Ex-FM says Govt paid Rs 186 cr/jet, Defence Ministry denies charges

The NDA Government’s decision to buy 36 Rafale jets instead of 126 as was decided by the UPA regime led to escalation of the price of each aircraft by 41 per cent and came as a windfall for French aircraft-maker Dassault, said  Congress leader P Chidambaram citing an exhaustive  report published by The Hindu newspaper.

The Defence Ministry has denied the charges in detailed statement.

Claiming that the Government paid Euro 25 million more per aircraft compared to the price negotiated by the Congress-led UPA, Chidambaram said the Government did not buy 90 more aircraft needed by the Air Force and paid Rs 186 crore more to French firm Dassault, maker of Rafale, for 13 India-specific enhancements in the medium multi-role combat aircraft (MMRCA).

The former Finance Minister reiterated his party’s demand for a joint parliamentary committee (JPC) probe into the Rafale jet deal, saying the decision is not amenable to court but to a parliamentary panel. The Congress has alleged earlier that the Prime Minister increased the ‘Benchmark Price’ of Rafale deal from 5.2 billion Euros to 8.2 billion Euros and that the NDA Government paid over Rs 1,600 crore per aircraft against the UPA’s negotiated price of Rs 527 crore per aircraft, demanding answers as to who is responsible for the loss to the State exchequer.

Chidambaram’s Press conference came in the backdrop of a media report claiming that Prime Minister Narendra Modi’s decision to buy 36 aircraft instead of the 126 asked for by the Indian Air Force pushed the price of each jet up by 41.42 per cent.

“The Government has wronged the country in two ways — firstly, it has compromised national security by denying to the Air Force 90 fighter aircraft that they desperately need. Secondly, it has purchased two squadrons that will cost about Euro 25 million more per aircraft. At the 2016 exchange rate, Euro 25 million is equal to Rs 186 crore. India will pay Rs 186 crore more per aircraft,” Chidambaram said.

“There is no doubt any longer that Rafale aircraft deal deserves to be examined thoroughly by a Joint Parliamentary Committee. The Congress reiterates its demand for constitution of a JPC,” he said.

The Rajya Sabha member said he feels that Dassault “is laughing all the way to the bank”, as the NDA Government gave a “gift” to the French firm over amortisation or recovery on the cost of 13 India-specific enhancements sought in the aircraft that cost 1,300 million Euros.

He said the cost of these enhancements has been recovered by Dassault in 36 aircraft and the same should have been recovered by it for 126 aircraft instead.

“That is a windfall for Dassault. That is the gift that the NDA Government has given to Dassault and that is why I said Dassault is laughing all the way to the bank....The windfall to Dassault was a deliberate decision of NDA government and is highly questionable,” he said.

“The increased price per aircraft is a gift to Dassault that the NDA Government gave between April 2015 and August 2016,” he also said.

Chidambaram earlier said in the light of new facts and revelations, “the question gains greater urgency: why did the government buy only 36 Rafale aircraft instead of 126 aircraft required by the Air Force?

Chidambaram took to Twitter and said serious issues are being raised in media reports about the process of decision-making in the NDA Government and alleged that “the man who got away was Mr Manohar Parrikar who passed the buck to the Cabinet Committee on Security. Clever man.”

Meanwhile, the Defence Ministry on Friday said the deal for purchase of 36 Rafale fighter jets in 2016 achieved the objectives of better price, better delivery period and better terms compared to the earlier proposal. Making this assertion, the Ministry said Defence Minister Nirmala Sitharaman had answered in detail about all issues related to the contract in an open debate in Parliament in the recently concluded winter session.

In a statement, the Ministry said pricing details, which are of confidential nature and covered by the Indo-French security agreement of 2008, were shared with the Supreme Court in a sealed cover. The Supreme Court has gone through the details of pricing and commercial advantage. The Court has not found anything adverse in the deal and has refused to order an investigation.  Moreover, 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, it said.

As regards questions raised about India Specific Enhancements (ISE) for the Rafale jets and allegations that the NDA Government paid 41 per cent more than deal being negotiated by the erstwhile UPA Government, the ministry said these enhancements were part of the requirements of the Indian Air Force to achieve tactical superiority over our adversaries.

Also these ISE 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. However, to compare the cost for the now scrapped Medium Multi-role Combat Aircraft (MMRCA) contract which never materialized with the cost of the 36 aircraft procured in 2016 is fallacious, the statement said.

Allegations about the price of ISE as 1.4 billion Euro in 2007 has failed to include the in-built escalation factor that would have worked between 2007 and 2015.  Moreover, comparisons were made between un-escalated price of 2007 with the price of 2016 without considering the escalation factors inherent in the price bid, it said.

The statement said the change from a firm and fixed price to a flexible rate was possible only because the deal was structured under an Inter Governmental Agreement with France.

This factor is expected to lead to a substantial commercial advantage over the delivery period of 36 Rafale aircraft, it added.

On the issue of dissent within the Indian negotiation team while finalising the 36 Rafale jet deal, the statement said it was answered by Sitharaman in Parliament. In the highest traditions of the Civil Service, all views are 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, the ministry said.