a secret from the
international community of military experts and journalists specialising in
defence and security matters. In fact, some of the information is already
available in the public domain. An Indian Air Force document, cited by The
Hindu’s Special Correspondent, Dinakar Peri, in a November 2018 report
(https://www.thehindu.com/news/national/india-specific-rafale-add-ons-after-
delivery-of-all-36-fighters/article25532159.ece), states that the 13 ISE
capabilities are “not present in the Rafale aircraft being operated by other
countries.” They include capabilities relating to radar enhancements “which
will provide the force with better long range capability”, a helmet mounted
display “through which IAF pilots will be able to counter many threats
simultaneously”, the capability to start and operate from high-altitude
airfields, an advanced infrared search-and-track sensor, “a very potent
electronic jammer pod”, and capabilities pertaining to avionics. The Hindu
has access to the full ISE list but will not be presenting it here, because the
technical details contained in the list, which the government insists on
keeping secret, are not strictly relevant to this story.
My Comments 9 : I have already mention in my point 2 that media gather
information from somewhere and Govt. broadcasting that are two completely
different subject. Maintaining secrecy of a deal is Govt. responsibility and if
that secrecy is mentioned in the deal itself, then govt. is bound by that.
However as Ram said Hindu has access to full ISE list but he still not
published list, then it seems these ISE indeed has something that should be
kept secret.

Special leverage?
An important question that arises is whether in 2015-2016 the NDA
government had any special leverage that might have enabled it to extract
substantial price reductions from France for the 36 fully fitted, combat-ready
Rafale fighter jets. The answer is yes – and the leverage was provided by an
attractive, if not mouth-watering, offer that came from the Eurofighter
Typhoon Consortium which comprises leading aerospace and defence
companies from the United Kingdom, Germany, Italy, and Spain. In fact, the
official documentation shows that the three dissenting members of the Indian
Negotiating Team raised this issue in the following manner: “(f) Issue-6. The
20% discount offer of EADS [European Aeronautic Defence and Space
Company] in 126 MMRCA tender was ignored. The INT should take EADS
quote for 36 Rafale delivery equivalent and then compare prices.” The
relevant INT resolution, adopted by a 4-3 majority, asserts that “the
unsolicited offer of 20% by EADS in 126 MMRCA deal” was not in line with
the provisions of the Defence Procurement Procedure and was also against
Central Vigilance Commission (CVC) guidelines, since it was given after the
bidding closed.

