 On Friday, the Congress President Rahul Gandhi on the floor of the parliament accused the Nareen Modi government. In the Rafael case, accused the government for not being very forthcoming and not being very transparent in the deal that they struck with France and accused the government of hiding the full facts from the Indian public regarding cancellation of an earlier done deal and its replacement by an order to purchase of the shelves 36 fighter jets, Rafale fighter jets. We have today with us D. Raghunand, who is not just with the Delhi Science Forum, he is an active member of Delhi Science Forum, but one of leading defence experts in this country. He is going to talk to us about Rafale and the various aspects of this deal which make it very controversial. Welcome Raghunand. Raghunand, I will start by asking you, there was a done deal in 2012 for purchase of 126 fighter jets, so which 18 were to be bought off shelves and 108 were to be manufactured by Hindustan Aeronautics Limited, with which the salt has had a long standing relationship, mirage and earlier fighter jets. There are two questions that come to mind Raghunand, one is will you tell us fun in light of what happened in the parliament on Friday regarding the price that was negotiated and secondly regarding the significance of the MMRCA deal itself, the medium range fighter jet itself, which had been pushed by the Indian Air Force. But first I would like you to talk to us about the price deal and the various aspects. On the price, one problem is that the deal struck when the UPA was in power for the 126 fighters. The price then and the price now when the NDA signed the agreement for 36 straight out purchased Rafales, it is very difficult to do a one on one comparison, apples to apples comparison because the cost for the aircraft now includes various add-ons, different weapons, spares, it includes after sale service, whereas the earlier one didn't. However, from earlier price disclosures by the present government, it turns out that compared to roughly about 560 crores for as a base price, which was supposed to have been paid under the deal signed by the UPA, the present government seems to be signing a deal where each aircraft goes for about 750 crores. So, it is about a 200 crore difference. You mean minus the add-ons. Yes. Yes. So, this is the base price per unit. This looks like the base price per unit aircraft. Okay. So, there seems to be a difference of about 200 odd crores in the base price itself. Okay. We don't know what exactly is the differential in terms of the add-ons, etc. Well, government, one of the ministers, minister of state for defense, Subhash Bhamre, on November 16, 2016, in a written reply, said that the government is paying 670 crores as the base price and 1000 crores are for add-ons. That's right. Various other add-ons were there, but these add-ons, were they not present in the earlier deal? Some of them were not. Like, for example, because these are 36 of the shelf aircraft, the contract also includes maintenance and serviceability contracts, which in the present deal, they will have to sit in this country and ensure 75% availability of these aircraft at any given point of time. Because you are buying only 36 aircraft and straight off the shelf, you will not have the ability to be able to service, maintain, replace, put spares for all these aircrafts. It doesn't give you enough scope to maintain inventories or even deploy the manpower for doing all these jobs. So all that has also been assigned to Dassault. So then in the earlier deal, it would have been serviced and maintained by the Indian Air Force and service and overhaul by HAL because you're dealing with the 126 aircraft, bulk of which would be manufactured in this country itself. So if you manufacture them in this country, obviously you can maintain and repair them as well, which is what we do for all other aircraft, whether they are the Sukhoi's or the MiGs or the Mirage 2000s, et cetera. But because the Rafale deal restricts it only to 36 aircraft, you are constrained to do various things which you would not have done if you had bought a larger. So that itself pushes up the cost that you're going to incur. There are various aspects to this, the controversy which need to be looked at. One is doing away with the done deal and then settling for off the shelf purchase of 36, a reduced number. In addition, you're also removing it from the possibility of its manufacturing and acquisition of expertise and technology. That is also law. In addition, we have that the offset clause which is also to be serviced, landed in the lap of a controversial corporate house which has no background, no history of having engaged in any kind of aircraft manufacturing, let alone even servicing. In addition, it has also mired in a lot of financial wheeling dealings, including rupees 1.25 lakh crore debt which it owes to public and private sector banks. So how do you look upon this aspect of it? This is very simple. The offsets clause was originally intended to, when India incurs a large amount of expenditure purchasing defense equipment, the idea of the offsets was not only that some amount of that money that is spent is spent within the country. So because the offsets means that for smaller projects 30 percent, but for larger projects like the Rafale deal, 50 percent of the money has to be spent within this country. That means the party from whom you are buying in the same project, in that project. So the idea of the offsets was if you are buying let us say 126 aircraft which was the deal earlier, at least 50 percent of that money would be spent inside this country which cannot be done unless you are manufacturing 50 percent