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Rafale price out of Supreme Court debate, for now

The government has previously denied most of these allegations and also said it cannot disclose pricing details publicly on account of a secrecy clause in its agreement with France and to ensure India’s enemies do not get to know details of the India-specific enhancements and weaponry of the Rafale.

india Updated: Nov 15, 2018 00:13 IST
Bhadra Sinha and Sudhi Ranjan Sen
Bhadra Sinha and Sudhi Ranjan Sen
Hindustan Times, New Delhi
rafale,rafale deal,rafale BJP
The Supreme Court of India said it would steer clear of the contentious pricing issue in the controversial Rafale deal, in a move that should bring some relief to the government, but reserved its judgement after a day-long hearing of petitions demanding a court-monitored Central Bureau of Investigation (CBI) probe into the deal. (AP)

The Supreme Court of India said it would for now steer clear of the contentious pricing issue in the controversial Rafale deal, in a move that should bring some relief to the government, but reserved its judgement after a day-long hearing of petitions demanding a court-monitored Central Bureau of Investigation (CBI) probe into the deal.

The petitioners, activist and lawyer Prashant Bhushan, former union ministers Arun Shourie and Yashwant Sinha, Aam Aadmi Party (AAP) Rajya Sabha MP Sanjay Singh and advocates ML Sharma and Vineet Dhanda asked for an investigation on four grounds: lack of transparency over the pricing of the jets; an offsets deal that seemed to favour a private firm; flouting of due process in closing the deal; and that the deal isn’t a government-to-government deal at all as it has been pitched because France refused to offer India a sovereign guarantee and instead gave it a letter of comfort.

The government has previously denied most of these allegations and also said it cannot disclose pricing details publicly on account of a secrecy clause in its agreement with France and to ensure India’s enemies do not get to know details of the India-specific enhancements and weaponry of the Rafale. It has submitted details of the price in a sealed envelope to the Supreme Court, though, and the court said it would not get into the pricing issue.

“We are yet to take a call on whether it (cost) should be brought in public domain,” Chief Justice of India (CJI) Ranjan Gogoi told attorney general KK Venugopal.

The government has also explained the process followed in an affidavit filed to the court, which has also been shared with the petitioners.

Finally, it has always maintained that the choice of an offset partner is not its, but that of the aircraft-maker, Dassault Aviation.

The petitions asked for the registration of a criminal case under the anti-corruption law.

At an election rally in Chhattisgarh, Congress president Rahul Gandhi alleged the National Democratic Alliance (NDA) government bought the planes at ~1,600 crore a piece as against the ~526 crore for each aircraft fixed by the Congress-led United Progressive Alliance (UPA) government, according to news agency Press Trust of India.

The three-judge bench and the AG discussed various aspects of the deal in detail, especially on the four points raised by the petitioners who presented their arguments first.

The court spent a lot of time trying to understand the details of the Inter Governmental Agreement between India and France for the purchase of 36 aircraft, which had replaced a previous deal-in-the-works between India and Dassault Aviation for 126 aircraft, of which 108 were to be assembled in India by the state-owned Hindustan Aeronautics Ltd (HAL).

The petitioners attacked the foundations of the new deal, signed by the NDA government in 2016, and announced by Prime Minister Narendra Modi in 2015, by claiming it could not be a government-to-government deal because there was no sovereign guarantee provided by France. Indeed, this was raised by the law ministry too when the deal was being worked on, but the Cabinet Committee on Security signed off on it despite there being no guarantee from France, which was only willing to provide a letter of comfort. France also insisted that India’s dispute resolution be with the manufacturer and not with it.

A former government official directly involved in defence purchases said there was nothing unusual about this.

“All Intergovernmental Agreements (IGAs) are subject to negotiations including clauses about dispute resolution and sovereign guarantee. IGAs are negotiated agreements in which nothing is written in stone. There is no standard format. India has bought arms earlier on the basis of a letter of comfort from Russia and other countries as well,” said Amit Cowshish, former chief financial advisor (acquisition).

Venugopal admitted that the French government did not offer a sovereign guarantee, but had issued a letter of comfort, ensuring the final execution of the deal. The law officer denied the charge that procedures were violated and said courts could not review the inter-governmental agreement on the judicial side.

The court also heard air force officers air vice marshal J Chalapathi, who has been associated with Rafale aircraft procurement decision; air marshal VR Chaudhari, deputy chief of the air staff; and air marshal Anil Khosla, vice chief of air staff.

The chief justice wanted to know which generation the new jets belong to and Chalapati responded that they were fifth generation “because they have stealth technology”.

The new deal for Rafale replaced one being negotiated by the previous UPA government. It has become controversial, with the Opposition, led by the Congress, claiming that the price at which India is buying Rafale aircraft now is Rs 1,670 crore for each, three times the Rs 526 crore, the initial bid by the company when the UPA was trying to buy the aircraft. The deal has also become controversial on account of the fact that one of the offset deals signed by Dassault is with a joint venture it has with Reliance Group of Anil Ambani. The Congress claims the earlier deal was scrapped and a new one signed just to provide Ambani this opportunity for an offset deal. Both the government and Reliance Group have repeatedly denied this.

In an interview to ANI on 13 November, Dassault Aviation CEO Eric Trappier said the choice of Reliance Group as a joint venture partner to tap the offset opportunity was the company’s and that the price of each jet in flyaway condiction under the new deal was around 9% lower than the corresponding price under the old deal that never reached closure.

The judges also quizzed the AG over the selection of the offset partner and on HAL’s absence in the new deal. Venugopal said the decision to enter into a new agreement was because the working scheme between HAL and Dassault ran into a rough weather. “HAL was not able to assure whether it would be able to achieve the competence as expected,” Venugopal said, rejecting former HAL chief TS Raju’s contention, in an interview to Hindustan Times, that the company could have manufactured the aircraft.

First Published: Nov 14, 2018 23:40 IST