The Eurofighter had come through technical and flight evaluations carried out
between 2009 and 2011 along with Rafale and been found to be fully
compliant with the Indian Air Force’s MMRCA requirements. It had lost out
to Rafale, on price. With the negotiations for the acquisition of the 126 Rafale
fighter jets stalling for a complexity of reasons, the Eurofighter Consortium
represented by Airbus (formerly EADS) sensed an opportunity. In a letter
dated July 4, 2014 addressed to the then Defence Minister, Arun Jaitley,
Domingo Urena-Raso, Head of Military Aircraft, Airbus Defence and Space,
outlined a fresh offer. This featured 126 Eurofighter Typhoons, a 20%
reduction in the total package price “compared to the numbers previously
submitted”, improved aircraft capabilities, “favourable payment terms”, an
enhanced transfer of technology process by setting up a production line and a
Eurofighter Typhoon Industrial Park in India along with “a comprehensive
training and support programme”, and the tantalising prospect of accelerated
delivery of Eurofighter jets by diverting deliveries meant for Germany, the
U.K., Italy, and Spain “to the benefit of the Government of India should you
wish to utilize such an accelerated program.”
Nor did the new Eurofighter offer seem entirely “unsolicited.” Sr. Urena-
Raso’s letter to Mr. Jaitley opens with this intriguing sentence: “The interest
of the Indian Government to replace its existing fighter aircraft fleet has
continually attracted our full engagement and we are hence delighted to
respond to your request as conveyed through our Nations’ Ambassador.”
The opportunity to make full use of the leverage provided by the new offer
from the Eurofighter Consortium was lost. The official stance that
entertaining the offer at that stage was impermissible under the DPP and
would also be violative of CVC guidelines was, at best, a debatable position
to take. By going for an inter-governmental agreement, in lieu of a straight
commercial contract with M/s Dassault Aviation, for the acquisition of 36
flyaway fighter jets instead of the 18 flyaway Rafales plus the 108 to be
manufactured, under licence, by HAL, the Indian and French governments as
well as Dassault were, in effect, crafting a new deal. Walking away from the
deal under negotiation if the finally offered price was not right was certainly
an option – and that knowledge should have given the Indian negotiators
strong leverage with France. The leverage might even have been potent
enough successfully to push for pricing and related terms that would have
matched the Eurofighter offer.
My comment 10 : Ram has already accepted that 9% discount was obtained
by NDA govt. and also ISE cost was brought down to €1.3 billion. In addition
to those NDA govt. extracted much favorable escalation clause, 50% (instead
of 30% of UPA) offset clause etc. etc. How can Ram be sure that govt.
obtained all these without leveraging Eurofighter Typhoon offer? Remember
we were downsizing the deal from 126 to 36…ideally Dassault should have
withdrawn some of the offers/discounts made during deal negotiation by UPA
but instead NDA govt. was able to extract more from Dassault. Question
should be asked to UPA why they were not able extract such discounts from
Rafale when their order (126 aircraft) was much bigger than NDA (36
aircraft)
Eurofighter Typhoon offer may be mouth watering (we Indians have special
inclination to anything that has discount) but this should be remembered
business are done for profit so for any discount exists a business strategy
(mostly hidden from buyer) to recover the cost in one way or another. These
are presented as discount to customer but business organizations internally
refer this as investment and always enforces a proper ROI (Return on
Investment) should be attached to it. Sometime these discounts could be
misleading too…let me tell you a story (somewhat real story):
“A vendor firm offered client mouth watering 10% flat discount. It was T&M
(time and material deal, charged on hourly basis) and this 10% flat discount
offered was a deciding factor for the firm to bag the order. However the
strategy the vendor firm adopted was increasing official per day work hours
to 9 from 8. It was difficult for client to minutely track how these additional 1
hour were spent every day by the vendor firm employees…so majority of the
time 8 hours work was passed to client as 9 hours work and billed to client.
So this way for most of the 8 hours work, the vendor firm billed client for 9
hours and thus make 11% - 12% additional profit. So 10% flat discount
offered to the client yielded 1% - 2% additional profit for the vendor firm and
1%-2% loss for the client.”
I am not concluding that Eurofighter Typhoon offer was malicious but doubts
can be should be raised how come they were suddenly able to offer 20%
(that’s huge discount by any imagination). Also Eurofighter Typhoon is a
consortium of 4 participating countries (unlike Rafale which is developed in
one country France) and some of these countries have strict war time policies
regarding supply of parts etc. This was and always will be a concern while
deciding between Eurofighter Typhoon and any other aircraft.
Distributed over 36 jets
To sum up the new information presented in this article: In the 2007 bid by
M/s Dassault Aviation, the ‘design and development’ cost of €1.4 billion
claimed by the vendor for the India Specific Enhancements was to be spread
over 126 aircraft. Although this fixed cost was negotiated down to €1.3
billion in the 2016 inter-governmental deal, it was distributed over 36 fighter
jets. This straightaway meant an increase of €25 million in the price of each
aircraft as compared with the UPA-era bid by Dassault.
The increase of €25 million was far greater than the 9% reduction in the price
of a bare-bones aircraft offered by France in 2016. That this discount was
applied to the price of a bare-bones, and not a fully fitted, combat-ready,
Rafale was confirmed by Dassault Aviation Chairman and CEO, Eric
Trappier, in a November 2018 interview to ANI.

The 9% reduction was explained by Union Law Minister Ravi Shankar

Prasad at a press conference at the BJP’s headquarters on July 23, 2018:
“The UPA invited quotes for 126 aircrafts in 2007. The price quoted for
Rafale was Euro 79.3 Million, which also had inbuilt escalation formula.
When the bid was opened in 2011, the proposed cost in the bid document
was 100.85 Million Euros per aircraft; however, this also could not be
finalized. When in 2016, after NDA came to power, under the inter-
government agreement the cost per aircraft finalized was 91.75 Million
Euros.” The Minister added: “Therefore the price determined during
NDA Government is 9% lesser than what was negotiated during UPA
Government. Therefore, the corresponding cost in Indian Rs 670.32
Crore per aircraft has been conveyed to the Parliament.”
My Comment 11 : To the text in bold from RAM’s article..both Finance
minister Arun Jaitley and Defence minister Nirmala Sitharaman has said in
parliament that i) NDA cost of flyway Rafale aircraft is 9% cheaper than
UPA ii) NDA cost of fully loaded (including ISE) Rafale aircraft is 20%
cheaper than UPA iii) this 20% would be more favorable if escalation cost are
considered. That’s comprehensive statement…what Mr. Ravi Shankar Prasad
mentioned was just point i) in his statement.
What the Law Minister’s statement failed to say was that when the ‘non-
recurring’ design and development cost claimed for the India Specific
Enhancements was factored in, the per unit price negotiated by the NDA
government for the 36 Rafale fighter jets worked out to €127.86 million,
which was 41.42% higher than the price quoted by Dassault in 2007. When
the escalation formula was applied, the price per aircraft agreed to by the
NDA government turned out to be 14.20% higher than the proposed price per
aircraft when the commercial bid was opened in November 2011 under the
UPA government.
My comment 12 : Now let me burst this 41.42% and 14.20% higher cost
theory of Ram:
a) N Ram’s calculation for 41.42% higher cost:
NDA flyaway cost per aircraft – €91.75 million
NDA ISE cost per aircraft (1.3 Billion/36) – €36.11 million
So overall cost per fighter aircraft - €127.86 million