worth of the product assembly or otherwise inside this country. The idea is not only that you earn money by doing this, it is also that in that process you bring in manufacturing facilities into this country and acquire technologies in this country. In this Rafale deal with only 36, you are obviously not manufacturing any since you are buying out, but there is an offset clause which requires you to spend money. So in this deal, there is a convoluted deal has been struck whereby the Anil Ambani group is going to do some sub-assembly component manufacturer for a commercial civil executive jets made by Dassault called the Falcon jets. So there is no technology acquisition. There is no acquisition of technology related to Dassault or the Rafale aircraft. There is just a financial transaction taking place and that too to a company which as you said not only has no experience in the aircraft industry, it has no experience in manufacturing sector per se. So I leave it to the conclusion of the viewer as to what this deal is about because it makes neither technical sense nor political sense. That brings me to the last question, Raghu, which is the most important. How do you place, I mean this replacement of a medium range aircraft and reopening that entire issue, how do you look upon it? And what are the implications? So coming to that, I'd just like to touch on this price aspect once again, this big debate that took place in parliament the other day. I think the Congress leader, Mr. Rahul Gandhi, made a bit of a tactical mistake by saying there is no confidentiality agreement on the price which the government was able to refute saying there is a confidentiality agreement. I'd just like to clarify on that, there is a confidentiality agreement but the confidentiality only refers to those aspects which will impact on security and operational capabilities of the aircraft meaning what kind of radar it has, what kind of weaponry it has, such details. There is nothing in that clause which prevents price disclosure and in fact the French president, which is what Rahul Gandhi was quoting in his rather funny manner, hinted at such in an interview last year to an Indian magazine where he has said that this is up to the government what it discloses to parliament or not. But no confidentiality agreement prevents price disclosure in this country. I just wanted to clarify. But the minister himself, the union minister, Nirmala Sita Raman herself had promised and assured. Had promised but has not done. And has not lived up to her promise. So I just wanted to clarify that. Now coming back to the question you asked about the original MMCRA, to me the biggest problem with this deal has been the fact that as you know the Indian armaments acquisition process is a very long involved process with a lot of bureaucratic procedures which in the typical Indian way have been ostensibly designed in order to build in more transparency and to reduce chances of corruption. So you have got all kinds of processes involved. Coming through all these tortuous processes, the MMRCA deal took almost 10 years to process, went through rigorous field trials of the three contending finalists which were the Rafaal, the Eurofighter, then boiled down to just these two the Eurofighter and the Rafaal, detailed field trials in this country under the climatic conditions they would operate in were conducted by the Air Force. The 126 aircraft requirement was projected a long time ago by the Air Force. Having done all that, Rafaal was selected. Suddenly for unexplained reasons the government decides to reduce this order to 36. No rationale is given. If the Indian Air Force has projected a requirement for 126, how come that requirement suddenly disappears and becomes a requirement for only 36? It defies logic plus it is also very clear that this decision has been taken only by not by the Air Force and the military and the entire process but by the prime minister and select political leadership that then defends minister etcetera have taken this decision. Secondly, it has gone from a commercial decision to a government to government decision. It is unsurprising that the government today is taking shelter under a confidentiality clause while the whole point of the convoluted procurement process in India is to increase transparency and then you fall into doing a deal which has no transparency in it seems to defy all logic and purpose of the thing. To make things worse, having done all that you have again gone and issued a tender for the same MMI or CA deal. You have shortlisted the same six aircraft that you started with and you are going to go through the entire process all over again which the defense ministry bureaucracy have clarified the technical selections themselves even though you have gone through trials earlier will take three years then price negotiations will start which as we know likely to take so after six years you are likely to reprise what we have done ten years ago. The entire thing defies logic and once again shows you can take the best procedures in your country ultimately if you end up taking arbitrary decisions then naturally accusations of non-transparent behavior of corruption etcetera will get thrown up. Thank you Raghu. Thank you very much. We will be coming back to returning to this Rafael story again because this is a story which is not going to go away very soon. The sting from it has not died down and there are aspects to it which make it clear as Raghu explained the whole procedure through which it ended and finally benefited ended up benefiting a corporate house leaves a lot of questions to be answered. Thank you for watching NewsClick. If you have any feedback do get back to us.