Did Modi unilaterally also fix Rafale price in April 2015?

Joining the dots in information in the public domain on the sequence of events, clearly indicates that the Prime Minister Narendra Modi not only struck the deal but also decided the Rafale price on his own.

Did Modi unilaterally also fix Rafale price in April 2015?

Information in the public domain on the sequence of events, indicate that the Prime Minister Narendra Modi not only struck the deal but also decided the Rafale price on his own.

The sequence of events after Prime Minister Narendra Modi’s announcement in April 2015 to purchase 36 Rafale in flyaway condition from France indicates that he not only unilaterally announced the deal but also decided the price of the aircraft on his own. And all this seemed to have been designed and intended to favour a fledgling private sector Indian defence company. No prizes for guessing which one.

To reach this conclusion, all we tried to do is join the dots in the information that is already in the public domain.

Remember, that in May 2016, the then Defence Minister, Manohar Parikkar, had told the media that the “Negotiations on the terms and conditions of the supply of 36 `Rafale’ fighter aircraft, including those related to total cost, actual delivery timelines and guarantee period, have not been concluded”.

In the same month, an article published ( May 4, 2016) by a corporate intelligence news portal, Intelligence Online, read: “Before the end of the spring, the Indian defence minister could resolve the final issue before signing a Euros 7.8 billion order for 36 Dassault-built Rafale (emphasis added) fighter aircraft. The Indian military is under intense pressure to conclude the deal by the leaders of the ruling Bharatiya Janata Party (BJP), the office of the Prime Minister Narendra Modi and the National Security Advisor Ajit Doval, all of whom are amazingly keen on the French deal. But the French companies on Team Rafale have been going all out to woo the ruling party.”

There are two key issues here. One is the price of the 36 aircraft – $7.8 billion. Is it a mere coincidence that the final price – as is now openly being discussed – is virtually the same? The second, if the Intelligence Online’s report has any basis, what is the role of the BJP leadership, the PM and even the NSA, Mr. Doval, in a defence deal and what can explain their support for Anil Ambani’s role in the deal?

The problem in Anil Ambani’s fledgling defence venture being given a role in the Rafale deal was Dassault’s reluctance. The “solution” was to have Anil Ambani have a role not in Rafale manufacture but in other Dassault projects. In September 2015, financial daily Economic Times, quoting Defence Ministry sources, had reported that on the offset, obligations will not be on the defence sector, but on civilian projects.

“The logjam has been broken with a broad agreement on hybrid offsets in which French investments in other Make in India projects will also be considered as meeting offset obligations. The investments in India could include civilian projects that companies like Dassault and Thales are pursuing. One of the Make in India investments is likely to be in the manufacturing of components of the French Falcon executive jets as well as in the smart city projects of Thales.”

If we read Dassault’s reservations to partner with the Indian government-recommended private company due to its financial capabilities and why it chose to invest only in a civilian project, things get as clear as daylight.

Another reliable source gives a clearer picture on how Modi’s Rafale deal was designed and intended to help one struggling Indian businessman.

In his critically acclaimed and well-researched book – A Feast of Vultures – published two months prior to India signing the Inter Government Agreement (IGA) with France, investigative journalist Josy Joseph narrates a coffee shop conversation that he had with a diplomat in the chapter ‘Insiders and the Outlaws’.

“I answered the call on my phone. The diplomat sounded frantic; it was important that we meet immediately, she said. It was evening – the most chaotic hours in a newspaper office – and I was rushing to meet a deadline. Still, I paused to wonder about her tone. This was not her way. Till then, she had always contacted me days in advance, and we had met for leisurely lunches. The next morning, I stopped by at a coffee shop to meet her. She was already waiting. She started off without the usual pleasantries: ‘You know, we are confused. Some people in the government and the party are so enthusiastically backing the deal, we don’t know what they are expecting in return.’ Her country was at a very advanced stage of negotiating a multi-billion-dollar deal between the two governments, for which the supplies were to come from private companies. The surprise official announcement of the deal during a summit meeting between the Indian prime minister and his counterpart had set in motion hectic activity. A host of players got into the act: an Indian billionaire who was hoping to do a part of the deal, a high-profile PR executive and various other outsiders. However, what was surprising to the foreign country, and my diplomat acquaintance, was the over enthusiasm displayed by a couple of key people. One of these was an important functionary of the party in power and was known to enjoy the prime minister’s confidence, and the other was a retired government official who had been appointed by the new government to an important post. The party functionary had voluntarily offered the diplomat’s colleagues all-out support for the deal. ‘He is very enthusiastically backing the deal, is available to us any time of the day and is following the deal very closely,’ she said. The government functionary, meanwhile, insisted on discussing the deal during a visit to the other country. ‘We were surprised because it was not his remit. Of course, we were happy,’ she admitted.”

