Finally Parrikar Admits Rafale Deal Nowhere Near Closure

NEW DELHI: The government has finally declared that both the Inter Government Agreement (IGA) and negotiations over offsets, in procuring 36 French Rafale fighters are yet to be finalised.

In a written reply to the Rajya Sabha, Defence Minister Manohar Parrikar on 19 July said details on the Rafale purchase, including the transfer of technology through offsets would emerge after the negotiations were completed.

"The negotiations are underway and the IGA and offset contract are yet to be finalised," Parrikar stated, a month after categorically declaring that the Rafale deal would be completed by June.

India has been insisting on France discharging a 50% offset liability of the overall contract cost, which has appreciably hiked the final price that too remains unresolved.

“The minister does not appear to be in the know of what is going on in his ministry” a senior Indian Air Force (IAF) officer said.

The Rafale import seems increasingly indeterminate and unlikely, he added declining to be identified.

Other IAF officers conceded that if the IGA were not inked before the year-end, the fighter purchase would not fructify despite the fanfare with which Prime Minister Narendra Modi announced it in Paris in April 2015.

The Indian media touted the decision as yet another instance of Modi’s decisiveness.

At the time both sides had agreed that India would acquire 36 Rafales off-the-shelf for the same price that manufacturers Dassault sold them to France’s Armee’ de L’air.

The Rafales had been shortlisted in 2012 from amongst six fighters vying for the IAF’s Medium Multi-Role Combat Aircraft tender for 126 platforms, issued in 2007.

Modi’s surprise announcement superceded this deal which had been under negotiation since early 2012, but was deadlocked on transferring technology to Hindustan Aeronautics Limited to licence build 108 Rafales in Bangalore. The additional 18 Rafales were to have been bought off the shelf.

Official sources, meanwhile, said National Security Advisor is believed to have recently ‘urged’ Parrikar to fast track the Rafale contract, as the continuing delays in confirming it had become embarrassing.

PM Modi and visiting French President Francois Hollande had confidently declared in Delhi in January that the fighter deal would be concluded ‘within days’.

But defence industry insiders believe Parrikar is dragging his feet on the Rafale purchase, as he is reportedly not entirely convinced of the economic and operational efficacy of acquiring only two squadrons at an astronomical price.

The overall Rafale purchase, including its weaponry and engineering support package, is reportedly $10.5-11 billion.

A back-of-the-envelope calculation makes it whopping $290 for each fighter, accounting for a major chunk of the IAF’s capital acquisition budget, even though payments would be extended over several years.

The Defence Minister is believed to be of the view that for the price of each Rafale, the IAF can acquire multiple licence-built Su-30MKI’s and many more Tejas Light Combat Aircraft to make up flagging fighter numbers and hence, is subtly stalling progress on acquiring the French fighter.

In early 2015, when negotiations for the MMRCA were deadlocked, Parrikar had declared that upgraded Su-30MKI multi-role fighter were ‘always there’ for the IAF as an alternative to the Rafales. Insiders claim he continues to pursue this line of thinking.

Parrikar is also believed to have repeatedly declined, since April, to meet a team of senior French officials seeking to discuss-and finalise- the Rafale contract.

Consequently, in an odd turn of events, cursory negotiations have begun recently between the Ministry of Defence (MoD) and the French Embassy in New Delhi. In most foreign materiel procurements, particularly one as high profile as the Rafale tender, local embassies, at best perform a liaison role.

To add to France’s irritation Parrikar is in advanced and much publicised negotiations with executives from Lockheed Martin, Boeing and Saab, all offering to transfer their production lines to India for the F-16 and F/A-18 Hornet and the Gripen-E respectively.

Earlier this year Parrikar had declared that the MoD would shortlist at least one foreign fighter by end-2016 for indigenous manufacture under the governments Make in India initiative.

Perhaps the Defence Minister should first vindicate what his PM had promised France rather than cast about for additional fighters, which for now too appear somewhat fanciful.