New Delhi: The CAG report on Rafale jets punched holes in defence minister’s justification – of going for a straight out procurement of 36 aircraft made in France – that it would provide the Indian Air Force with top-of-the-line fighters sooner than the deal being worked under UPA II.
In its report the CAG noted that there was an improvement of just one month in the delivery schedule of the 2016 contract signed between India and France over the previous offer being worked between UPA II and Dassault.
But the report goes on to state that the Indian negotiating team ‘had apprehensions about the achievement of even this delivery schedule, because at the time of signing of the contract M/S DA [Dassault Aviation] had an order backlog of 83 aircraft.
“Considering its production rate of 11 aircraft a year, clearing this backlog itself would take more than seven years.”
When CAG sought the response of Ministry of Defence, it was told that the “the project was currently on schedule and the progress was being closely monitored by the resident Project Management Team and also through the Inter-Governmental Bilateral High Level Group.”
While the details of the contract that could shed light on whether there is a penalty clause forcing Dassault to either deliver the aircraft on time or risk paying penalties to the Indian government are not in public domain, the CAG report quoting the Indian Negotiating Team raises some serious questions about Dassault’s ability to deliver the aircraft on time.
What is clear though, in light of details furnished in the CAG report, is that clause of Bank/Sovereign Guarantees, which were part of Dassault’s 2007 offer had been waived in the 2015 deal under NDA.
“In the 2015 offer the French vendor did not furnish any Financial and Performance Bank Guarantees. Since about 60 per cent of advance payments were to be made to the French vendors, Ministry of Law and Justice advised that Government/Sovereign guarantee should be requested in view of the value of the proposed procurement,” the CAG report said.
But when the issue on sovereign guarantee was submitted to the Prime Minister Narendra Modi-led Cabinet Committee on Security in September 2016 for consideration, it accepted only a ‘letter of comfort’ by the French government, overruling the concerns put forward by the law ministry.
The Indian government had by going for a straight purchase of made in France jets sacrificed its own ‘Make in India’ programme claiming that its decision would allow a sooner delivery of Rafale jets.
Instead of procurement of 18 jets, from Dassault’s assembly line in France, and 108 that were to be made in India – the terms on which deal was being struck under UPA II, NDA had decided to purchase 36 jets, in what Sitharaman had called an ‘emergency purchase’ to help aid depleting air force fighter jet strength.
Air Marshal, SBP Sinha who led the Rafale negotiations, while talking to News18 on the issue, defended the government, claiming benefits under the new deal.
‘The delivery schedule of the 36th aircraft is 7 months in advancement than it was in MMRCA procurement. So the aircraft will be there seven months before and the process of software upgrade will start two months later and by the time it gets installed in the last aircraft it will be one month,” he said.
He added, “So these aircraft will come early, it is only the India specific enhancement installation on the last aircraft will be one month prior to the previous procurement date.”
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