New smoking gun?

Among the many high-profile defence deals signed during the tenure of the Narendra Modi government, the Rafale aircraft deal is the only one that has persistently attracted allegations of a scam. A closer look at the developments relating to the high-profile deal over the last three years reveals how and why it has steadily and increasingly become controversial.

This deal entered public consciousness in early April 2015 when the Prime Minister announced that India would acquire 36 Rafale fighter jets in a “fly-away condition” owing to a “critical operational necessity” of the Indian Air Force (IAF).

The unexpected decision, announced at a joint press conference with the then French President, Francois Hollande, in Paris attracted praise and also astonishment in India—praise for the urgency shown by the Prime Minister in taking the decision to fulfil a 15-year-old demand of the IAF and astonishment at the manner in which he had summarily replaced a previous arrangement under which 18 Rafale aircraft were to be acquired in “fly-away condition” and 108 manufactured in India, through an Inter-Governmental Agreement (IGA) with France.

More than a month later, the Congress party raised its first set of questions and criticisms against the IGA. At a press conference, former Defence Minister A.K. Antony sought clarifications about two things. Was the Finance Ministry, which had raised objections about the deal in the past, consulted and was the Defence Procurement Procedure followed? A day later, the Congress’ deputy leader in the Rajya Sabha and former Commerce Minister, Anand Sharma, sought to up the ante. He asked why the public sector company Hindustan Aeronautics Limited (HAL), which has a long experience in manufacturing the French Mirage jets, was kept out of the IGA. He also sought to know which private Indian company had replaced HAL, which was initially supposed to manufacture 108 Rafale aircraft in Bengaluru following technology transfer from Dassault Aviation, the French company that designs and manufactures the military aircraft.

However, the Modi government, then just a year old, enjoyed tremendous public goodwill and the Congress’ questions did not attract wide attention. In fact, the inability of the previous Congress-led alliance government to expedite procurement of the aircraft still dominated the political narrative pushed by the Modi government, which was seen as being decisive in addressing the concerns of the armed forces.

In an interview to The Tribune in May 2015, Modi sounded decisive in responding to criticisms from the Congress and justified his decision to purchase 36 Rafale aircraft in a “fly-away condition”: “The purchase of Rafale aircraft was guided by the need to respond to the immediate operational requirements of the Air Force which was affecting our defence capability. How can that be questioned? In fact, the challenge is to break a logjam that we inherited from the previous government. Some decision had to be taken. We consulted all concerned and decided that we will have only a government-to-government deal. There will be transparency, so no one will be able to raise questions.” However, questions continued to be raised. On its part, the government asked its critics to wait for a deal to be signed to share further details. A financial deal drawn from the IGA was still being worked out, the government seemed to suggest.

In September 2016, Manohar Parrikar, then the Defence Minister, formally signed a deal with his French counterpart to acquire 36 Rafale aircraft. Officials stated that the first Rafale jet would be inducted in the IAF within three years of the deal and all 36 in 67 months. Evidently, the number of aircraft proposed to be acquired under the deal changed from 126 to 36.

Reliance’s involvement

In late October 2017, the foundation stone for the manufacturing facility of a new joint venture company, Dassault Reliance Aviation Limited (DRAL), was laid in Nagpur. As the name suggests, it is a business partnership between Reliance Aerostructure, an Anil Ambani-led Reliance Group company, and Eric Trappier-led Dassault Aviation. The purpose of forming this joint venture was stated in an official release issued by the Reliance Group: “The Dassault-Reliance manufacturing facility Dhirubhai Ambani Aerospace Park is located in the Mihan SEZ adjoining Nagpur International Airport. Under Joint Venture company, DRAL (51% Reliance Aerostructure and 49% Dassault Aviation), the facility will manufacture several components of the offset obligation connected to the purchase of 36 Rafale Fighters from France, signed between the two governments in September 2016. DRAL will manufacture components for the Legacy Falcon 2000 Series of Civil Jets manufactured by Dassault Aviation and thus will become part of its Global Supply Chain. These first steps are expected to achieve in the coming years the possible setting up of final assembly of Rafale and Falcon Aircraft.”

