Having cut my teeth as a defence reporter, I dealt with the so-called Bofors and HDW procurement scams from their inception. Even though no one has been convicted for anything in either case, all I can say is that I suspect every deal involves money beyond the actual cost of the product. Some call it a commission, facilitation money, and yet others, a bribe. The fact is that the defence business is cut-throat.
Even minus bribes or facilitation, because of the effort that goes in long design and development cycles and years of hawking your product around arms exhibitions across the world, companies find a way of building it into their price.
The only category that is probably free from this taint is a military sales deal in the US, because there the US government is the buyer and usually an American company is the seller. No one dares to cross Uncle Sam, though the “Fat Leonard” scandal suggests that crooks can often find ways around the tightest of situations.
There is another category of acquisitions where costs and details are hidden because they relate to strategic programmes, such as those relating to the development of a nuclear propelled submarine or missiles. Other government-to-government deals are not sacrosanct either.
How the Rafale Deal Unfolded?
There have been several cases where no questions were asked and none given — Mirage 2000 or the Sukhoi MKI. Some years ago, the government blacklisted companies from Germany, Switzerland, Russia, Singapore, and Israel on charges of bribing an ordnance factory official. One would imagine that these companies’ products would not require “other considerations”, but clearly they do.
As for the Rafale deal, it is important to separate the old and the new. The old deal to fill the Medium Multi Role Combat Aircraft (MMRCA) requirement was for 18 aircrafts in a flyaway condition with 108 to be made in India progressively through transfer of technology.
This won the competition against the Eurofighter, the Boeing FA18, F-16, Gripen and the Mig 35, and was ready for price negotiation. In 2011, Rafale and Eurofighter were shortlisted, and the former named the winner in 2012.
Thereafter price negotiations began on a complex deal, but in 2014, a new government came to power in New Delhi and short-circuited the old deal.
On a visit to France, Prime Minister Modi personally took charge and announced that the IAF would now buy only 36 aircraft off the shelf, no technology transfer would be required.
Same Aircraft, Two Different Deals
The same fighter is in the picture, no new variant or model. So price comparisons are not difficult and made easier by the fact that the Defence Ministry itself disclosed in 2016 that the basic price per aircraft would be approximately Rs 670 crore per aircraft, with the price going up to Rs 1,640 crore if you add weapons, spares, costs for special fitments asked for by India, and a commitment by Dassault that for five years, it will supply all the spares, components and technicians to keep the aircraft flying 75 percent of the time.
Those familiar with the issues know that there is nothing unusual in the “bells and whistles” costing more than the aircraft.
For instance, take the Storm Shadow, a long-range stealthy ground attack missile or the Meteor air-to-air missile. According to a British Parliamentary question, each Storm Shadow fired in Libya cost Rs 7 crore each.
As for the Meteor, it is recognised as one of the most lethal Beyond Visual Range missiles around the world. Reportedly, India has sought other electronic enhancements each of which cost money. As for the 75 percent availability, this is crucial in a country whose fighter availability has sometimes dipped to 30 percent, and it comes expensive.
In 2015, speaking to the media, the then Defence Minister Manohar Parrikar had spoken of a figure which added up to around Rs 714 crore per fighter, considerably lower than the Rs 1,640 crore India is paying now. Of course, these are two different deals, but it is inconceivable that the Air Force requirement for “bells and whistles” have gone up so sharply in two years.
Opposition is Right in Demanding Answers
It is essentially the same aircraft and the same country buying them, so questions about its details are legitimate even if there are valid answers. Unfortunately, the government has decided to take recourse to a secrecy clause to block information, even to Parliament.
The Opposition is right to demand information on the pricing.
Providing information on the cost of an aircraft, its engine, missiles, radar warning receivers, radars, does not undermine the country’s security. What is secret is what is inside the sensors, its capabilities, algorithms and so on, which no one is asking for.
There should be no surprise that we are paying premium prices for the acquisition of one of the world’s best fighters. Certainly we will pay more than the French themselves are paying for it. That is because we will retrospectively also pay for its design and development. That is the price we pay for not having developed our own military aviation industry. Barring the US, all countries use exports to subsidise their domestic armament acquisitions.
IAF Should Get Its Priorities Right
The primary blame for the current state of affairs rests with the Indian Air Force, which ridiculously, and probably deliberately, combined six different kinds of fighters for a single requirement which was a cheap interim machine till the Light Combat Aircraft was developed. The two American fighters were 1970s vintage, the Gripen, Mig-35 and Rafale from the 1980s and the Eurofighter from the 1990s.
Of these, three were twin engine and the rest single engine. Of these the Gripen was probably the most suitable, but when you take two engines into account, the Eurofighter and Rafale were clearly superior.
Some of the suspicion around the current deal is because its offset clause would have Dassault spend some Rs 30,000 crore or 50 percent of the amount in developing manufacturing, design, training and maintenance facilities in India. The charge is that this money is destined for the Dassault-Anil Ambani joint venture that is coming up in Nagpur to make components for civil aircraft made by the French major.
The Ministry of Defence’s statement on Wednesday, however, insists that as of now Dassault has not chosen an offset partner. There is speculation, though, that some of the money may actually be used for a DRDO-SNECMA deal to create a powerful new jet engine as a successor to the Kaveri, which was revealed in November 2016.
Going by experience, it is next to impossible to determine whether there has been corruption or not. As the Bofors or the Westland helicopter deal revealed, the ways of the arms merchants are next to impossible to follow. You may get some low-level functionaries who got some “business development” money, but you are unlikely to reach the big bucks.
(The writer is a Distinguished Fellow, Observer Research Foundation, New Delhi. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)
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