Whom Does Rafale Deal Really Sting?

By Inderjit Badhwar

In October 2018, I wrote an editorial for India Legal in which I observed that what started off as political sparring between the Opposition and the Modi government over the Rafale aircraft deal could well turn into the Bofors-type knockdown and drag-out which brought the Rajiv Gandhi government to its knees. I tempered this, though, with some caution: “While I am not predicting that this defence arrangement, which has raised alarms of crony capitalism and shady quid-pro-quos, may be the ultimate spoke in the wheels of the Modi juggernaut, there is scarcely any doubt that its shadow will loom over the upcoming general election in 2019.”

We were not too far off the mark. At that time, l’affaire Rafale had gained national currency because the Supreme Court had examined a petition questioning the bona fides of the transaction. While the apex legal body refused to delve into the price and related technical specifications of the contract, or to issue notice to the government in the matter, it nonetheless asked the centre to provide details of the decision-making process in a sealed cover. The petition had sought a directive from the apex court asking the centre to reveal details of the Rafale deal along with price comparisons.

The government had sought dismissal of the PILs filed in the case, citing politics as the motive behind the challenge. Attorney General KK Venugopal, stressing national security as the main reason to preserve secrecy, argued that the Court was being misused in order to gain political benefit for the forthcoming elections.

Subsequently, the Supreme Court gave a clean chit to the government even as critics howled that all relevant documents and notations had not been provided to the Court and that the CAG report referred to by the judges had not even been finalised. And now that the CAG report has been tabled, it has opened up another can of worms for the Modi government in which pricing, performance and guarantees have become major issues. While politicians trade charges on specifics, one macro issue that fails to receive adequate attention is that Modi’s most attractive promise during his tenure—Make In India (the initiative for converting this nation into an attractive international manufacturing hub)—has taken a public beating.

In the midst of the current din in the media which has left most people confused, we reproduce from earlier stories written in India Legal a synopsis and timeline in order to make some sense out of the mess:

• The new Rafale deal is a defence agreement between the governments of India and France for the purchase of 36 Rafale fighter aircraft in fly-away condition. It is part of the upgrading process of Indian Air Force equipment.
• Specifically, petitions by two lawyers had requested a Court-monitored investigation into the Rs 59,000-crore deal for 36 fighters from France’s Dassault. The Rafale deal was announced in 2015 after Prime Minister Narendra Modi’s talks in Paris with then French President Francois Hollande.
• The Opposition has accused the government of going for a not-so-favourable contract to benefit Anil Ambani. Both the government and the business tycoon have denied the charge. The Rafale controversy soared sharply after Hollande’s comment in an interview in France in September 2017 that his government was virtually arm-twisted into the selection of Anil Ambani’s start-up, Reliance Defence, as India offset partner for Dassault. As part of the offset clause, Dassault has to ensure that business worth at least half the amount—Rs 30,000 crore—is generated in India.
• Several months before Hollande’s statement, and well before this controversy hit the headlines, an India Legal editorial, painting on a larger but related canvas, called Prime Minister Modi’s “Make in India” initiative “a bit of a flop”. The editorial cited the new Rafale deal as a prime example of bad tidings for India’s attempts at becoming a self-sufficient manufacturer of armaments for its defence.
• The defence sector, anointed as the lead agency in what could have been a laudable scheme, “envisaged to galvanise manufacturing, continues to languish at the altar of procedural delays and has failed to demonstrate its true potential”. (This is not criticism from some opposition party or language from the recent petition before the Supreme Court, but rather, the words of India’s own Ministry of Defence which has written a stinging indictment of the lethargy that so often overtakes and stymies otherwise praiseworthy enterprise.)
• In particular, the report, addressed to the prime minister, says that the “desired level of indigenization and self-reliance in defence manufacturing research and development and timely equipping of Service are some of the areas where the situation continues to be far from satisfactory”.
• Perhaps the prime minister himself has something to answer for on this subject. India has hardly been transformed into a “come hither” nation during the last three years of Narendra Modi’s governance. The ease of doing business, notwithstanding official statistics, is no easier than before. The corruption index, high taxation, countervailing duties and protectionism remain high. There is a loss of confidence in the banking system. Consumer buying has ebbed since demonetisation. New investments are not even worth talking about and Chinese goods are literally swamping the marketplace.
• At a sectoral level—defence—the continuing Rafale purchase for the Air Force appears to be eating into Modi’s grandiloquent design. For more than two decades, defence experts have been predicting a virtual existential crisis for the Indian Air Force. Its frontline fighter strength has inexorably depleted, with the inevitable phase-out of obsolescent aircraft, scientifically predicted according to their age, airframe fatigue, outmoded systems and laughable armament avionics. The much ballyhooed “two-front war” would be nothing short of a disaster under these circumstances.
• The Rafale deal by the Modi government drastically reduced the IAF’s requirement with no advantage to Indian industry. The “Make in India” bombast was defeated by the same person who coined the phrase!

