Unravelling the Mystery of Vicious Anti-Rafale Campaign
(20 January 2019)
Major General Mrinal Suman
Hollowness and
stridency of the anti-Rafale campaign has surprised all for its sheer
brazenness and inconsistency. The government answers one point and the critics
invent a new one to keep the pot boiling. Sample the shifting sands – due
process was not followed; price paid is much more than that of the non-deal;
number of aircraft has been reduced from the earlier 126 to 36; Ambani has been
favoured by denying orders to HAL; Ambani has no experience in manufacturing
aircraft; payments to HAL are being withheld to force engineers to quit and
join Ambani company; and so on.
Before discussing the
issue further, four facts need to be flagged here. One, Rafale’s selection cannot
be questioned as it emerged winner after gruelling technical and commercial
evaluations under the previous government. Two, the current order was placed
through a government to government deal with no middleman/agent. Three, no act of corruption or trail of slush money
has been reported. Finally, even the Supreme Court has expressed its satisfaction
with the correctness of the deal. If that be so, why this continuous baying and
unseemly mud-slinging? This write-up endeavours to unravel this mystery.
A Request for
Proposals (RFP) was issued in August 2007 for the procurement of 126 fighters –
18 to be bought in fully built up condition while the balance quantity of 108
was to be manufactured in India by the Hindustan Aeronautics Limited (HAL) under transfer of
technology. Six manufactures submitted their proposals. After extensive trials,
two platforms were found technically acceptable – Dassault’s Rafale and European
Consortium’s Eurofighter. Finally, Rafale emerged winner (L1) due to its lower
life-cycle cost and an announcement to that effect was duly made on 31 January
2012.
Shortly thereafter, negotiations commenced with
L1 in due earnest. However, even after prolonged meetings, the deal could not
be concluded. By 2014, talks had reached a total impasse with no signs of
breakthrough. It became clear that the deal was dead for all purposes. The then
Defence Minister Antony admitted so publicly. IAF was a worried force and made
its disquiet known to the new government in no uncertain terms. While on a tour
of France in April 2015, Prime Minister Narendra Modi announced India’s intent
to place an order for 36 ‘ready-to-fly’ Rafale fighter jets to meet emergent
requirements. It was to be a government to government deal and at terms better
than those offered earlier. IAF heaved a sigh of relief as it was a desperate
measure to boost its diminishing strength. After detailed negotiations,
the deal was concluded in September 2016.
No questions were raised by anyone when the
government terminated the stalled deal or when an intent to buy 36 aircraft in
fly-away condition was announced or even when the contract was concluded in
September 2016. The environment appreciated the urgency and found the
government to government deal to be the best way forward.
Reasons for Non-conclusion of the Earlier
Deal
It remains a mystery
as to why a deal so very critical to India’s defence potential could not be
concluded even after 28 months (Jan 2012 to May 2014) of intense negotiations. Nevertheless,
a number of reasons are being cited in the media – Dassault’s reservations
regarding HAL’s capability to absorb high technologies; refusal of Dassault to
stand guarantee for the aircraft manufactured by HAL; and requirement of excessive
man-hours by HAL, thereby escalating cost and delaying production schedule.
In addition, in early February 2014, the then Defence
Minister Antony dropped a bomb by announcing, “There are complaints about the procedure
of calculating the Life Cycle Cost and that issue is not yet settled”. He
further added that the government had no funds to buy the fighters. Both the
reasons were bizarre, to say the least. Rafale was declared L1 in January 2012
and no one questioned the methodology at that time. Why this belated reaction? Why
was the farce of finalising contractual provisions (including transfer of
technology to HAL) continued with Rafale for two years when the very basis of
selecting Rafale was suspect? As regards non-availability of funds, no procurement
proposal is ever initiated without assured availability of funds. Financial
support is a pre-requisite. One wonders as to how could a sovereign nation
carry on negotiations with a foreign defence manufacturer without committed
funds. Was it just a sham exercise?
The latest press reports reveal that considerable pressure was
being exerted by the losing competitor Eurofighter. Reportedly, a strategy
paper for its promotion has been recovered that indicates involvement of Christian
Michel and Guido Haschke. Many fear that the fighter deal was scuttled by
vested interests who did not want India to buy Rafales. They wanted the case to
be aborted and fresh bids invited. It is time-tested ploy used by many losing
competitors.
As a last-ditch effort, Eurofighter
submitted a fresh unsolicited bid to the Modi government on 04 July 2014,
reducing its earlier commercial quote by 20 percent, making it lower than that
of Rafale. However, there was no way a revised bid could be accepted by the
government. The Defence Procurement Procedure does not permit it at all and
rightly so. No deal can ever be finalised if the competing parties are allowed
to keep underbidding each other after the commercial quotes are opened.
The Probity Angle
In early 2007, in an article by this author in the Indian Defence Review, the contours of
the vulnerability map of India’s defence procurement procedure had been
identified. This sort of mapping is considered crucial to identify stages where
the system could be subjected to external influences and to indicate the degree
of such vulnerability.
