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Rafale Fighter Jet Deal Controversy

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RAFALE DEAL CONTROVERSY - law insider

By Nishita Makkar

Published on : September 5, 2021 at 13:13 IST

Introduction

On November 14th, 2018, the Supreme Court of India rejected all the petitions related to Rafale Jet deals. The Apex court had given a clean chit to BJP Government and Prime Minister Narendra Modi on the allegations imposed by the opposition in the India-France Government deal where India had procured 36 Rafale Fighter jets from France. The deal was made by Prime Minister Narendra Modi during his visit to Paris in April 2015.

But the beginning of the deal has been evident from year 2007 when UPA government released tenders for 126 fighters, based on the demand by Indian Force. The following deal was opposed and criticized by the government on bases of allegations of price escalation as well as favoritism by the BJP government[1].

The controversy was also brought up in the Parliament by Congress leader Mr. Rahul Gandhi which was defended by Finance Minister Ms. Nirmala Sitharaman. After going through all the struggles and controversies, India received its first Rafale Jet in a ceremony in France attended by Indian Defence Minister Mr. Rajnath Singh in October 2019.

How was the deal sealed? – The Whole Story

The origin of the deal lies in the Indian MMRCA competition, a multi-billion dollar contract to supply 126 multi-role combat aircraft to the Indian Air Force (IAF) in 2012. According to the deal, first 18 aircraft were to be supplied by Dassault Aviation fully built and remaining 108 were to be made under license by Hindustan Aeronautics Limited (HAL). But there were disagreements regarding quality and warranty between Dassault and HAL[2]. In January 2014, it was reported that the cost of the deal had escalated to $30 billion (Rs. 1,86,000 crore). Due to this, the deal was not signed in the year 2013-14 due to budget problems.

In 2014, National Democratic Alliance led by Bhartiya Janata Party came to power. Due to disagreements prevailing the deal, Defence minister Manohar Parrikar advised to by Su-30MKI alternatively but refused by France Air Chief Marshal. Then in 2015 the Rafael deal came to edge of cancellation.

But during official visit to France in April 2015, Prime Minister Narendra Modi announced that India will acquire 36 fully built Rafale, citing “critical operational necessity” and informed the Rajya Sabha. In January 2016, India and France signed a memorandum of understanding (MOU), of those 36 jets after finalizing the financial terms.

 The agreement included a 50% “offset clause”, which required the companies involved in the agreement- primarily Dassault, Thales, Safran and MBDA to invest 50% of the contract value back to India, with 30% of the total reserved for the Defence Research Organisation (DRDO).

On October 3, 2016, The Reliance Group and Dassault Aviation issued a joint statement announcing the creation of a 51:49 joint venture named Dassault Reliance Aerospace Limited. The joint venture was to manufacture components for Legacy Falcon 2000 series of jets such as the nose, cockpit and doors at DRAL facility in Nagpur starting from January 2018.

What were the allegations made by the Opposition on the deal?

The deal had been in a controversy from the date it was made. There were many allegations made on the Central Government because of the Rafael Deal. The Government was sued for corruption in the deal. The two main allegations are discussed below.

  • Price Escalation:

Just after the day of signing of IGA between France and India, the Congress spokesperson, Manish Tewari demanded to make the details of the deal public. Moreover, he also questioned about the escalation of price from Rs. 715 crore to Rs. 1600 crore. Also, the Congress leader Randeep Surjewala alleged the BJP government for advancing corruption in the deal as the price escalated was even more than 100%.

To this Defence Minister Ms. Nirmala Sitharaman defended the government by negating any type of procedural wrong-doing and also stated that everything was done after Cabinet Committee approval. Air Chief Marshal Birender Singh Dhanoa as well as French government officials also rejected the allegations so made.

It was said that the proposal now was far more beneficial because of better maintainance and weapons package including provisions for training and better facilities etc.

  • Allegations of Favouritism:

Other main allegation by Congress leader Randeep Surjewala was on the presence of Anil Ambani in France during the Narender Modi’s announcement to acquire 36 fully built aircraft. Also, the government approvals were not taken before establishing Joint-Venture between Dassault Aviation and Reliance Defence Limited. Moreover, Congress Vice-President Rahul Gandhi criticized the government to dropping the manufacture by Hindustan Aeronatics Limited which is state-owned and to give it to the privately-owned Reliance Defence Limted.

As an answer to these, the Reliance Defence Limited released a statement that Anil Ambani was present as a member Indo-French CEO Forum and no government approvals are required for 49% of foreign investments as per the law.