Though Josy has not mentioned any name, nationality or any other details of the individuals involved, there are clear signals for those following the Rafale deal about which defence deal and who all the diplomat was referring to. According to sources, she was speaking about the Rafale deal, and the people she mentioned were ruling Bharatiya Janata Party (BJP) president Amit Shah, National Security Advisor Ajit Doval and public relations man Suhel Seth. If this is true, why was Shah so keen to close a defence deal? What was Doval’s interest? Were they and Seth lobbying for Anil Ambani and his group in which Dassault originally showed no interest?

On many previous occasions, it has been pointed out that the then Defence Minister Manohar Parrikar was not a party to the Rafale decision, and he has repeatedly also clarified that the decision was taken by Modi alone.

In an interview on April 13, 2015, Parrikar had stated that the decision to purchase 36 Rafale in fly away condition from France was “the decision of a leader who knows what is leadership and he has taken a bold decision” clearly signalling that he had no role in it.

In another interview a couple of days after Modi’s announcement from France, Parrikar said, “The decision to purchase 36 aircraft were probably the outcome of the discussion” between Prime Minister Modi and French president Francois Hollande.

The impact of this decision of scrapping the global tender for 126 fighters for only 36, without consulting the Indian Air Force is now well-known. In October 2015, quoting senior Indian Air Force (IAF) officials, The Hindu wrote: “The IAF says the numbers are not enough, and many in the force also foresee the possibility of the two Rafale squadrons ending up being a heavy burden on the budget of the Air Force. The very announcement of the 36 Rafale purchase in Paris was almost abrupt, and the Air Force was left with a fait accompli, according to several sources.” It quoted another senior IAF official who was a part of the formulation of the earlier proposal for 126 aircraft saying, “The projection was for 126 fighters, the present number was thrust upon the IAF”.

The Hindu report further says: “Another source said that the government did not “pay much attention to the customer’s (IAF) requirements.” He said the move could have long term repercussions—on the mix of fighters IAF would have for decades to come, expenses involved in maintaining the fleet, and ambitions about developing an indigenous aerospace industrial base.”

The same article quoted the then Chief of Air Staff, Air Chief Marshal Arup Raha: “I cannot say I only want Rafale. I want the capability of Rafale-type aircraft. So, the government will have a look at it and based on urgency and the type of contract signed with Dassault Aviation, further decisions may be taken by the government.”

This indicates that the Air Force chief had not much of a say in the Modi government’s decision and he was not even aware of the details of the contract India signed with France.

Former IAF chief Air Chief Marshal P V Naik was quoted as saying “A smaller number means that after some time they will have to phase out the fighter – there is no interchangeability of spares and equipment with the rest of the fleet and having a small number like 36 has a lot of disadvantages”, showing IAF was not properly consulted by Modi government before Modi’s announcement.

Defence analyst, retired Major General of the Indian Army and founder member of the Defence Planning Staff (now Integrated Defence Staff), Ashok K Mehta, wrote “The Government truncating the contract from 126 to 36 is the real scandal. Bofors is chicken-feed compared to Rafale.” He goes on to add: “Only National Security Advisor Ajit Doval was involved in this decision. The then Defence Minister Manohar Parrikar was brought in at the 11th hour. Even Air Chief Marshal Arup Raha was merely consulted.” [emphasis added].

Mehta continues “Due process was violated. A serving CAG official and a former Secretary, Defence Finance explained to me the impropriety of Modi’s provisional contractual announcement in Paris. The 126 Rafale contract under negotiation was guillotined and the Eurofighter Typhoon was excluded from the new contract, making the single-vendor purchase non-competitive. Legal and technical issues are riddled with this contract.”

When it comes to the ouster of public sector HAL from the deal, an article The Hindu published in September 2015 was the first one to have suggested the reason.

Quoting Defence Ministry sources, the article said, “One official in the know of things said the French side had several concerns that could play out as both sides sit down to carry out specific negotiations. Key among them is their questions about what role a major Indian private conglomerate would play in the deal. Due diligence done on the group, recommended strongly by a section in the government, has thrown up questions over its financial capabilities.”

It went on: “The two sides could also find the negotiations running into serious trouble over the offset clause for the deal. While the MMRCA (Medium Multi-Role Combat Aircraft) deal — the precursor to the present Rafale deal — had 50 per cent offset, and most of its fighters were to be assembled in India, the deal under negotiation is for off-the-shelf purchase of 36 fighters from France.”

We don’t have to struggle to guess the name of the “major Indian private conglomerate” with questionable financial capabilities “strongly recommended by a section in the government.”

Now for the price of the aircraft, over which there has been a lot of secrecy.

All these dots, once joined, clearly indicate that Modi not only announced the deal, but unilaterally decided the price, too, without prior approval from the relevant authorities. And if the reports are correct, with BJP president Amit Shah and NSA Ajit Doval, playing an extra constitutional role in this deal.

So, the big question here is: did the Modi government misinform the Supreme Court to cover-up its involvement? And did the Court, without verifying the facts, write a judgment absolving the government functionaries involved thereby severely damaging its own reputation?

Ravi Nair broke the story of the Rafale scam and is writing a book on the subject. The views expressed are personal.

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