India's controversial Rafale deal with France
February 13, 2019
1. In 2007, after several warnings by the Indian Air Force that its fleet of warplanes was becoming outdated, the Indian government under former Prime Minister Manmohan Singh of the Indian National Congress (INC) party, invited bids from international manufacturers for 126 fighter jets.
2. Five years later, the bid was won by France's Dassault Aviation, which offered the lowest prices compared to rival companies in the US and Europe. The initial arrangement stipulated that 18 planes would be imported to India for immediate use. The remaining would be manufactured in India together with the Indian Hindustan Aeronautics Limited (HAL) aviation firm. At the time, there was no final decision on the price of the aircraft.
3. In January 2016, Prime Minister Narendra Modi and French President Francois Hollande signed a Memorandum of Understanding on the purchase of the Rafale fighter jet, manufactured by Dassault. A few months earlier, during a trip to Paris, Modi announced his government would buy 36 jets for an immediate deployment. These would be delivered by the beginning of September 2018 at a cost of €7.8 billion. India would also get spare parts and the Meteor missile, manufactured by the European company MBDA.
4. An additional condition of the agreement was that France would have to invest 20 percent of the nearly €8 billion for producing parts of the aircraft in India. Thirty percent would be used for promoting research and development in aeronautics and defense.
5. In late 2016, Indian business tycoon Anil Ambani announced a joint venture of his company, Reliance Defence, with Dassault Aviation.
6. Problems began emerging two years later, when former French President Hollande told French website Mediapart that his government did not have any say in choosing Dassault's manufacturing partner in India and that Reliance Defence was nominated by the Indian government. Soon after, Dassault Aviation released a statement claiming the decision to choose Reliance was their own.
7. India's opposition Congress party, including its leader Rahul Gandhi, accused Prime Minister Modi's government of unfairly awarding the contract to Reliance Defence instead of state-owned aeronautics firm HAL. They also accused him of paying three times the amount that was initially agreed upon.
8. Following petitions to investigate graft allegations, the Indian Supreme Court said in December 2018 that it found "no occasion to doubt the process" of signing the deal with Dassault Aviation.
9. On February 13, 2019, a report from the Comptroller and Auditor General (CAG), Rajiv Mehrishi, who audits all funds and expenses by the Indian government, said the Indian government under Modi paid 2.8 percent less than the amount agreed upon by the previous government under Congress' Singh.
10. However, the report that was tabled in India's upper house of parliament, the Rajya Sabha, does not include the aspect of pricing. India's Ministry of Defense has said data pertaining to pricing was confidential. Furthermore, the report may be perceived as biased, considering that Mehrishi was the finance secretary in the federal government – and thus a negotiator - when the deal was signed in 2016.