Tuesday, September 22, 2020
Home Fact-Check Rafale deal: Rahul Gandhi's flimsy allegations don't stand the test of facts

Rafale deal: Rahul Gandhi’s flimsy allegations don’t stand the test of facts

In an earlier article this author had traced the entire timeline of the Rafale deal since 2004 and highlighted that since 2013, Dassault was unwilling to own responsibility for aircrafts manufactured by HAL. This had become a deal breaker at that time.

In view of the above, the following facts about the final Rafale deal stand out against allegations being levelled by the opposition.

Allegation 1:

  • Price of the deal is not disclosed

Facts:

  • Total deal value is already in the public domain and reported in most mainstream media publications including Business Insider, Times of India, Reuters to name just a few
  • India has paid €7.8 billion for 36 aircraft from France in ready to induct (fly-away) condition
  • The only aspect not disclosed is the line item break-up of pricing. It is absolutely reasonable to not disclose what features, capabilities and weapon systems are bought by Indian Air Force
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Allegation 2:

  • Deal price is three times higher than what previous government (UPA) had negotiated

Facts:

  • India’s deal value is fully in-line with or lower than what other countries have paid
  • Qatar deal is €7 billion for 24 aircraft = €292 million per aircraft (Rs. 2495 crore)
  • Egypt deal is €5.2 billion for 24 aircrafts = €217 million per aircraft (Rs. 1850 crore)
  • India deal is €7.8 billion for 36 aircrafts = €217 million per aircraft (Rs. 1850 crore)

(INR values in brackets are based on Euro to INR conversion rate on 26 Sep 2018 – intended for deal comparison purpose)

  • Meanwhile, this 18 seconds video shows that on four different occasions, Mr. Gandhi has quoted that UPA could have bought Rafale for
    • 520 crores
    • 526 crores
    • 540 crores
    • 700 crores
  • Numbers from Qatar and Egypt deals prove that prices quoted by Mr. Gandhi are unrealistic. Price of fully loaded aircraft depends on what features and capabilities are added on top of the base aircraft
  • UPA is comparing the price of “base aircraft” (500 crores) with “fully loaded” version with all add-on features, capabilities and weapon systems (1800 crore)
  • If other countries are spending in the range of 2000 crore per aircraft and UPA could really get the planes for 500 crores – why didn’t they?

Allegation 3:

  • The government replaced HAL by Reliance

Facts:

  • HAL was supposed to manufacture 108 planes in India, which is not part of the deal anymore. All 36 planes are coming in fly away conditions, hence there is no role for HAL. Even during UPA, the main roadblock was that Dassault did not want to partner with HAL for the manufacture of the remaining aircrafts.
  • Reliance is supplying components to Dassault as part of the offset clause – not manufacturing planes. There are 72 offset partners in total. 
  • Both these organizations are addressing different parts of the deal and are not a replacement for each other

Allegation 4:

  • Reliance has no plane manufacturing experience

Facts:

  • That’s true, but it’s not needed
  • Dassault will manufacture all 36 planes and send them in fly-away condition. Reliance does not need to manufacture planes
  • Reliance is only supplying components to Dassault. It is one among the 72 Indian companies selected as suppliers by Dassault as part of the offset clause. The list of Indian suppliers includes Tata, Mahindra, L&T, Godrej among others – the full list is accessible here

Allegation 5:

  • Reliance has no defence experience

Facts:

  • Reliance Defence and Engineering was formed by taking over Pipavav Defence
  • Technology, capability and experience in defence sector already exists and was acquired under a new company name
  • The decision to buy components from Reliance is Dassault’s not government’s
  • For a defence and commercial aircraft company like Dassault, the business depends on reputation – they cannot afford to deliver sub-standard products to win some small deals just because some government asked them to
  • Since 2013, Dassault wasn’t willing to own responsibility for planes manufactured by HAL due to quality constraints and was willing to let go of the entire deal with 126 aircrafts
  • Why would they agree to procure from Reliance for a small 36 plane deal, if Reliance was not capable?
  • Dassault has already clarified about their differences with HAL since 2013 and their reasons for including Reliance on the list of Indian suppliers

Other glaring holes in scam theory:

As far as allegations of scam are concerned, so far Mr Gandhi has called Rafale as a –

    • 36 thousand crore scam
    • 40 thousand crore scam
    • 58 thousand crore scam
    • 1 lakh 30 thousand crore scam

  • All this in a deal whose total value is only 59 thousand crores
  • and 50% of which is set to be invested back in Indian companies as part of the offset

Unless Mr Gandhi knows something about making more money in scams than the deal value itself, the whole “scam” allegation is a concoction of misrepresented facts and randomly thrown around numbers.

Broader perspective:

  • Indian Air Force needs 42 squadrons of fighter jets for effective defence across borders
  • By 2014, it was down to only 25 squadrons
  • With more MiG planes retiring, IAF will reduce to only 11 squadrons of active fighter jets by 2024

In this alarming scenario, where the strength of Indian Air Force has been rapidly diluting, UPA government just sat on the deal during their two terms of 10 years. 

After coming to power in 2014, NDA government closed the deal quickly to procure finest fighter jets for Indian Air Force. Additionally, in 4 years Mr. Modi’s government has also strengthened India’s local defence manufacturing capability through multiple collaborations under “Make in India” –

  • Hanwha-Techwin (HTW) of South Korea in collaboration with India’s Larsen & Toubro (L&T) is manufacturing K9 Self-Propelled VAJRA-T9 Artillery guns in Hazira, Gujarat
  • Boeing (USA) in collaboration with India’s Tata Aerospace Ltd is manufacturing fuselages for AH-64 Apache military helicopters in Hyderabad
  • Boeing (USA) has collaborated with India’s HAL and Mahindra Defence for manufacturing F/A-18 Fighter Jets in Bengaluru
  • Saab (Sweden) has offered to manufacture Gripen fighter jets in India with Adani
  • Lockheed Martin (USA) has offered to manufacture F-16 fighter jets in India with Tata
  • Lockheed Martin has also offered to manufacture third generation Javelin missiles in India
  • Russia is in the final stages of manufacturing Kalashnikov Assault Rifles in India

Modi government needs to be applauded for swift decision making in not only procuring the best equipment for Indian Forces but also rapidly developing the local defence manufacturing capability in India.

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Shashank Goyal
IIM-A alumnus, Software Sales Professional, Writes about business, economy and politics; Passionate about numbers, facts and analysis Tweets @shashankgoyal01

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