Comments from the government over the pricing of the Rafale deal continue to fly thick and fast with Union Minister of State for Agriculture Gajendra Singh Shekhawat asserting this week that Congress president Rahul Gandhi was misleading people by comparing the cost of an unloaded aircraft with a fully loaded one.
The present Rafale deal, Mr. Shekhawat said, “is almost 20% cheaper than the UPA deal.”
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Several Ministers contend that the price at which the NDA government agreed to buy the plane makes the transaction about 9% to 20% cheaper based on varying yardsticks of comparison.
The Centre has refused to share the price breakdown, citing confidentiality clause.
“The cost of 36 Rafale aircraft cannot be directly compared to the cost of the Medium Multi-Role Combat Aircraft proposal as the deliverables are significantly different,” Minister of State for Defence, Subhash Bhamre, had informed the Rajya Sabha in March.
No common benchmarks
Comparing a proposal with a concluded agreement, especially in the absence of clearly laid down common benchmarks for comparison would, however, not help in understanding how beneficial the transaction is, according to a former IAF chief and a defence official, who spoke on condition of anonymity.
Terming the pact for the Rafale a “good deal”, former Air Chief Marshal A.Y. Tipnis said 36 aircraft, however, wouldn’t adequately meet the IAF’s needs.
“If we want a yardstick we have to factor in the ordnance, the aircraft and so on… We can do nothing with only the aircraft. It comes as a complete package,” he told The Hindu .
The former IAF chief drew a comparison with the deal for the Mirage 2000 aircraft — also acquired from France — in which he said “the biggest mistake was we just got the aircraft and then discussed the ordnance for a long time.”
The defence official, on condition of anonymity, said while the latest agreement was a ‘good one’ it would be incorrect to compare basic aircraft in the two cases. “If a comparison has to be made, various factors have to be added including aircraft cost, armaments, maintenance costs, associated equipment, currency fluctuation and so on. It needs detailed calculation.”
In September 2016, India and France signed a €7.87 billion Intergovernmental Agreement for 36 Rafale multi-role fighter jets in fly-away condition. The transaction includes a 50% offset clause to be executed by Dassault Aviation and its partners in partnership with Indian companies. The basic cost of each aircraft was stated at that time to be about ₹680 crore and the fully loaded aircraft would cost more than ₹1,600 crore — including weapons, simulators, spares, maintenance and performance based logistics (PBL) support for five years.
Finance Minister Arun Jaitley had in an interview to ANI said that what was negotiated from 2015 to 2016 was finally executed in 2016 and “with the escalations and the currency variations, the basic aircraft price turns out to be 9% cheaper.” Compared to the 2007 price, he said the 2016 deal was 20% cheaper.
Defence Minister Nirmala Sitharaman too made a comparison of the costs of the basic aircraft and said that “when compared with all the escalation and other things, is 9% cheaper.”
And on the sidelines of a recent event, Deputy Chief of the IAF, Air Marshal R. Nambiar claimed that the deal was 40% cheaper when compared with the UPA deal, without providing any details.
A common benchmark of comparison would be useful to understand the real difference in terms of cost, the official added.
