Indian Defence Review

Successful first guided firing of Meteor from Rafale

3) No Transfer of Technology: -Transfer of Technology – to an ordinary citizen, this term gives an impression that the seller country will transfer the technology to the client country. In this case, France will transfer the technology of Rafale aircraft (with its subsystems, engine, radar, weaponry etc) to India. This is a misunderstanding of this term. No country, which has developed a cutting edge state of the art aircraft through years of research and after spending billions of dollar, would transfer the technology to the client for a fraction of money.

French government informed the French parliament that the total cost of the Rafale programme was approximately €46 billion. It involved the R&D cost and cost of the 286 planes for French forces. More than half of €46 bn was spent to develop the fighter. Why would French transfer that to any country for just €7.87 Bn? In Rafale deal, the ToT went off the table the moment we decided to procure 36 Rafales in fly-away condition from France.

The fact of the matter is that no OEM does ToT of its key components like radar, engine, avionics, weaponry, sensors etc. Had it been happening, we would have become self-reliant in Fighter Aircraft field when HAL started assembling Mig-21s in 1960 or Su-30MKIs in the early 2000s.

HAL has been producing planes for the last 60 years but unfortunately could not obtain Final Operational Clearance (FOC) for Tejas till now. It first flew on Jan 4, 2001 and obtained the Initial Operational Clearance (IOC) on 10th Jan 2011, HAL is still struggling with the FOC. IAF inducted Tejas with IOC standard in No. 45 Squadron on 1st July 2016. No. 45 Squadron was given just 4 Tejas and HAL promised to deliver 8 Tejas fighters within a year but it could not do so even in 2 years! So much for the experience it gained in the last 60 years.

Surprisingly no such hue-cry was there when we concluded such Government to Government deals in the past with the USA for planes like C17, C130, P8 etc. Because HAL and the government both knew that there would be no ToT or licence production for such a small number of planes.

4) HAL’s Exit and Reliance’s Entry: – Social media sites are full of angry netizens. They are angry because they are told that HAL has been deliberately thrown out of the deal and Reliance was brought in, thus depriving HAL of a business opportunity of around Rs 30,000 crore. Netizens feel that a company with zero experience has replaced a company with over 60 years of experience in the Aviation sector and the one that has produced Mig-21, Tejas, Su-30 MKI etc.

Did it really happen?

In the MMRCA programme (for 126 Rafales), HAL was a part of the GoI’s Contract Negotiation Committee because it was envisaged that HAL will produce 108 Rafales, while 18 rafales will come from France in fly-away condition. But there were serious challenges in their path. HAL and Dassault were not able to conclude work share agreement for a host of reasons – delivery schedule of HAL made Rafales, quality control, almost 3 times man-hour required by HAL to produce one Rafale and escalated the cost of HAL made Rafales.

But, when the decision to procure 36 planes from France in fly away conditionwas taken, the possibility of license production of Rafale in India ceased to exist. And with that, ceased the HAL’s involvement in the deal.

Now the only way for HAL to stay involved in Rafale deal was through the offset clause.

Coming to Offset clause of Rs 30,000 Crore.  An IAF officer recently explained the mechanism of fulfilling Offset Clause in fighter aircrafts. Different components of a fighter aircraft are made by different companies. Manufacturer of the fighter procure those components and produce the fighter.  Lockheed Martin uses GE engine for F16 and it uses Pratt and Whitney engine for its F-22. Boeing uses GE engine for F-18. Tejas also uses the GE-404 engine.

Rafale has Snecma’s M88 engine, Thales’ RBE2 AESA radar and weaponry from MBDA. Under the €7.87 Bn deal, GoI has signed contracts with all these companies, who are bound to fulfil their offset clause of 50% by themselves. It is not just Dassault, who would invest €3.9 Bn back in India. Dassault share was of the tune of Rs 6500 Crore and it has tie ups with a number of companies (Mahindra, Samtel, BTSL Automotive India, Defsys Solutions, Maini Aerospace, Kinetic India and Reliance) to fulfil the offset clause. Even Thales has also tied up with Reliance to get few components manufactured. Times of India just reported that DRAL (Dassault Reliance Aerospace Ltd) has started making nose cones of Flacon aircraft of Dassault and will start deliveries starting next year.

