Rafale deal and its origin In 2001, post-Kargil experience, the armed forces of the country felt that it caused three months to deal with enemies during Kargil war with help of Bofors and therefore they needed fully loaded with weaponry multi-role combat aircrafts which can strike from huge distance at the enemy and destroy the targets. Also, both of our neighbour countries, Pakistan and China, were empowered in this area of defence.
In 2004, the UPA (United Progressive Alliance) came to power. On June 29th 2007, the Defence Acquisition Council (DAC) granted the "Acceptance of Necessity'' for the procurement of 126 Medium Multi-Role Combat Aircrafts out of which 18 direct fly-away aircrafts were supposed to be acquired from the Original Equipment Manufacturer and rest 108 aircrafts were to be manufactured by Hindustan Aeronautics Limited (HAL) and they're to be delivered over period of 11 years from the date of signing.
In 2007, the bidding process commenced and in 2008, six vendors submitted proposals. The commercial bids were open in 2011 and in January 2012, M/s Dassault Aviation was listed as L-I. Negotiations commenced thereafter and continued but Somehow, the then Govt. again held the deal for a re-examination of facts after shortlisting on price and quality of Rafale. Meantime, the National Democratic Alliance (NDA) came to power in the middle of 2014.
The process of negotiations was in continuation even after NDA came to power in 2014. On 10th April 2015, India and France agreed for the acquisition of 36 Rafale Jets in the fly-away condition through an Inter-Governmental Agreement which was duly approved by Defence Acquisition Council and earlier proposal for the 126 Medium Multi-Role Combat Aircraft was withdrawn.
On 23rd September 2016, the Contract for the acquisition of 36 Rafale Jets and Offset Contracts were signed along with Weapons Package Supply Protocol and Technical Arrangements. The aircraft are scheduled to be delivered in phased manner commencing from October 2019.
Concept of Offset Contract Let's understand this concept with example of Rafale deal. Offset contracts are separate from Rafale contract. In Rafale Contract, the Govt. will purchase 36 fully loaded aircraft through Inter-Government Agreement coming from France and manufactured in France. No private party will be part of it and the role of the Govt. of India ends here.
Further, as per the policy framed by earlier UPA Govt., Original Equipment manufacturer i.e. Dassault Aviation is supposed to make future purchases of an amount equivalent to 30% of the total purchase of Rafale deal from Indian manufacturers. They can purchase guns, rubbers, steel or anything and can choose anyone as suppliers (Offset Partners) in India. They can enter into offset deal with both private as well as public sector and these purchases have nothing to do with Rafale deal.
Controversy In the month of September 2018, certain newspapers and online media reported statement of the Former President of France, Francois Hollande, from an interview where he claimed that the French Govt. was left with no choice in matter of selection of Indian Offset Partners and the Reliance Group, was the name suggested by Govt. of India. However, both the Govt. of India and Govt. of France rejected the claim of Francois Hollande.
In India, the President of Indian National Congress and Member of Parliament Mr. Rahul Gandhi raised this issue and made direct allegations on the current NDA Govt. and Prime Minister Narendra Modi of favouritism and corruption on several occasions on various stages like Public meetings, Press meetings, Parliament and Social media. However, he never presented any document or evidence in support of his allegations.
In response to the allegations made by the opposition leader, Union Ministers Mr. Arun Jaitley as well as Defence Minister Smt. Nirmala Sitharaman responded in Parliament as well as through Press Conference and several interviews in which they rejected all the allegations of opposition and termed them as baseless.
The opposition also demanded to make price acquisition of Rafale Jets public. The Govt. disclosed price of basic aircraft in Parliament but denied to make the price of weaponry aircraft's public citing reason of National Security.
Meanwhile, in 2018, Shri Manohar Lal Sharma, Shri Vineet Dhanda and Shri Sanjay Singh filed three separate writ petitions and Shri Yashwant Sinha, Shri Arun Shourie, and Shri Prashant Bhushan filed one joint petition with Supreme Court and prayed for following:
The Government submitted requisite information regarding the decision-making process, Indian Offset Partner (IOP) and details regarding pricing to the Court in a sealed cover.
Rafale Verdict The Supreme Court scrutinized the controversy in three broad areas of concern, namely, (i) the decision-making process; (ii) difference in pricing; and (iii) the choice of Indian Offset Partner (IOP).
On the decision-making process, the Supreme Court held that we are satisfied that there is no occasion to really doubt the process and we have also been informed that joint exercises have taken place which is a financial advantage to our nation. Broadly, the process have been followed.
On pricing, the Court held that it is certainly not the job of this court to carry out a comparison of the pricing details in such kind of cases. We say no more as the material has to be kept in a confidential domain. Here, Court has agreed that confidentiality of the pricing details of weaponry aircraft is essential for National Security by considering the reservations made by the Chief of the Air Staff.
On the choice of Indian Offset Partner (IOP), the Court held as follow:
We find no reason for any intervention by this court on the sensitive issue of purchase of 36 defence aircraft by the Indian Government.
CAG report The Supreme Court decided the matters regarding decision process and choice of Offset contracts in their verdict but refused to decide matter regarding pricing and stated in their judgment that the Govt. has provided pricing details of basic aircraft to the court but haven't provided pricing details of weaponry aircrafts citing concerns for National Security.
In the CAG report, it was disclosed that the contract was concluded at 2.86% lower cost than the earlier deal. However, the CAG report has also not disclosed the price of weaponry aircraft.
Impact of Rafale Controversy Rafale Verdict has cleared hurdles in the delivery of these aircraft as scheduled in October 2019 as SC has rejected the demand to quash the Inter-Governmental Agreement for the purchase of 36 Rafale Jets.
Delay in Rafale deal may not have cost India economically as disclosures made by Comptroller and Auditor General of India (CAG) in their reports but it certainly has cost India's defence up-gradation since the demand was raised in 2001 and today we are in 2019 and still, we have not received a single Rafale Aircraft.
Supreme Court made the observation that the process was concluded for 36 Rafale Jets on 23rd September 2016 but nothing was questioned then but now these petitions have been filed to take benefit of the statement made by the Ex-President of France regarding Indian Offset Partners.
It is my observation that political discourse has also gone down drastically during this controversy. The opposition made allegations on Govt. based on a statement of a Former French President in an interview and no document or evidence was in their support. The matter was challenged before the Supreme Court and all allegations were found to be dismissed by the Supreme Court and also by CAG report on the pricing issue. Despite Supreme Court Verdict, the opposition continued to raise this issue and political discourse went so down that recently in the case of contempt of court, Mr. Rahul Gandhi was compelled to ask for an unconditional written apology to Supreme Court for misquoting SC on Rafale Verdict.
Today, the matter has been held for review in SC as a review petition has been filed by Shri Yashwant Sinha, Arun Shourie, and Prashant Bhushan but no demand for quashing this deal have been made.