 Hello and welcome to NewsClick. We are going to discuss today the latest, of course, there have been a lot of latests on this, the Dassault and the Rafale deal that India has signed. We have with us D. Raghunandad, who has been once upon a time in his earlier avatar wars in Hindustan Aeronautics Limited as an Aeronautical Engineer and now has been an observer on the scene for quite some time, analyst, observer for NewsClick at least. The latest report which has come that this, the choice of Anil Ambani's company, which was acquired actually just a few days before the agreement being signed, this really was a choice made by the government of India and forced upon the French and it was not a choice made by the French and the erstwhile President Hollande has said this because it was made to appear because Ambani's did a film with his partner, therefore somehow Hollande is the one who foisted this on the government of India, this is what he has contested that it was an attempt to drag him into the call, into this shall we say in this particular episode that his reaction has been. I think it was an attempt to get him to back off, which is backfired. I think the government here must have thought if they raise this bogey about Hollande, then Hollande in the interests of his partner would back off. I think that was the game plan but it has backfired. Did you say he had already said this earlier? No, he hadn't said this earlier but it was an attempt to preempt that thinking they will get him off the books by bringing this up saying that you know if you say something then we will rake up that but it seems to have backfired and made him come out with this statement. Now clearly as far as the government is concerned here, this is a bombshell because our defense minister, government spokesman, finance minister, Jaitley all those who have been going out of their way to defend the government's actions on the Rafale deal have made it a point to say that Ambani was not chosen by us, Reliance was not chosen by us, it was chosen by the French. This was a commercial deal between two parties offset deal and we have always taken a backseat on this so we were not done. However, I think it would be clear to any observer of the scene and particularly to observers of the high tech manufacturing sector and the aviation sector in particular that there is no way a company of the size, scale and reputation of that sort would have chosen a brand new entrant not only into the aviation sector but into the manufacturing sector. They claim to have other expertise for putting things together. This was an existing company which was acquired by Anil Ambani as you know. See the Ambani's and Anil Ambani's entry into defense was because of his acquisition of the Pipava shipyard which he now uses to say that we have had a lot of experience in defense none of that is his or any of the people associated with this company which was recently floated. And of course the telling part of it is that none of the offsets which Anil Ambani's company is going to get for the Rafale have anything to do with the Rafale aircraft at all. And it is highly spurious of the defense minister to say that government had nothing to do with choice of offset partners. There is no way in which a deal of this magnitude with offsets of this magnitude ranging in somewhere around 20,000 crores or thereabouts would be done without the government playing some role in choosing the offsets partner. Is it the argument that Anil Ambani, a company, Prime Minister Modi was just a coincidence? It's a very, very strange coincidence, it's a one in a million coincidence then. That they were on the same flight going to the same event and then he just happened to get the contract afterwards. You said that Oland has come out with the refuting the government of India and the defense minister. But Dassault has also given some indication backing up Nirmala Sitaraman earlier that this was not apparently the government of India's decision but only their decisions. How do you read it? In light of what Mr. President Oland has said, see I don't take Dassault's assertion seriously because Dassault is a commercial company interested in seeing that this deal goes through. This deal depends on the goodwill of the government of India and Dassault cannot say something which goes against the government's line. So if the government says Dassault identified reliance, Dassault is bound to say yes. However, President Oland who presided over the entire deal to begin with has been very clear in how it transpired that this was all identified reliance. Dassault is bound to say yes. However, President Oland who presided over the entire deal to begin with has been very clear in how it transpired that this was pushed on him by the government of India and that all Dassault did was enter into commercial discussions with reliance, not in terms of the choice. So Dassault's rebuttal, I'm afraid, is pure boilerplate denial for public consumption because they don't want to be on the wrong side of the government of India. Any contractor would do that to bail out the principle as it were. I'm sure Bofors would have given similar certification, a number of times to Rajiv Gandhi as well. Other issue which is also made headlines is also the defense minister, Nirmala Sitaraman claiming that HAL did not have the ability to do it. Of course, it begs the question, did Anil Ambani's company have the ability to do it? But leaving that out, HAL has been, and you have been in Hindustan aeronautics once upon a time, HAL has been partners to various deals of this kind and this from starting from the MiGs to the other aircraft including the Mirage, again the French Mirage, all of this, at this inability of Hindustan aeronautics limited to be able to indigenize, is it the first time you're hearing about this? I mean, this is absolutely astounding. As you said, there were the MiG-29s and Hindustan aeronautics has made 200 engines, operated engines for the MiG-29 series. HAL has assembled more than 70 of the Mirage 2000 aircraft also manufactured by Dassault. It undertook a serious upgrade of these aircraft. It continues to license manufacture the advanced jet trainer from British Aerospace. It