Among those who attended the foundation-stone laying ceremony were Nitin Gadkari, Union Minister and Member of Parliament from Nagpur, Maharashtra Chief Minister Devendra Fadnavis and Reliance Group chairman Anil Ambani. In the official statement, Ambani was quoted as saying: “This facility in Mihan, Nagpur within the Aerospace Park named after my late father Shri Dhirubhai Ambani could not have happened without the strong and consistent support of Shri Nitin Gadkari and Shri Devendra Fadnavis.”

Congress’ questions

A little over a fortnight after the ceremony, just as the momentum for the Gujarat Assembly election was building up, critical questions against the deal resurfaced. At a press conference, the Congress’ communications-in-charge, Randeep Surjewala, said: “A huge scam is brewing.” The Congress, he said, had repeatedly sought to get more information about the deal, especially its financials, but after the IGA was announced, it was asked to wait for a deal. Even after a deal was signed in September 2016, full information was not being made public, he asserted.

Surjewala had a set of five questions for the Prime Minister on behalf of the Congress. These were about the financials of the deal—chiefly about the claim that the deal was costlier than the one which was being negotiated under the previous government—and transfer of technology.

One of the questions was particularly sharp: “Why did Prime Minister Shri Narendra Modi promote the interests of one industrial group, i.e., Reliance Defence Limited, which has led to the company tying up and entering into a joint venture with Dassault Aviation worth Rs.30,000 crore? Why was this done by Prime Minister bypassing the interests of a reputed public sector undertaking like HAL?”

It provoked sharp reactions from Bharatiya Janata Party (BJP) spokespersons and the Reliance Group on the same day. In a statement, the company termed allegations made against both Ambani and his companies as “unfounded and false”. Specifically mentioning the allegation about the Prime Minister promoting the company’s interests, it said: “The joint venture between Reliance Aerostructure Limited and Dassault Aviation Limited is a bilateral agreement between two companies. Dassault Aviation selected Reliance Aerostructure Limited as its joint venture partner. The Indian government has no role to play in this.” Notably, in conclusion, the statement added: “We reserve the right to take appropriate legal action against any party that disseminates these defamatory allegations.”

The Congress refused to back down. The next day, Rahul Gandhi, then a party vice president, again raised questions while interacting with mediapersons at a party event: “Tell me one thing. You ask me so many questions and I answer them frankly. Why don’t you ask Modiji about the Rafale deal? And why don’t you ask questions about Amit Shah’s son… as to what is happening. I will happily answer whatever questions you ask me, but the Prime Minister, who changed the entire Rafale deal to help a businessman…why don’t you ask him about that? I want to ask you.” Soon afterwards, he tweeted: “Can you explain ‘Reliance’ on someone with nil experience in aerospace for Rafale deal? Self ‘Reliance’ is obviously a critical aspect of ‘Make in India’.”

However, with the Gujarat Assembly election campaign throwing up new political issues, the Rafale deal got relegated to the sidelines in subsequent days.

In early February 2018, it came under critical scrutiny again, this time in Parliament. M.V. Rajeev Gowda, the Congress’ Rajya Sabha member, asked Defence Minister Nirmala Sitharaman, through a written question, about the cost of each aircraft under the IGA for 36 Rafale fighter aircraft. In her official response, she wrote: “As per ‘Article-10’ of the Inter-Governmental Agreement (IGA) between Government of India and Government of France on the purchase of Rafale aircraft, the protection of the classified information and material exchanged under IGA is governed by the provisions of the Security Agreement signed between the two nations in 2008.”

