Supreme Court Direction On Rafale Deal Rattles Modi Govt

By Nitya Chakraborty

The Supreme Court’s Directive to the Modi Government on October 10 asking it to provide the details of the decision making process on the Rafale deal to the Court in a sealed cover by October 29, has rattled the Modi Government. The Prime Minister’s Office which in fact spearheaded the revised agreement that was announced by the Prime Minister Narendra Modi on April 10, 2015 in Paris is in jitters as the entire process of decision making is marked by violation of the standard procedures of defence procurement.

The Supreme Court has set the next date of hearing on October 31 and the learned judges headed by the Chief Justice Ranjan Gogoi will go through the documents to be submitted by the Government, mainly the Defence Ministry by then. The BJP leadership and the Government officials are trying to project the apex court direction as a sort of victory since the Court did not want to go into pricing and the technical appraisal of the deal but they are extremely nervous as the documents might not be to the satisfaction of the judges in establishing the credibility of the decision making process.

That way, the October 31 hearing of the Supreme Court os politically very crucial for the Prime Minister as any new revelation about the intention of the Government behind the Rafale deal, will be damaging for the image of the Prime Minister and this will have demoralizing impact on the BJP’s election campaign in the next month’s crucial elections to the assemblies of five states. The Congress and the opposition parties are determined to make use of the Rafale deal in the election campaign for the assembly elections and their campaign will get additional edge if some damaging disclosures come out in the October 31 hearing in the Supreme Court.

Already the Modi government is in a very embarrassing position following further disclosures about the details of the Dassault-Reliance joint venture backed reportedly by the Prime Minister himself.

An internal Dassault Aviation document has revealed that the fighter jet manufacturer had no option but to enter into a joint venture with Anil Ambani’s Reliance Defence as it was presented as “mandatory” and a “trade-off” if the French company had to to bag the 36 Rafale jet deal, according to a report in the French investigative website Mediapart.

The Mediapart article states a presentation made by Dassault’s deputy chief executive officer Loik Segalen to the company’s staff representatives in Nagpur in May 2017 where he describes the Reliance partnership as “imperative and mandatory” to get the Rafale export contract to India. Mediapart had reported, “It was truly a false inauguration. A symbolic ‘first stone’ was placed on pre-cut turf, under a tent of circumstance, in Nagpur, but it announced the beginning of construction of the ‘future factory’ of Dassault-Reliance. According to an internal Dassault document obtained by Mediapart, a senior executive of the aviation group had explained to the staff representatives that the joint venture was a “trade-off”, “imperative and mandatory” to get the market for Rafale.

Former French president Francois Hollande had claimed in an interview to Mediapart last month that the Indian government had proposed Reliance Defence as the partner in the Rafale deal and France did not have a choice. Dassault had then clarified that the decision to partner with Reliance Defence was their own.Allegations and counter-allegations escalated after Hollande’s statement. The opposition has accused the government of ignoring the state-run defence company Hindustan Aeronautics Limited (HAL) to benefit Anil Ambani.

Even the incumbent French President Emmanuel Macron has appeared to distance himself from the decision-making over the Rafale deal, pointing out to media that he was not in charge at the time the deal was struck between the French and Indian governments.The opposition has been alleging that the Anil Ambani firm was favoured in the ₹21,000 crore contract at the cost of state-owned Hindustan Aeronautics Limited (HAL) despite the private firm having no prior experience in aerospace manufacturing.

The Narendra Modi government has repeatedly said it was Dassault that chose its India partner and that the government has had no say in the deal. In an interview to The Indian Express on September 13, Defence Minister Nirmala Sitharaman had insisted that the two commercial enterprises — Reliance and Dassault — had taken the decision among themselves. Now the latest French media exposure has put the Indian Defence Ministry on back foot.

Officially, the timeline of events in Rafale deal are-

Reliance Defence Ltd incorporated on March 28, 2015.
On April 10, 2015—ie 13 days later—PM Narendra Modi announces in Paris that India will buy 36 readymade Rafale aircrafts from France.
Two weeks later on April 24, 2015, Reliance Defence Ltd’s subsidiary Reliance Aerostructure Ltd formed.
On 30 July 2015, Defence Ministry scraps the RFP for the earlier deal, which took seven years of technical and commercial evaluation, to make room for the new inter-government deal
On August 5, 2015, new amendment to offset guidelines brought in, which allows Dassault Aviation to give details of its Indian offset partner at a later stage, instead of during evaluation or before signing of the deal
In June 2016, Modi Government allows 49% FDI through automatic route, meaning foreign firms no longer need prior approval from the Government in defence sector
On August 24 2016, the Cabinet Committee on Security approves the new deal for 36 Rafale jets under the inter-governmental agreement.
On September 23 2016, – The inter-governmental agreement and offset agreement get signed on the same day
On October 3 2016, Reliance Aerostructure Ltd and Dassault Aviation form joint venture with 51% and 49% stakes, respectively.
The same day, Dassault and Reliance lay foundation stone for a manufacturing facility in Nagpur (IPA Service)