UPA flyaway cost per aircraft – €79.3 million (as per initial cost submitted
in 2007)
UPA ISE cost per aircraft (1.4 Billion/126)– €11.11 million
So overall cost per fighter aircraft - €90.41 million

Error in the calculation : €79.3 million UPA cost was as per 2007 RFP
which later got escalated to €100.85 million in 2011. N. Ram also
confirmed this at the beginning of his article. So going back to
invalid/obsolete 2007 price and then deduce 41.42% higher cost per
plane is nothing but a malicious effort to malign NDA govt. This
calculation is nothing but a political propaganda spread by N. Ram
due to his hate towards Modi/BJP. Let’s throw this calculation into
dustbin and do not spend a second more to cross examine this.
b) N Ram’s calculation for 14.20% higher cost:
NDA flyaway cost per aircraft – €91.75 million
NDA ISE cost per aircraft (€1.3 Billion/36) – €36.11 million
So overall cost per fighter aircraft - €127.86 million

UPA flyaway cost per aircraft – €100.85 million (as per escalated cost of
2011)
UPA ISE cost per aircraft (€1.4 Billion/126)– €11.11 million
So overall cost per fighter aircraft - €111.96 million

Error in the calculation : This deserves a cross examination as

escalated per aircraft cost of 2011 is used by Ram. Here are some of
the of problems in the calculation:
i) These €91.75 million and €100.85 million are not fixed cost per
aircraft but the cost of first aircraft. For subsequent delivery of
aircrafts, there is an escalated cost associated too (which is logical
as aircrafts will be delivered over year and cost of manufacturing
in 2022 can’t be same of the same in 2016/2017). In UPA deal this
escalation cost was 3.9% fixed while in NDA deal, this escalation
cost is 3.5% or European inflation index whichever is lower (right
now European inflation index is ~1.6%). So with delivery of each
aircraft over the years (even with max 3.5% cost escalation as per
NDA agreement), the gap between NDA and UPA price for flyway
Rafale aircraft will widen in favor of NDA. This alone will tilt per
aircraft price in favor of NDA. Ram has completely ignored this
which is nothing less than a BLUNDER!!!. I could have attributed
to ignorance if this was not coming from RAM. As it is coming
from Ram, I am concluding this was ignored with purpose.
ii) €1.4 Billion was 2009 cost for ISE. N. Ram did not factor in obvious
cost escalation from 2009 to 2014 (imagining UPA finalized and
signed off the deal by 2014). So UPA cost for ISE would have been
much more than €1.4 Billion.
 iii) UPA deal was for 126 Rafale of which 108 to be manufactured by
HAL. It is well known that HAL quoted 2.7 times man hours
compared to man hours needed in France in manufacturing Rafale.
That means Rafale manufactured by HAL would have cost more
(~150 – ~160 more crore per aircraft by some sources internet i.e.
~€18 - ~€20 million more per aircraft), so 2011 €100.85 million per
price aircraft price of UPA would have gone up significantly if 108
of those were prepared by HAL. That would have again tilted per
aircraft price significantly towards NDA’s favor.
iv) It does not include weapons, maintenance, supply of parts etc. of
the NDA deal. So only a part of the deal was considered by Ram to
calculate this price increase.
v) As I have mentioned earlier, UPA did not sign the deal. So no one
can say what the final UPA deal would have been if they were able
to sign it. So any comparison of NDA and UPA costs are not apple
to apple comparison and should be taken with a grain (or sack?) of
salt!!!

