‘2016 Rafale deal achieved objectives of better price, delivery and terms’: MoD spokesperson rubbishes The Hindu report

MoD spokesperson has said: "The article is factually inaccurate. It does not adduce any new arguments. All the issues have been answered in detail by the Government at various fora and most recently by the Raksha Mantri in an open debate in the Parliament".

The Hindu today published a story authored by N Ram, a foremost member of the family that owns the paper. In the article, which lifted content revealed by another journalist and passed them off as a The Hindu ‘exclusive’, N Ram made some fantastical claims deriding the Rafale deal. After the article was published, the Ministry of Defence spokesperson has issued a detailed response to the article. In the point by point response, MoD spokesperson has rubbished the claims made. 

The full statement has been reproduced below:

1. The article is factually inaccurate. It does not adduce any new arguments. All the issues have been answered in detail by the Government at various fora and most recently by the Raksha Mantri in an open debate in the Parliament.

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2. The deal for the purchase of 36 Rafale fighter jets in 2016 achieved the objectives of a better price, better delivery period and better terms compared to the earlier proposal.

3. The 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 Supreme Court has not found anything adverse in the deal and has refused to order an investigation as sought by the Petitioners. The 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.

4. The author has rightly pointed out that the cost of the basic aircraft in the 2016 deal was better than the offer of 2007 after considering escalation even though several media reports and political parties keep comparing the cost of the basic aircraft of 2007 with the cost of fully loaded aircraft in 2015.

5. The India Specific Enhancements were part of the requirements of the Indian Air Force to achieve tactical superiority over our adversaries. These 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 MMRCA contract which never materialized with the cost of the 36 aircraft procured in 2016 is fallacious. The author while indicating the price of ISE as 1.4 Bn Euro in 2007 has failed to include the in-built escalation factor that would have worked between 2007 and 2015.

6. Surprisingly, in the headline of the article, the author has compared the un-escalated price of 2007 with the price of 2016 without considering the escalation factors inherent in the price bid. Later, hidden deep in the article itself it is stated that the price is 14.2% higher compared to the escalated price as probably this figure does not attract as much attention as a 41.4% higher price.

7. The author has also missed the main advantage in terms of price obtained by the Government in 2016 deal which was mentioned by the Raksha Mantri in Parliament.

8. This change from a firm and fixed price to a flexible rate was possible only because the deal was structured under an IGA. This factor is expected to lead to a substantial commercial advantage over the delivery period of 36 Rafale aircrafts.

9. A negotiation, especially, between two countries is a comprehensive deal and by selectively picking certain aspects while ignoring others, creates doubts by vested interests on a matter of vital national security. This has been repeatedly pointed out by the Government and accepted by the Supreme Court.

10. The issue of dissent within the Indian Negotiated Team has also been answered by the Raksha Mantri in the 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.

11. The issue of benchmarking and the offer of EADS to give a 20% discount are related. Even the UPA Government had rightly rejected the EADS offer of 20% discount in 2012 after opening of bids as violative of procedure. Consideration of this offer by the Government would have again made the Government subject to charge of violating basic procedure. It is best to avoid the pitfalls of a corporate battle which has been going on since 2012 which has adversely affected the capabilities of the Indian Air Force. The controversy should be put to rest in the interest of national security.


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