set up a dedicated new helicopter facility outside of Bangalore where it's making hundreds of helicopters. This is a company which you say doesn't have the ability to manufacture 100 or so of Rafales and on top of that, she has said that look, the rate of delivery of HAL has been very slow, even the IAF chief has said this. The Rafale deal now of 36 aircraft are being delivered to India at a leisurely pace of 12 aircraft per year, starting with 2022, the first one, and HAL was criticized by the Air Force for starting with a schedule of delivering 12 Tejas light combat aircraft which it has now stepped up to 18, apart from everything else that HAL is doing. There is no problem in HAL's capacity to deliver and recently the chairman, the retired chairman and managing director of HAL, Subarna Raju has come out saying we had worked out a work share agreement, detailed plans had been worked out for how HAL would undertake the work in India. The only glitch was two issues. Dassault said we will not take responsibility or guarantee for aircraft manufactured by HAL, and HAL said no problem, we will stand guarantee for them. The second issue was price, and HAL did have a higher manner calculation which made their price slightly higher, and Subarna Raju has clarified that this is bound to happen, since Dassault obviously has more advanced technologies, higher productivity manufacturing facilities, and if the government had really wanted, they could have made an upfront investment for the infrastructure in HAL, so that HAL could have stepped up the rate of manufacture and they could have recovered it over time. Basically the capital investment that HAL had to make had to be recovered from the cost of the aircraft. That's right. That's right. So it's no big deal. That's an obvious issue, and the government did not want that to happen. Exactly. They should have been forthcoming on that. In any case, this Rafale plane, this 36, we already know the cost has really gone up through the roof, so let this government talk about the cost, because with earlier cost and this cost, the huge difference that is there, we're not even discussing that today. So the cost is really not the issue here. So it's interesting that a company which was in the public sector under the Defense Ministry, because it's important, HAL is under, let's say, Taraman's ministry, and therefore it's, in fact, she's speaking against a company which is under her. And in fact, if you ask me, this false claim to be a hands-off onlooker of the government, HAL and Dasault were negotiating. They couldn't come to an agreement, therefore the deal collapsed. Offsets, Dasault is having an agreement with Reliance. Government has nothing to do with this. This is specious. It's not the way government of India works, and you know this very well in this country. Any public sector undertaking, if the chairman has to sneeze, he has to take permission from government of India, there's nothing here that happens without the government's say so. And the government should have been taking a proactive role in ensuring that HAL and Dasault strike an effective contract, because it's in the nation's interest to build self-reliance and transfer of technology, et cetera. So there's no question of government taking a backseat in this. And also it's important, since we already discussed this earlier, that this agreement with HAL, actually involves no indigenization of the aircraft itself, no transfer of technology. The offset was supposed to be in completely different areas. So therefore India was not gaining technologically from this deal at all, which is not what would have happened if the partnership with HAL, because then at least HAL would have got access to more advanced technology. It's upgraded their skills. And in fact, I want to make a point about these offsets also. This business of government of India taking a backseat and allowing the offsets to be a commercial deal between the original equipment manufacturer and an Indian partner is not what the offsets were designed for. Offsets are designed in order for India to acquire technologies, which has to be done with a strategic planning vision, which technologies do I prioritize, where are the gaps, which technology should I acquire. Therefore you plan the offsets in a certain way. And this requires an active role of the government. This is not just a commercial deal. So in fact, the government should be taking a proactive role and not take the stance of allowing it to be a commercial deal because that's not the purpose of the offsets at all. As we have discussed earlier, that this is the difference between make in India and made in India. Absolutely. That made in India meant that you had to absorb the technology, indigenize it so that you could go to the next level. Make in India means just come in as a commercial, that's all. The other last point, all of us know and this is shall we say not the best kept secret in the world, that prime ministers and presidents act as essentially as people who sell arms. In fact, whenever such a big arms deal is involved, it's actually between the top politicians of the country's concern because this scale of deals obviously means both sides' political leadership has to be involved. So therefore, as you have said already, that to pretend that this was a private arrangement is completely bogus, not when presidents and prime ministers are involved. And especially when you have abandoned what was a tender process to begin with in favor of a government-to-government contract. You have made it a deal between two governments and then to say that the government is not involved in it, it makes no sense. I think more and more as skeletons keep tumbling out of the closet. And this time with the defense minister really taking on two major claims in recent days, both of which seem to have been controverted publicly. I think this government will find it increasingly difficult to defend itself from this particular deal, the Rafael deal. And it shows science of becoming what the Beaufort deal was with the Congress once upon a time. Thank you very much, Raghu, for being with us. And we'll monitor this particular issue as well as other issues as it comes along.