The points elaborated below explain the Rafale controversy in a condensed but comprehensive chronological perspective:

1. More than 20 years ago, IAF planners began identifying options to keep their strength at the sanctioned 42 combat squadron level, specifically to replace the 20 squadrons of MiG-21 variants plus 10 squadrons of MiG-23s/27s which constituted the bulk of the IAF combat force, with next-generation multi-role fighters.
2. In fact, this situation was well understood much earlier, when in 1983, the Government of India constituted the Aeronautical Development Agency (ADA) to manage, fund and monitor progress of the light combat aircraft (LCA) to be indigenously designed, developed and manufactured in India to meet the IAF’s expected MiG-21/27 replacement requirements from the late 1990s.
3. This programme has tragically floundered for over three decades. The handful of Tejas LCA Mark-IIs produced by HAL for the IAF have fundamental flaws in their essential design due to inexperienced engineers at ADA and inadequacy of production infrastructure at HAL, Bengaluru. In consequence, instead of some 200+ LCAs serving with the IAF already, there is today just one LCA squadron under raising, equipped with just a handful of LCAs which too have doubtful operational capability.
4. The possibility of this situation had alarmed IAF planners in the late 1990s when the government was urged to hedge against continued delays in the LCA programme and efforts made to induct 126 Mirage 2000s to supplement the 50-odd Mirage 2000s already in IAF service, which were considered the most effective multirole fighters extant. This requirement was accepted by the government and was the basis for formalisation of the “Medium Multi-Role Combat Aircraft” programme, with the IAF shortlisting four fighter aircraft types that best met its re­quirement. These were the Dassault Mirage 2000, Lockheed Martin F-16, Saab Gripen and MiG-29M (later re-numbered MiG-35).
5. The initial request for information (RFI) was sent to the four companies in 2004 but, inexplicably, the follow-on request for proposal (RFP) was delayed till 2007. When it was finally made, amazingly, it included far heavier, complex and very expensive aircraft types such as the Eurofighter Typhoon, Boeing F-18 Super Hornet and Dassault Rafale.
6. This was considered by experts as being most unprofessional since the very purpose of having a “medium” multi-role fighter to replace the MiG-21/27s (by implication also affordable in large numbers) was now completely defeated. The MMRCA competition became farcical as, even though six different fighter types were strenuously evaluated, and included flight-testing and armament-firing, the shortlisted types were not only 50 percent heavier than the MMRCA specifications, but at least twice as expensive to procure and multiple times more expensive to operate. As a wag put it: “Some termed this as comparing apples with pineapples!” Inevitably, the Dassault Rafale was chosen in January 2012, but the contract was not formalised for its procurement and licence production in India (a total of 126 aircraft) floundered till the change of government in 2014. Why?
7. The new prime minister’s flash announcement while visiting Paris in mid-2015, ordering 36 Rafales directly from France with no follow-on transfer of technology or production in India, took the community by surprise as this not only drastically reduced the IAF’s requirement (from 126 aircraft) but gained absolutely no advantage for Indian industry and the “Make in India” bombast was defeated by the very person who had coined the phrase! Technically too, the MMRCA tender remained “live” and the other contender (Eurofighter) was still in the running. There could have been an international legal dogfight over this but the losers did not choose to pursue it.
8. The situation in 2019 is very dark for the Indian Air Force and the only silver lining could be acceptance of its plea to select a single-engine fighter and procure/build this type in India in sufficient numbers to arrest the drastic decline of the combat fleet. The handful of Rafales will only equip two squadrons by 2021, while the blighted LCA will equip perhaps another two by the same time. By 2021, however, the IAF will have lost all its remaining 11 squadrons of MiG-21/27s, leaving the service “on a par” with its key adversary, the Pakistan Air Force, which will have about the same number of combat squadrons.
9. With China now wielding its next-generation fighters in Tibet and the situation in Kashmir remaining explosive, it is imperative that the government pulls out all stops and rapidly proceeds with the process begun in 2016—to identify a suitable lighter fighter which is not only of the next generation but can be procured in large numbers at affordable cost and within the next three years.

The sad irony is that instead of “making in India”, the country is today the world’s largest single importer of arms. And despite this, it cannot even meet the real defence needs of its air force.