The Narendra Modi Government is now facing heat over the allegations in Rafale deal, spearheaded by the Congress President Rahul Gandhi. What is this Rafale deal and how did this come about? Here are the facts…
UPA’s Rafale deal
The Indian Air Force usually buys its planes from either the Soviet Union or France. India has to avoid the ones Pakistan and China used and historically India preferred to deal with either the Soviets or the French and the French got the upper hand after Soviet disintegration. In 2006, the United Progressive Alliance (UPA) floats the World’s biggest tender to purchase 126 fighter jets. France’s Dassault company’s Rafale and Eurofighter’s Typhoon were the main competitors and Rafale has the blessings of the then Congress President Sonia Gandhi. BJP leader Subramanian Swamy has alleged several times that the deal was made between the then France President Nicolas Sarkozy’s gorgeous Italian-origin wife Carla Bruni and Sonia Gandhi, also of Italian-origin. Anyway, the decision to buy 126 fighter jets from Dassault’s Rafale was officially announced during the French President’s Indian visit in early 2008.
The number 126 fighter jets is still a mystery and originally the deal was to buy 18 directly from France and for the remaining 108 to be assembled in India at Hindustan Aeronautics Limited (HAL). This deal, termed as the World’s biggest tender was worth around $7.7 billion. Swamy accused that Sonia and her two sisters, and Carla Bruni were going to get 20% commission from this deal by falsely making Rafale as the lowest bidder. Why 126 fighter jets? The more the quantity, the greater the commission. Ignore the cooked up reports that wrote of the need for more fighters.
There was little transparency in the deal, and the actual price was never reached. There were allegations of rules and conditions being bent to make Rafale the lowest bidder and to kick out Eurofighter. At last, by 2012, when the deal was about to be declared, the country was witnessing a huge anti-corruption wave and Sonia Gandhi and her son-in-law Robert Vadra were being dragged into every nut and bolt purchase in the country. At that time, Vadra’s benami defence dealer Sanjay Bhandari’s Offset India Solutions (OIS) was also trying to get offset contracts from Dassault but it got rejected. And Dassault’s major Indian agent was Mukesh Ambani’s Reliance Group and they announced a Joint Venture in February 2012.
In 2012, BJP leader Subramanian Swamy filed a detailed complaint to the Defence Minister pointing out the irregularities in the selection of Rafale accusing Sonia Gandhi. This complaint became a death knell to UPA’s Rafale deal and Anthony slowed down the process. He never signed or approved any crucial papers and also put many queries in the files. In the end, by early 2013, the UPA”s Rafale deal became dead.
NDA’s Rafale deal
By end of 2013, the warring brothers Mukesh and Anil Ambani patched up and as per the settlement, Mukesh gave his Defence Sector to bankrupt brother Anil Ambani, whose businesses were collapsing, be it telecom or infrastructure. There were allegations of the involvement of Anil Ambani’s Reliance Group (ADAG) in the 2G Scam and the Coal Scam. ADAG earned a bad name after withdrawing from the Delhi’s Airport Metro operation. The public too was angry at him due to the inflated power bills by his companies. At one time, the Central Bureau of Investigation (CBI) even time declared him as a Hostile Witness for not answering properly or lying!
Anil Ambani who got Defence Sector from his brother Mukesh became very happy when NDA’s first Defence Minister Arun Jaitley decided to look into the UPA’s aborted Rafale deal. Within months, in 2015, Prime Minister (PM) Narendra Modi on his France visit declared the purchase of 36 Rafale Jets directly in a Government to Government agreement. As per this deal, the cost of the purchase is expected to be $7.5 billion dollars and 36 planes would be totally made in France and will be dispatched from 2019 to 2022. As per our information, the Government of India has given around 25 percent of the total cost to Dassault.
Anil Ambani bagged Dassault’s main offset deal because of the Ambani family agreement while sharing assets. The offset deals worth 3.8 billion dollars are mainly related to Falcon, one of Dassault’s commercial jet manufacturers. Many Indian private players also got offset contracts. Vadra’s benami Sanjay Bhandari, tried once again to get Dassault’s offset contracts and got rebuffed yet again. Now Bhandari is a fugitive, having escaped from India via Nepal and is believed to be in London. The place he is staying in London appears to be Vadra’s benami asset, from the email conversations between them.
So what is RaGa alleging?
Recently Rahul Gandhi has started alleging of a scam in Rafale and questioning the role of Anil Ambani in the deal. The allegations are basically on the role of Anil Ambani, whose credibility in running businesses is low. He has a tainted past in so many sectors that he involved himself with – Telecom, Power, Coal or Infrastructure to state a few. The question then arises as to why Narendra Modi entertained such a person who is mired in so many controversies.
BJP leaders argue that it was Dassault who decided to partner with Anil Ambani. Yes. That is the technical answer. But one must remember that there is morality in politics. The government of India should not allow a business group having a tainted past to enter into the Defence Sector. For instance, will the Government of India allow Dassault to partner with Vijay Mallya’s firms or Mehul Choksi/ Nirav Modi’s firms? The Modi Government should not have entertained Anil Ambani firms which occupied the front and center stage in the 2G scam-era of UPA. Modi should not have taken Anil with him to France when the Rafale deal was announced in 2015.
Why did Modi re-open a bad deal?
Another question that comes to mind is why Modi dusted off and re-worked the aborted Rafale deal. The government could have called a new tender in a transparent way. Only Narendra Modi and the then Defence Minister Arun Jaitley can tell us why they preferred to re-work the UPA’s corrupt Rafale deal instead of coming up with a fresh tender. It is learnt that many officers have noted on file that during UPA’s tenure Rafale was selected as the lowest bidder in dubious ways. It would have been better for the NDA Government to go for a fresh tender. With a quarter of the money paid to Rafale, the only option before the Government is to check the credibility of the private firms engaged in Defence Sector and bring more transparency to the sector. Non-credible players, bankrupt groups should not be allowed to play in the Defence Sector.
1. The conversion rate used in this article is 1 USD = 50 Rupees.
 The Rafale Deal Should Be Scrapped And Renegotiated – Aug 18, 2014, Outlook Magazine
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