Rafale deal affected because state-run HAL was in poor shape under UPA: Sitharaman

State-run aerospace company didn’t have the capability to produce fighter jets in collaboration with French company Dassault Aviation, defence minister says.

Negotiations for procuring 126 Rafale jets under the United Progressive Alliance (UPA) government failed because state-run aerospace company Hindustan Aeronautics Ltd. (HAL) didn’t have the capability to produce the aircraft in India in collaboration with French company Dassault Aviation, Defence Minister Nirmala Sitharaman said Thursday.

Defence Minister Nirmala Sitharaman during an interaction with journalists at PTI office, in New Delhi, Sept 13, 2018.(PTI)

Sitharaman said A K Antony, who was defence minister in the UPA government, made an unprecedented intervention in 2013 when the cost negotiation committee was finalising the deal but that put the final nail in the coffin.

Dassault Aviation, after rounds of negotiations with HAL, felt that the cost of jets will escalate significantly if they were to be produced in India, she said during an interaction with PTI editors and reporters at the news agency’s headquarters in Delhi.

“Dassault could not progress in the negotiations with HAL because if the aircraft were to be produced in India, a guarantee for the product to be produced was to be given. It is a big ticket item and the IAF (Indian Air Force) would want the guarantee for the jets. HAL was in no position to give the guarantee,” she said.

Sitharaman said the weapon systems, avionics and other key add-ons to the Rafale aircraft, expected to be delivered beginning September 2019, will be “much superior” than that negotiated by the UPA government, and her government is getting the planes for 9% cheaper than what was earlier agreed upon.

The UPA government started negotiating with French Dassault Aviation to buy 126 Medium Multi-Role Combat Aircraft (MMRCA) in 2012 .

The plan was for Dassault Aviation to supply 18 Rafale jets in fly-away condition while 108 aircraft were to be manufactured in India by the company along with HAL. However, the deal could not be sealed.

The Congress party, which led the UPA government, has asked the government to explain why HAL was not involved in the new deal.

Sitharaman said the UPA-era deal collapsed, as HAL did not have the capability to produce 108 aircraft in India.

“Even during negotiation with HAL, Dassault felt that the cost with which the HAL will produce will be far higher than the aircraft produced in France. That was the reality,” she said.

“Why could not the then defence minister say that we will pump in all the required resources into the HAL. He could have done it. That was not done,” Sitharaman said, adding that the current government was initiating steps to strengthen the company.

In 2016, the Modi government signed a government-to-government deal with France for purchase of 36 Rafale jets at a cost of Rs 58,000 crore. The Congress has been alleging irregularities in the deal.

Rebutting charges of corruption in the deal, the defence minister also asserted that people of the country have put a closure on the issue as they trust Prime Minister Narendra Modi.

“There is a trust in the prime minister. He is not going to be corrupt. So with all this, I think mentally, people of India have reached a closure on it, saying there is no corruption here,” she said.

Sitharaman ruled out calling the opposition parties for a meeting to allay their concerns over the Rafale deal, saying they are “throwing an allegation” without any basis as well as showing no concern for operational preparedness of the air force.

She said the Congress was running short of issues and corruption was a plank on which it utterly failed.

“It is one of the cleanest governments India has ever seen. On corruption, the Congress is very frustrated. The party will have to learn from this government.

“I am saying this with a certain sense of confidence and not arrogance. The defence ministry is being run without any middleman and in a transparent way. We have proved that defence procurement can happen without middlemen,” she said.

On Antony’s intervention, she said he held back the file at a stage where he did not have any role to play. However, she did not elaborate on reasons for Antony’s action.

The Congress has repeatedly criticised the deal for the 36 Rafale jets, alleging that the government was procuring each aircraft at a cost of over Rs 1,670 crore as against Rs 526 crore finalised by the UPA government.

Sitharaman said the Rs. 526 crore figure refers to the bare aircraft, capable of just flying and landing, and does not take into account the avionics, arsenal and other associated technologies that make it a complete fighting machine.