BJP vs Congress over Rafale fighter jets: Who worked a better deal? Explained

While the first batch of Rafale Dassault fighter jets will come to India in September 2019 - a new government is expected to be in place by then - the Indo-French defence deal seems to be trapped in mist.

The Congress has alleged that they worked a better deal with France for Rafale fighter jets, while the BJP says that the UPA government had not formalised the agreement and left too much grey areas in the deal that could have spiked the cost enormously.

The Congress has called the Rafale deal a Rs 50,000 crore scam of the Narendra Modi government. Congress vice-president Rahul Gandhi accused the Modi government of shying away from Parliament (over delay in convening the winter session) due to rafale deal expose.

WHAT IS RAFALE DEAL?

Rafale deal is a defence agreement signed between the governments of India and France. The deal was after long-drawn talks. Defence Minister Nirmala Sitharaman recently claimed that the Rafale deal has its origin in the NDA government of Atal Bihari Vajpayee, which in 2000, emphasised the need to mordernisation of the Indian Air Force.

As per records, the procurement of Medium Multi-Role Combat Aircrafts (MRCA) was initiated in 2007, when the then UPA government issued a Request for Proposals. Proposals from the six contenders - Boeing's Super Hornet, Lockheed Martin's F-16IN Super Viper, RAC MiG's MiG-35, Saab's Gripen C, the Eurofighter Typhoon and the Rafale - were examined by the Indian Air Force.

In 2011, the IAF narrowed the focus on the Eurofighter Typhoon and Dassault Rafale in the fray while rejecting the other contenders. In January, 2012, the IAF identified the Rafale as the winner following which negotiations over the cost began.

WHAT WAS IN THE UPA DEAL?

The UPA's deal was for 126 Rafale fighter jets. Of these 18 Rafale fighter jets were to be delivered by the French company in flyaway condition. The rest 108 were to be manufactured in India at the Hindustan Aeronautics Limited (HAL).

The cost of the deal had not been finalised during the tenure of the UPA government. The Congress leaders have claimed that their deal cost less than the one struck by the Modi government. However, the projected cost estimated by Congress spokesperson Randeep Singh Surjewala and senior party leader Kapil Sibal vary.

According to Surjewala, the Rafale deal worked by the UPA government was of Rs 42,000 crore while in Sibal's calculation the 126-jet deal could have cost Rs 79,200 crore.

Sibal claimed that India could have got 3.5 times the number of Rafale jet fighters under the UPA's deal by paying only Rs 21,000 crore more than being paid under the Modi government's agreement.

Congress leader Kapil Sibal alleged that the reworked Rafale deal is a 58,000 crore scam.

However, Chief of Air Staff Air Chief Marshal BS Dhanoa recently said that the deal was "not overpricing... We have negotiated for 36 French fighter aircraft Rafale (at a price) lower than that in the contract. The government has negotiated a very good deal."

Some reports claimed citing defence sources that the per unit cost of Rafale fighters under UPA's deal was USD 100 million while under the new terms the per unit cost is USD 90 million. The IAF, recently, also pitched for procuring 36 more Rafale jets arguing that the next batch of fighter planes may cost only 60 per cent of the original price.

TRANSFER OF TECHNOLOGY

The Congress has claimed that under the UPA deal, the Rafale had agreed to transfer of technology while under the Modi government, there is no such bounding on the French company. Nirmala Sitharaman, rejecting, the charge said that transfer of technology will happen as 126 Rafale fighter jets would be manufactured in India.

Reports suggest that the need for reworking the Rafale deal arose as the French company refused to share its technology with the HAL saying that it was not equipped to transfer its technology on the fighter jets. This happened after the exit of UPA government.

The new Modi government insisted that Rafale Dassault took responsibility of the quality standards of the fighter jets. Rafale was not ready to accept the condition necessitating a revisit of the terms and conditions negotiated during UPA government.

Now, IAF chief Dhanoa has said that "technology may not be going to the Hindustan Aeronautics Ltd (HAL) but it is coming to the Defence Research and Development Organisation (DRDO) and then to a lot of Indians."

COST VARIATION

The UPA government had agreed to calculate the price of the Rafale deal on a formula that allowed the company to include an additional cost of 3.9 per cent Inflation Indices from the day deal was struck. Under the reworked deal, the fixed cost escalation rate has been limited to 3.5 per cent. The government claims to have saved around USD 200 by lowering the cost escalation rate.

There was another factor that has led to confusion about the costing of the deal. During the UPA regime, the negotiators had agreed for the proposal of manufacturing 108 Rafale fighter jets in India.

Later it was found that the cost of industry manhours was 2.7 times higher at HAL in India than in Rafale in France. This variation was expected to have pushed per unit cost of the fighter plane in India by about Rs 150 crore.

This was believed to be the reason for a file noting by the then Defence Minister AK Antony stating that the negotiating team must consult him before finalising the contract with Rafale.

WHAT ELSE?

Under the reworked deal, the Rafale is bound to offset 50 per cent of its earnings, from the sale of fighter jets to India, in the defence sector of the country. This was not discussed in the original deal.

The Rafale is also obliged to provide 3 crore industry manhour for production of fighter planes in India under Make In India programme. The Rafale experts will be working with the professionals of the HAL in India sharing their expertise and technological know how.

The Rafale Dassault has to keep 75 per cent of the total strength of the fighter jets in operational condition at any point of time for the first five years. This is significant improvement from the standards maintained for Sukhoi or other fighter planes.

At present, only 60 per cent of Sukhoi-30 fleet remains operational at a given point of time. According to some defence analysts, it was only 48 per cent till 2013.