Here is a summary of the findings. Stages where the procedure
was found to be vulnerable to unfair manipulation included initiation of
proposal and allocation of priority; formulation of qualitative requirements;
field trials; staff evaluation; determination of lowest bidder; acceptance and
implementation of offset obligations; and grant of final approval. For various
stages, degree of vulnerability to corruption was graded as least, moderate,
considerable and maximum. Most revealingly, ‘grant of final approval’ was the
only stage that got graded ‘maximum’, implying that it was most vulnerable to
corrupt practices. Let me elaborate.
After
concluding negotiations with L1, the Contract Negotiation Committee submits its
report to the Defence Minister for acceptance by the competent financial
authority (CFA). No deal can be concluded unless CFA accords sanction. CFA can
hold-up a proposal indefinitely or raise incessant queries. He can even let a
case lapse. Having gone through agonizing technical and commercial evaluations,
the stakes for L1 are exceedingly high at this stage. The deal is within his
reach. Consequently, he is extremely susceptible to arm-twisting and can be
coerced to shell out bribe money. Environment is aware that huge amounts have
to be paid to ‘buy’ CFA sanction and
hence most vendors factor it in their initial commercial bid itself. Such
bribes carry the taxonomy of ‘facilitation money’.
The fighter deal followed a similar path. Rafale was declared
L1 on 31 January 2012. It is apparent
that the real reason for not signing the contract was either Dassault’s
failure/refusal to oblige or gratuitous intervention by the Eurofighter. Hence,
it was belatedly ‘discovered’ that the methodology adopted to determine L1
needed a relook, that too after discussing contractual minutiae with Rafale for
over two years, Can there be a more ludicrous excuse to stall the case! Interestingly,
the Eurofighter is already facing allegations of misdemeanour in its sales to
many other countries.
Timing of the Criticism
As stated earlier, there was no criticism when
Modi announced India’s intent to buy 36 aircraft nor when the deal was
concluded in September 2016. On the contrary, many observers called it a
masterstroke to meet emergent requirements of the Air Force. Suddenly, in November 2017, the deal came under flak and was termed a scam for non-adherence
to procedure, escalated cost and promotion of a private company at the cost of
HAL.
Timing of the anti-Rafale campaign is
revealing. Two related developments need to be recounted here. First, there
were reports in a section of media that the Air Force was considering
procurement of two more squadrons of Rafale in a fly-away condition as an
interim measure as the fresh case for 110 fighters would have taken
unacceptably long to fructify. Incidentally, both Rafale and Eurofighter figure
in the list of six vendors who have responded to the new Request for
Information (RFI) wherein 15 percent fighters are to be bought in fully built condition
and the balance to be indigenously manufactured through a Strategic Partner.
Secondly and more importantly, in
January 2017, the Indian Navy issued a RFI for purchasing approximately 57
multi-role fighters for operation from aircraft carriers. It was hinted that
the contract could grow bigger with additional procurements through the option
clause. Four manufacturers have shown interest; Rafale is reported to be one of
them. For India, it makes sense to opt for Rafale, provided it emerges the
lowest technically acceptable bidder. Synergy of operations and commonality of
infra-structural facilities will prove immensely beneficial.
The anti-Rafale campaign has become more strident of late. The
sole aim is to prevent Rafale from bagging further orders. Some planted
articles have gone to ridiculous limits, questioning suitability of Rafale for
India. According to some presstitutes, Rafale is the wrong choice. Rafale
was invited to participate in trials in August 2007 – wonder why it has taken these
‘learned people’ over a decade to get ‘enlightened’ about the unsuitability of
Rafale!
In Conclusion
Let us look at some interesting aspects of the
whole conundrum. Rafale is an excellent fighter aircraft. It has proved its
mettle in wars. The Air Force selected it after gruelling competitive trials in
which it emerged the winner. India is purchasing it duly configured with
latest add-ons as per its operational requirements. Purchase of two squadrons
in a fly away condition was the quickest way to cover critical gaps in India’s
air capabilities till a fresh case fructifies. The deal was a government to
government contract with no middleman and decidedly on terms more favourable to
India than those offered in the aborted case. There is no slush money.
Yet the criticism goes on unabated, albeit with newer
allegations concocted at regular periodicity. Even when an allegation is duly
rebutted with facts, the critics decline to debate the replies but keep harping
on newer allegations. The sole aim is to keep throwing mud, in the fond hope
that some of it would stick. Subjective stories are planted by the
purchased media to raise questions about the sanctity of the procedure
followed. Some of the media persons start casting aspersions on the quality of
the system being procured. How low can one stoop!
Corruption must be exposed but it is anti-national to stall
modernisation of the armed forces by resorting to witch-hunting with wild
accusations to settle political scores. The decision-makers (political leaders,
bureaucrats and the military brass) get deterred by such a scenario. They consider it safer not to
conclude any defence contract during their tenure lest they get hounded later
in life for the decisions taken in good faith. Defence potential of the country
should never be allowed to fall prey to political slugfest. That shall prove
perilous.*****
