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India signed an intergovernmental agreement with France in September 2016, called “Rafale deal,” in which India purchased 36 twin-engine fighters off-the-shelf from Dassault Rafale for a price valued at Rs 58,000 crore or 7.8 billion euros.
Prime Minister Narendra Modi had declared in April 2015 that India will purchase off-the-shelf 36 French-manufactured Rafale fighter jets from the French aircraft manufacturer and integrator Dassault. In 2012, the Rafale was chosen over competing offers from the USA, Europe and Russia. The move was required to improve the aging fleet in India. The initial proposal was for India to buy 18 off-the-shelf jets from France’s Dassault Aviation, with 108 others being manufactured by the state-owned Hindustan Aeronautics Limited or HAL in Bengaluru, India.
However, the Modi-led BJP government rowed back from the last UPA government’s commitment to purchase 126 Rafales, claiming the twin-engine planes would be too costly and the deal fell down after nearly a decade of India-France negotiations. There had been a lot of glitches over the aircraft costs. Faced with the falling number of fighters and a growing need to upgrade the Indian Air Force, however, Prime Minister Narendra Modi interfered and opted to buy 36 “ready-to-fly” fighters instead of attempting to acquire Dassault’s technology to make it into India.
Shortly after the deal was announced, Congress charged the ruling BJP of non-transparency in the multi-billion-dollar deal and called it the ‘Make-in-India’ program “one of the biggest failures.”
In January 2016, India announced the order of 36 Rafale jets in defense deal with France and under this agreement, Dassault and its main partners – engine-maker Safran and electronic systems-maker Thales – will share some technologies with DRDO (Defense Research and Development Organization) and some private sector companies and HAL under the offset clause.
From the outset, the Rafale twin-engine combat jet is designed as a multi-role fighter for air-to – air and air-to – ground attack is nuclear capable and its on-board Electronic Warfare (EW) systems can also perform reconnaissance and radar jamming functions.
Nearly one and a half years after the declaration of the proposal by Prime Minister Narendra Modi during a visit to Paris, India reportedly signed an intergovernmental agreement with France in September 2016, known as the ‘Rafale deal,’ under which India would pay about Rs 58,000 crore or EUR 7.8 billion for 36 Dassault Rafale twin-engine fighters off-shelf.
Approximately 15 per cent of this cost is paid out in advance. According to the deal, India will also get spares and weapons, including the Meteor missile, known to be among the world’s most powerful.
In addition, an accompanying offset clause was sealed with France investing 30% of the EUR 7.8 billion in India’s military aeronautics research programs and 20% in local Rafale component production.
However, a political war over the Rafale deal started in November 2016, and the Congress accused the government of causing “insurmountable loss” of taxpayers ‘ money by signing the contract worth Rs 58,000 crores. It also stated that Reliance Defense Limited, headed by Anil Ambani, had been unfairly picked as the Indian partner of the French firm. The Congress claimed that the cost of each aircraft is three times higher than that agreed in 2012 by the previous UPA with France.
Defense Minister Nirmala Sitharaman and Anil Ambani-led Reliance Defense Limited rebutted the allegations with the government saying the renegotiated deal was transparent and better than the contract signed by the previous UPA government as it contains a superior weapons package and strategic assistance that was lacking in the previous one.
Reliance Defense has said that its subsidiary Reliance Aerostructure and Dassault Aviation formed a joint venture-Dassault Reliance Aerospace, following a bilateral agreement between two private companies and “the Indian government has no role to play in this.”
However, Congress reiterated its attacks on the government for failing to table details of the Rafale deal over alleged irregularities. Defense Minister Nirmala Sitharaman told Parliament that the specifics of the Rafale fighter jets deal with France could not be disclosed under the Intergovernmental Agreement because it is “classified information.”
Officials say there is a confidentiality clause in the Rafale deal for reasons of national security which restricts the buyer and seller from talking about the pricing, making it impossible for any government to disclose any specifics about the defense deals.
In a counter-attack to Congress, Finance Minister Arun Jaitley accused the party of “seriously compromising” the security of the country by digging for details of the weapons bought along with the aircraft. He also advised Chief of the Congress Rahul Gandhi to “learn” from former Defence Minister Pranab Mukherjee “lessons on national security”.