Also, Defence Minister Ms. Nirmala Sitharaman added that the transfer of technology to HAL would not be economically feasible. And there was no requirement of government permissions for joint-venture of two private companies.

Even a defensive statement was made by the French-government saying that contracts would be handed by four companies including Dassault and 500 companies would benefit in total.

Hence, these were the allegations made by the opposition on the deal and as a result defended by the both the governments as well as Reliance Defense Limited.

What are the various controversies related to Rafale Deal?

The Rafale controversies heightened up until Supreme Court gave a clean chit to the government and found no traces of irregularities and corruption in the process. At different times, different matters relating to the deal were taken up by the opposition in the parliament as well as election campaigns.

As in 2017, during Gujarat Legislative Assembly Election, Rahul Gandhi raised the issue against the BJP government and alleged for the same reasons mentioned above. To which Manohar Parrikar justified the costs saying that there was delay in the acquisition by creating uncertainty over the lowest bidder was made by the predecessor A.K. Antony of the United Progressive Alliance Government. Also, the Rafales were brought with various facilities to meet the critical necessity of the Indian Air Force.

Then, in Budget Session 2018, opposition demanded the details of the deal to be made public by the government which was answered by Ms. Nirmala Sitharaman stating that the details were classified under the security agreement signed by Indian and French governments in 2008 only under UPA government itself. The Parliament has been given approximation of value of the deal and revealing item-wise cost would be against the national security of the country and violative of 2008 agreement. Also, the partners in the deal could have a negative impact and may charge with disregard of the contract so made.

Even the cost settled before was 99 million Euros for each jet without weapons and other facilities whereas now the cost settled was 91 million Euros for each jet if the cost of weapon and better services was put aside.

Also, French president Emmanuel Macron in an interview said that the details of the deal have to be kept secret to protect the interest of companies involved in the agreement.

Even the various opposition parties joined hands together and tried to pass a No Confidence Motion in the monsoon session but in vain. Prime Minister Narendra Modi himself came at front of the battle ground to explain the terms in the deal so made. Also, it was said that NDA has purchased Rafale at a nine percent cheaper price from the UPA government and even taken up the up-to-date technology to meet the needs of today’s defence requirements.

Additionally, Rajesh Dhingra, the CEO of Reliance Defence, dismissed any connections of incorporation dates to Modi’s announcement as contrived.

What was the Decision of the Supreme Court?

In case Manohar Lal Sharma V. Narendra Damodardas Modi[3], the Apex Court agreed to hear a public interest writ petition seeking cancellation of the Indo-French Rafale deal on the basis of corruption the process. Congress Leader Kapil Sibal said that Congress would wait until the required documentation is handed over to the court and a thorough investigation is made.

The Central Government was asked to provide all details of the deal with France in a sealed cover[4]. On December 14th, 2018 the court gave its decision in favour of the Central Government and dismissed all the petitions seeking a probe in the deal and gave a clean chit to the Union government. All three aspects were investigated thoroughly i.e. the decision making, pricing and selection of Indian offset partner.

The Court ruled that no wrongdoing was found in decision making and price escalation. Moreover, court is satisfied by the provisions of the deal to be kept secret as it could pose a threat to the Agreement and National Security.

Chief Justice of India, Ranjan Gogoi while writing the judgment for the three-member bench, ruled that, Adequate military strength and capability to discourage and withstand external aggression and to protect the sovereignty and integrity of India, undoubtedly, is a matter of utmost concern for the nation. The empowerment of defence forces with adequate technology and material support is, therefore, a matter of vital importance.”

Conclusion

As per conclusion, we can say that the actual deal has been started under UPA government when A.K. Antony delayed it because of non-compliance with lowest bid offered and due to Indian instability in the economy to pay for the deal. The same deal was put forward by Prime Minister Narendra Modi but for lesser number of items and more associated parts and better technology. Also, it was proved by the Supreme Court that allegations made for favouritism were found to be baseless.

Moreover, the Apex Court stated that the deal is very important for enhancing the defence system of the country. Even after thorough investigation by the court the opposition was not satisfied where the Central government welcomed the verdict saying that it has exposed all the falsehood.

The opposition again filed plea but the Supreme Court of India dismissed all the petitions seeking review and stood with its judgment stating no irregularities ad wrongdoings performed in any context.


[1] “Rafale Deal” (Last visited on August 28th, 2021)

[2]Rafale Fighter Jet Deal”(Last visited on August 28th,2021)

[3] Manohar Lal V. Narendra Damodardas Modi, WP (Crl.) 225/2018; RP (Crl.) 46/2019

[4] “Rafale deal:SC gives clean chit, here is a brief timeline of fighter jet case” (Last visited on August 28th, 2021)