Based on all the above points, my comnclusion is Let’s throw this

calculation of N. Ram also into dustbin as it is not objective
comparison of price.
As confirmed by M. Trappier in his ANI interview, the 2007 and 2011 prices
mentioned by Mr. Prasad were for the 18 flyaway aircraft. The remaining108
aircraft were to be manufactured under licence by HAL in Bengaluru, for
which negotiations were at an advanced stage when the surprise
announcement that India would buy 36 flyaway Rafales from France came
from Paris in April 2015. Among other things, this meant jettisoning HAL
and with it the plans for technology transfer, building self-reliance in the
defence sector, and ‘Make in India’.
My comment 13 – Factually and purposefully incorrect. Negotiation with
HAL was stalled from UPA era as i) HAL quoted 2.7 times more man-power
and ii) Dassault was not satisfied quality assurance process of HAL and did
not want to guarantee the aircrafts made by HAL. In fact this was the major
reason NDA govt. had to go for 36 Flyaway aircraft from France as there
urgency expressed by air force.
Also ‘Make in India’ should be taken by its literal meaning…it’s ‘Make in
India’ and not ‘Make in PSU India’. So private companies are also very much
part of ‘Make in India’ initiative as they also can provide self reliance. HAL
is definitely in the forefront of Indian companies involved in aircraft
manufacturing but it’s high time they deliver Tejas MK1A, MK2 on
time…otherwise this monopoly will actually end up hurting India’s dream
indigenization of defence equipment manufacturing.
What was more, in exchange for the 9% reduction in price, the Indian
government agreed to abandon the options or ‘follow-on’ clause, which was
very much part of the deal being negotiated with M/s Dassault Aviation for
the 126 aircraft. Dropping the follow-on clause – having an option for a
follow-on contract to buy up to 50% of the quantity bought earlier, under the
same terms and conditions – was a deviation from standard practice in
defence contracts. In the deal under prolonged negotiation, the UPA
government had an option to buy 189 aircraft with the same fixed cost of
design and development of the India Specific Enhancements.
My comment 14 – Not sure why Ram is unhappy about it!!! As per him NDA
deal was overpriced so he should have been happy that ‘follow-on’ clause
was abandoned!!!
On a serious note, I don’t think India is losing much abandoning this clause.
This was an emergency purchase and for rest of aircrafts fresh RFI has been
issued (85% of these aircrafts to be manufactured in India). So Indian govt.
has no plan to ‘follow-on’ purchase of more Rafale built completely in France
and that’s why abandoning this clause does not hurt India.

A fairly large literature, investigative, prosecutorial, and critical, is now

available on various aspects of the Rafale deal of 2015-2016. This literature
has shown or alleged that institutions and mandated or standard procedures
laid down for defence acquisitions were bypassed; that guidelines were
violated; that the benchmark price, a sort of ceiling for the whole package,
discovered by financial experts was arbitrarily raised from €5.2 billion to €8.2
billion at political behest;
My comment 15 – I believe Ram considers his article as one of those “fairly
large literature, investigative, prosecutorial, and critical, is now available on
various aspects of the Rafale deal of 2015-2016”. That itself is enough to
conclude how far those articles are from actual truth. Most of those are driven
by political ideology/inclination/compulsion, venom against by Modi only
and not by fact (just like the article Ram has written).
that crony capitalism was behind the NDA government’s choice of key offset
partners;
My comment 15 – The above statement is a note for the soul of Nazi hunter
Simon Wiesenthal. Joseph Goebbels is still alive and running malicious
propaganda.
Fact is offset partners are chosen by Dassault (and other OEM vendors
involved in the deal)…not by Indian or French govt.
that the Modi government took an indefensible risk by not insisting on a
sovereign guarantee from the French government, as advised by senior
officials in the Ministry of Law and Justice, and settling instead for a ‘Letter
of Comfort’ from the French Prime Minister, which considering M/s Dassault
Aviation’s fragile financial situation ‘is no comfort at all’ (in the eyes of a
former senior bureaucrat who has gone on record); and indeed that the Indian
Air Force was short-changed by the deal.
May comment 16 – This has already been answered by defence minister
Defence minister Nirmala Sitharaman in parliament. Even Sukhoi 30 and
many previous govt. To govt. deal did not have sovereign guarantee and not
even ‘letter of comfort’
In addition, top-level corruption and criminal misconduct have been alleged,
notably by Congress president Rahul Gandhi, and three well-known public
interest petitioners, Yashwant Sinha, Arun Shourie, and Prashant Bhushan,
who along with two others took their case to the Supreme Court of India but
could not succeed.
My comment 17 : ROFL!!!!!!!
Comparisons have been drawn with the Bofors scandal, by protagonists as
well as antagonists, towards different ends. The process of decision-making
on a vital defence acquisition in 2015-2016 does bear an eerie resemblance to
how decisions were made in 1985-1986; but unlike Bofors, where journalistic
investigation was able to uncover corruption disguised as ‘commissions’ paid
secretly into Swiss bank accounts, no money trail has been discovered so far
in the current case. What seems guaranteed is that we have not heard the last
of l’affaire Rafale.
My comment 18 : ‘Journalistic investigation was able to uncover corruption
disguised as ‘commissions’ paid’ because Bofors was a scam. ‘No money
trail has been discovered so far in the current case’ because there is no scam
in Rafale.