Contrary to the popular belief, it is not Reliance who has got the lion’s share of offset clause but the DRDO. To fulfil its offset obligation of €1 Bn, Snecma has tied up with DRDO to revive and certify indigenous Kaveri engine. Once done, it will have a tremendous effect on our zeal to become self-reliant in the military aviation field. Kaveri will not only power Tejas Mk.-II but will become the bed rock for future generations of engines. We will not need GE engines from the United States to fly our indigenous fighters.

Reliance’s selection by Dassault caused quite a stir in Indian media and political circles. Allegedly Reliance group’s company involved in the offset business came into existence few days before the announcement of 36 Rafales. While the game of allegations and clarifications was in full swing, a statement from former President of France Francois Hollande (who was the President of France when the announcement of 36 Rafales was made) complicated the situation even more. Hollande said that Dassault had no choice but to tie up with reliance as Reliance was proposed by the Indian Government. Both Indian and French Governments issued rebuttal by saying that neither Government had any role in selecting Offset partner and it was totally up to respective French company to select their Indian Counterpart.

Hollande’s claim is not verifiable. But typical to media trials, the burden of proof is on the Government.

5) Violation of Defence Procurement Procedure (DPP): – The memorandum given to CAG lists down the points where DPP was violated in Rafale deal. It says: –

“No mandatory prior approval of ‘Cabinet Committee on Security’ was taken before announcing the purchase of 36 Rafale aircraft on 10th April, 2015. … Mandatory requirement of DPP for ‘Price Discovery’ through the instrumentalities of ‘Contract Negotiation Committee’ (CNC) and ‘Price Negotiation Committee’ (PNC) were not followed…. Not only this, the decision of Modi in proceeding to announce the purchase of 36 Rafale ‘off-the-shelf’ on April 10, 2015, when an international tender was already under negotiation as also the subsequent cancellation of the international tender on 24th June 2015, is clearly violative of the DPP.”

But the DPP 2013 does not restrict the government to make the announcement (not signing the contract). The announcement was made to procure 36 Rafales under a Government to Government deal. It was assured by the French that 36 Rafale deal would be at better price, terms and condition than the 126 Rafale deal. This was possible because no ToT and Licence production was to be involved in 36 Rafale deal. The due procedure was then followed, tough negotiation happened and the Cabinet Committee on Security approved the deal in Aug 2016.

One may argue why we did not engage L2 bidder – Eurofighter Typoon when negotiations with Dassault were not making much headway and Typoon had offered 20% discount on their quoted price. UPA rejected Eurofighter’s offer because the DPP has no provision to accept such revised bids.

So far there appears to be no major violation of DPP but if there was any, CAG will bring that to the public domain.

Conclusion

Daal main itna kala hai nahi, jitna dhoondh ja raha hai. The deal appears to have been negotiated well, in favour of the exchequer and the end user. Deliveries will be at a faster pace. An advanced version of Rafale with come with thorough training and maintenance agreements. These Rafales will not be what we started with in 2007 but a much deadlier machine. But turning it to a Bofor’s like scandal will have an adverse effect on nation’s defence preparedness. If CAG finds some procedural anomaly, then the proper legal procedure should be followed. But IAF should not be made to make do with just 36 Rafales. Investing so much money for just 2 Squadrons would be a waste of resources in the future.

Ambala and Hasimara Air Force Stations are being prepared to host Rafale. Rs 220 Crore has been sanctioned to upgrade the Infrastructure of these bases. Bases will have Simulator based training facilities and ammunition/spare storage facilities. These two bases can easily handle 1 more squadron each. This would save us a lot of money (in comparison with the cost involved in procuring any other type of aircraft to make up the number), help the IAF in minimizing the number of type of aircrafts in its fleet (Currently IAF is a sort of a museum having Mig21, Mig27, Mig 29, Mirage, Jaguar, Su-30 MKI, Tejas. Rafale would be a new addition to this verity) and make IAF’s Rafale fleet logistically, financially and operational a potent fighter. The Government must take strong, correct and may be an unpopular decision but it should be in the best interest of the IAF and Our Country.