This provoked a fresh controversy. Speaking with mediapersons outside Parliament, Rahul Gandhi said: “For the first time, the Defence Minister is saying that we will not share details of money spent on buying the aircraft… yeh kya tareeka hai [is this the way?]…I said during the Gujarat elections that there is a scam in the Rafale deal. Modiji has personally got the deal done. Modiji has personally gone to Paris. Personally the deal was changed. Entire India knows it. And the Defence Minister is saying she will not inform India, the Indian martyrs and their relatives, about the money spent on buying those aircraft. What does this mean? This only means there is some scam.” Both Nirmala Sitharaman and Finance Minister Arun Jaitley strongly rebutted this allegation, insisting that there was no scam. Jaitley even pointed towards replies by previous Defence Ministers in Congress governments who refused to share information about the Rafale deal citing the same reason. However, another assertion from the current government that there was no deal to purchase 126 Rafale aircraft under the previous government appeared to take the sting out of his claim that Ministers of the United Progressive Alliance (UPA) had also denied information about the deal in Parliament.

Manish Tewari, former Cabinet Minister and Congress spokesperson, told Frontline that Nirmala Sitharaman’s reply was unconvincing. He pointed to the definition of “classified information” in the 2008 security agreement cited by the Defence Minister. “The definition doesn’t cover the price [of defence equipment being imported],” Tewari said.

The definition in the 2008 agreement for protection of “Classified information and material in the field of defence” states: “For the purpose of this agreement: ‘classified information and material’ refers to information and material to which a specific level of security classification has been accorded regardless of its nature and mode of transmission, which requires protection against compromise, destruction, removal, disclosure, loss or access to any uncleared [ sic ] and unauthorised person, in the interest of national security in accordance with national laws and regulations of the respective parties.”

Rajeev Gowda explained the rationale of his party asking the questions: “We are not asking for specific details about weapons or anything that is of strategic relevance. We want to know, overall, whether you sold out the country and paid three times the price which other countries have paid. It raises suspicions about why you are paying more. If your Minister of State for Defence has already answered this question in the past, then why are you not telling the price details now? In any case, price is a gross number. You can give that. National security does not come under threat by revealing that. The bluff and bluster seems a shameful attempt to cover up.” Rajeev Gowda was referring to an answer given by the Minister of State for Defence on November 18, 2016, in the Lok Sabha. Responding to a written question raised by Sukhbir Singh Jaunpuria, a BJP MP from Rajasthan, about the estimated cost of the fighter jets and the expected time of their delivery, Subhash Bhamre, Minister of State for Defence, wrote: “Cost of each Rafale aircraft is approximately Rs.670 crore and all the aircraft will be delivered by April 2022.”

The reluctance to share information in February 2018 is, therefore, inexplicable.

Speaking to Frontline , a top government source said: “Cost-wise, this is a cheaper deal than what the UPA government had been negotiating. Additionally, there are 13 India-specific changes which make the Rafales we are buying even more potent. If we give details, then Pakistan will have no need to recruit spies. What has happened is that they haven’t got anything against the Modi government in the past four years. These are manufactured allegations.”

Notwithstanding the government’s reluctance to share information, the Congress president continued to attack the Prime Minister over the Rafale deal in late February. In a tweet, he exhorted the Prime Minister to speak about the “Rs.58,000 crore Rafale Scam” in the “Mann Ki Baat” radio show. Clearly, India’s main opposition party has found one of its campaign issues for the 2019 elections. But will the accusations create enough disaffection towards the government to affect voting behaviour?

Sanjay Kumar, Director of the Delhi-based Centre for the Study of Developing Societies, said: “One thing which goes against the government along with corruption is price rise. If the two things happen simultaneously, people tend to believe that prices are rising because politicians are making money. But the recent scams which have surfaced may not have the same potential or same intensity which was there during the UPA time because there were other things also happening, which people didn’t like. So, yes, people would not welcome these scams, but it may not have the same impact on the voting choices as it happened in 2014. Because, a large number of people seem to think that the Prime Minister himself is clean. He has not made his hands dirty in these scams, and so on, and the whole government is centred on this one man. So that will actually help in holding the tide against the BJP at this moment. What happens six months from now, I do not know.”

The coming months are crucial because the next general elections are scheduled for 2019. It is this that gives an edge to the opposition’s clamour and makes the government worried.