France Rejects Congress Rafale Charge, Reliance Defence Threatens to Sue

New Delhi: France has categorically rejected allegations made by the Congress party that the Narendra Modi government has negotiated an overpriced deal with French company Dassault to supply the Indian Air Force with 36 state-of-the-art Rafale fighter jets, while the Anil Ambani-led Reliance Defence Limited has threatened to sue the opposition party if it does not retract its charge that it was unfairly picked to be the French firm's Indian partner.

"This fighter jet has been selected for its outstanding performance and competitive price.  It was selected through a fully transparent and competitive process," French diplomatic sources said, on Wednesday, describing the Congress allegations as "a domestic political matter" that they would not like to enter.

The Congress has alleged that Prime Minister Narendra Modi's government has caused an "insurmountable loss" of taxpayers' money in signing the deal for 36 Rafale aircraft from France for Rs 58,000 crores (7.8 billion Euros). The opposition party alleged on Tuesday that the cost of each aircraft is three times more than what the previous UPA government it led had negotiated with France in 2012.

The Congress has also asked why the government "promoted the interests of one industrial group, i.e Reliance Defence Limited, which has led to the company tying up and entering into a joint venture with Dassault Aviation worth Rs. 30,000 crores?"

Responding to the allegations, Reliance Defence said, "Government policy issued on 24 June 2016 allows for 49% FDI in the Defence Sector under the automatic route, without any prior approval. No approvals from the Union Cabinet or CCS were required for the formation of the aforesaid Joint Venture company under the automatic route."  The company said its reserves the right to take legal action against the Congress if the allegations against it are not withdrawn.

Several of the allegations raised by the Congress to question the deal are not new. For more than a year, critics have suggested that India has got a raw deal on the Rafale jets, which will form the cutting edge of the Indian Air Force's fighter fleet once the aircraft start getting inducted.

While it is true that the unit price of each aircraft is more than what had earlier been negotiated, several aspects of the deal that have sent the cost up have not been stated by the Congress in its latest allegations.

While Rafale had emerged as the lowest bidder (Rs 54,000 crore) in an international tender in 2012, the final deal could never be closed by the UPA government.  By the time the BJP-led government came to power in 2014, the deal was completely deadlocked with Dassault refusing to certify key components of the jet which were to be built by the public sector company Hindustan Aeronautics Limited (HAL) unless a series of conditions were met.

According to sources involved in that original deal for Rafale jets which was scrapped, there were big differences on total manpower costs between Dassault and Hindustan Aeronautics. HAL reportedly said that manpower costs would be nearly three times higher in India and so it would cost more to build the Rafale jets here, which was disputed by the French company, which said it wouldn't. They could not reach an agreement.

With no deal around the corner and with successive Air Chiefs telling the government that India's air defence would be seriously affected without the jets being inducted, PM Modi had announced an off-the-shelf purchase from France during a visit to Paris in April 2015. "France has always been a reliable supplier for India from jet fighters to submarines," the Prime Minister had said.

When the deal for the Rafales was finally signed, they came at 2016 prices, significantly higher than what was on offer four years earlier. Apart from the aircraft, the price also includes several key items, including state of the art weaponry, spares support for seven years and India-specific customisation of the jet that the French Air Force and Navy operate.

Under this deal, the Indian Air Force Rafales will come equipped with the Meteor, the world's most advanced Beyond Visual Range Air to Air Missile which can hit targets further out than any comparable missile at the moment. India is acquiring the SCALP cruise missile which can hit ground targets more than 500 km away and will be customised to eventually deploy a variant of India's BrahMos anti-ship cruise missile.

Software codes and patches will be provided so that future integration of new weapons systems take place in India.  An Israeli helmet mounted display will be integrated into the jet.

Significantly for the Indian Air Force, which has faced enormous problems with the reliability of its Sukhoi-30 fighters, the French will guarantee the performance of the Rafale and provide complete logistics support to ensure that 75 per cent of the Rafale fleet will be battle-worthy when required.  The IAF has struggled to get over 50 per cent mission availability for its Sukhoi fighters.

Nine Indian Air Force personnel including three pilots will be trained in France with the IAF also getting access to French Air Force Rafales for training.  

In order to reduce costs, the government capped the European inflation indices to 3.5 per cent which means that if inflation goes down, so will the cost of the overall deal, the payout for which happens in tranches.  

The first Rafale jets are to enter service with the Indian Air Force from 2019 onwards and Dassault has been negotiating with the government of India for a deal of 36 more jets which would form two more squadrons.