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NDA Rafale Deal Achieved Better Price Than Earlier Proposal: Defence Ministry

A defence spokesman said that even the UPA government had rightly rejected the EADS offer of 20 per cent discount in 2012 after opening of bids as violative of procedure.

NDA Rafale Deal Achieved Better Price Than Earlier Proposal: Defence Ministry
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NDA Rafale Deal Achieved Better Price Than Earlier Proposal: Defence Ministry
outlookindia.com
2019-01-18T20:20:10+05:30

The Defence Ministry on Friday dismissed as "factually inaccurate" a media report that talked of a 41 per cent increase in the price per aircraft of the 36 Rafale fighter jets from Dassault saying it had got "better price, delivery period and terms" compared to the of the UPA era proposal for purchase of 126 bare-bones aircraft.

It also asserted that the Supreme Court has not found anything adverse in the deal and the CAG has been given access to all files.

The reaction came in response to an article published in the daily "The Hindu" which said that the Modi government's decision to buy 36 Rafale jets shot up the price of each aircraft up by 41 per cent, mainly because of the deal "bypassing" mandated procedures and attributed to "Design and Development" of 13 "India Specific Enhancement" spread over 36 instead of 126 aircraft.

A response from the Defence Ministry spokesperson said that 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 which has gone through the details of pricing and commercial advantage and asserted that the apex court has not found anything "adverse" in the deal and has refused to order an investigation as sought by the petitioners.

The ministry said that the Comptroller and Auditor General (CAG) has been given access to all the files related to the deal advising to "await the report".

Referring to the media report and political parties comparing the cost of the basic aircraft of 2007 with the cost of fully-loaded aircraft in 2015, it said the cost of the basic aircraft in the 2016 deal was better than the offer of 2007.

"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 aircrafts procured in 2016 is fallacious. The author while indicating the price of ISE as 1.4 billion Euro in 2007 has failed to include the in-built escalation factor that would have worked between 2007 and 2015," said the ministry.

 Surprisingly, the ministry contended that 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 per cent higher compared to the escalated price as probably this figure does not attract as much attention as a 41.4 per cent higher price. 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.

"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," the ministry said.

It further said 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."

"The issue of dissent within the Indian Negotiated Team has also been answered by the Raksha Mantri in the Parliament, it said, adding in the highest traditions of the Civil Service, all views are aired and recorded and a collegiate decision taken after considering such opinions.

The spokesperson said the decisions on the deal were taken after due process of inter-ministerial consultation and the issue of benchmarking and the offer of "EADS to give a 20 per cent discount are related".

He said even the UPA government had rightly rejected the EADS offer of 20 per cent 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," the ministry added.

IANS

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