Rafale deal cheaper than the original contract: CAG
February 14 2019 12:18 AM
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Agencies /New Delhi

India’s federal auditor said yesterday that 36 fighter jets bought from France’s Dassault Aviation were cheaper than an earlier deal, offering respite for Prime Minister Narendra Modi.
Modi’s 2016 decision to abandon talks on buying 126 Rafale planes, including local production, and instead order the 36 French jets in flyaway condition has drawn political fire from Modi’s rivals, alleging wrongdoing in a deal estimated at $8.7bn.
The Comptroller and Auditor General (CAG) said in a report submitted to parliament yesterday it had done a cost analysis and found the new contract saved 2.86% on the earlier deal.
That deal hit a wall over quality assurances India sought for the jets to be made locally, prompting the government to scale back the order to meet the military’s most urgent requirements.
The CAG did not provide the price of the planes, in line with government policy not to provide details of arms purchases, but listed parameters on which it made comparisons, such as customising the aircraft, engineering support and the weapons package.
“The contract was concluded for “U” mn i.e. 2.86% lower,” the CAG said. The contract was one of the largest closed by India in recent years.
But as Modi heads into an election expected in April-May, the opposition has said he bypassed Defence Ministry procedures and caused a loss of public funds.
Congress leader Anand Sharma said the government-appointed auditor’s report lacked credibility.
“We know how these things function,” he said.
The CAG though noted that the new contract did not have the financial and performance guarantees that had been agreed to previously.
The Hindu newspaper reported yesterday that defence ministry officials who negotiated the contract had written a dissent note over the lack of sovereign or bank guarantees for the contract.
The note, published on June 1, 2016, said there were serious concerns about terms of the deal and that the final price offered by Dassault was not cheaper than the one previously being negotiated.
Congress president Rahul Gandhi said the two major claims made by the government of cheaper deal and faster delivery of aircraft stood demolished.
“The two pillars of the Narendra Modi government’s defence for the aircraft deal, of cheaper deal and faster delivery, stand demolished,” he said.
Gandhi also dismissed as “eyewash” the CAG report.
“Experts who were part of the negotiating team have said Dassault Aviation has an order backlog of 83 aircraft and with a capacity of manufacturing only 11 aircraft per year, it will take eight years to clear the backlog.
“Thus, India will get its first Rafale much later than what was scheduled in the UPA deal. Not only that, they have also pointed out the final price offered by the French is 55.6% higher than the benchmark price fixed by the negotiating team,” Gandhi said, referring to the Congress-led United Progressive Alliance.
Dismissing the CAG report, Gandhi said even the national auditor has admitted that the cost of India-specific enhancements for 126 aircraft with transfer of technology was cheaper than what is under the new deal without transfer of technology.
“Under the UPA deal, the India-specific enhancements along with transfer of technology was €11.11mn per aircraft whereas under the Modi deal, the cost for the same, that too without transfer of technology, is €36.11mn per aircraft. This is where all the corruption has happened,” Gandhi alleged.




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