In The Rafale Deal: Flying Lies, authors Ravi Nair and Paranjoy Guha Thakurta have examined in forensic detail the Indian negotiations with France over the purchase of the Rafale fighter jets for the Indian Air Force and concluded that many opaque aspects remain to be clarified if doubts about the probity of the deal are to be laid to rest.
Ravi Nair with Paranjoy Guha Thakurta
The Rafale Deal: Flying Lies
Paranjoy (November 2022)
A precis here of the history of the purchase might be necessary. Concluding a commercial bidding process that began in 2007, by 2012 the purchase of 126 Rafale aircraft from Dassault was decided upon with 18 planes in fly-away condition and the remainder to be assembled in India by HAL. By 2015, the negotiations were said to be 95% complete though Dassault was disinclined to guarantee the HAL planes. In a dramatic intervention on April 10, 2015, Prime Minister Narendra Modi in Paris announced he had asked French President Francois Hollande for 36 ‘fly-away’ Rafales on terms better than the ongoing process, which was considered superseded. This was a political decision, not a commercial one, that had not been approved by the Defence Acquisition Committee headed by the defence minister nor the Cabinet Committee on Security.
This new contract was implemented without seeking competitive bids, bank guarantee, an anti-corruption clause, obligation to transfer technology or manufacturing in India. The arbitration centre would be in Geneva and not India. Anil Ambani’s Reliance Aerostructure Ltd., though the company was financially stressed and “brought neither funds nor knowhow to the venture” other than political influence, was chosen as the offset partner by Dassault, which arrangement was worth about Rs 30,000 crore. Hollande first claimed that Ambani had been proposed by India and later recanted. A formal inter-government contract was signed for €7.8 billion in September 2016 with a 5-year maintenance warranty. According to the authors, the cost was nearly Rs 900 crore more per aircraft though with an added new missile, and Rs 20,000 crore was paid in advance.
Three out of seven in the Indian negotiating team dissented on the price hike. The government pleaded a secrecy accord with France and security sensitivity to protect information about the costs. It removed the CBI director from initiating an enquiry, and before the Supreme Court claimed a clearance from the Comptroller and Auditor General, who by then had not yet tabled his conclusions in Parliament. In December 2018, the court dismissed the petitions for an enquiry, which closed down the investigation into corruption allegations. The Indian negotiating team and Cabinet Committee on Security approved the deal post facto.
The main questions the authors pose are: why were only 36 planes acquired whereas the original requirement projected was 126? Who approved the deal? Why had the price escalated? Why was Anil Ambani’s company taken as the offset partner?
Prime Minister Narendra Modi and French President Francois Hollande at their April 10, 2015 press conference in Paris. Photo: PIB
Commendably, in the interest of equity, the authors have included a 42-page robust defence in 2020 of the 36-plane Rafale deal by retired Air Marshal R. Nambiar, who states that the prescribed procedures being complex and time-consuming, IAF’s need became progressively more pressing. The Dassault-HAL arrangement had broken down over the man-hours required, and the French company would not take responsibility for the 108 planes HAL was manufacturing. He asserts that the IAF had asked for at least 36 planes as an emergency procurement and the defence minister was aware of Modi’s intention to purchase 36 fly-away Rafales and their price since India did not have the money for 126 planes. Modi did not break procedures; in Paris, he only announced an intention, not a contract; the procedures were fulfilled later. Nambiar also claimed that the inter-government price was better pro rata than the commercial package, and was approved by the Defence Acquisitions Committee guided by the Indian negotiating team. As for the letter of comfort rather than a sovereign guarantee, Nambiar claimed that this covered only the offsets which were a commercial contract. Dassault had wanted an extra 0.35% for any bank guarantee which was unreasonable. And Geneva was accepted as the seat of arbitration since the inter-government process was entirely different from the commercial deal envisaged earlier.
The BJP government predictably accused the opposition of anti-national behaviour by undermining the military through formulating a “selective and incomplete picture”, and the Congress party and HAL for delaying the purchase pre-2014. There’s no denying that despite the IAF’s shortages, delays were caused by defence minister A.K. Antony, who repeatedly had the Dassault agreement reviewed. In any event, the original deal for 126 planes was unaffordable since there was no budget. There is no money trail, the CBI did not investigate the deal and the government refused a joint parliamentary committee, so corruption accusations are hard to level. Ambani’s preferential treatment can be ascribed to habitual crony capitalism. Indian media has lost interest and public engagement died with the 2019 election.
Modi, the ultimate event manager, loves the dramatic gesture, the big announcement – his unpredictability is his USP as one Delhi-based editor has written. In this case, precedents and procedures were set aside for the prime minister to appear a decisive nationalist. In the wake of this, the BJP and the cabinet engaged in mixed messaging, false leaks, contradictions, double-speak, half-truths and equivocations – a travesty for a party and leader who take pride in connecting seamlessly with the people.
French anti-corruption agencies were approached by an NGO called Sherpa in 2021 and a judge started an investigation into French malpractice, though it will be blunted by the French government’s plea of secrecy and will have marginal impact on the authors’ queries. The main French media platform making enquiries is Mediapart, whose target is a family headed by Brij Mohan Gupta, Dassault agents, who, it is claimed, received money for influence pedalling, and no less than 1 million Euros for producing 50 model replicas of Rafale.
The authors’ dedication and diligence are remarkable; this work is fully referenced and the sources are in the public domain, but the approach is one of an advocate’s brief which makes it difficult to engage. A summary of each chapter would have been advisable for readers who did not need, or wish, to encounter such granular detail. But the salient argument remains – that the ruling party has a case to answer and many doubts to clear. For this, the authors are to be commended.
Krishnan Srinivasan is a former foreign secretary.
