Articles - Rafale Deal

No bank guarantees meant a more expensive new Rafale deal
N. Ram
MARCH 06, 2019 05:04 IST
A Rafale jet performing, during the AERO INDIA 2019 at IAF station Yelahanka, in
Bengaluru. | Photo Credit: K. Murali Kumar
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Rafale deal
INT’s final report reveals how the Indian negotiating position was
weakened and the French position bolstered by a parallel negotiating
track
In its final report submitted to the Defence Ministry on July 21, 2016, the seven-
member Indian Negotiating Team (INT) estimated the cost of loading bank
guarantees, which the French commercial suppliers with backing from the French
government refused to do, as €574 million. This made the €7.87 billion inter-
governmental agreement signed on September 23, 2016 by the National Democratic
Alliance government for the aircraft and weapons packages for the 36 fly-away
Rafale fighter jets more expensive by €246.11 million than the estimated aligned
cost of the Rafale aircraft deal initiated by the United Progressive Alliance
government.
Detailed document
The “Report of the Indian Negotiating Team on Procurement of 36 Rafale Aircraft

for Indian Air Force” is a detailed and revealing document to which The Hindu has
access. The report states in paragraph 69: “The final offer of 7878.98 M€ (excluding
additional mandatory weapons supplies of 10.55 M€) is 327.89 M€ lower than the
aligned cost of 8205.87 M€ with respect of MMRCA [Medium Multi Role Combat
Aircraft] offer without taking into account the impact of BG [Bank Guarantees],
which has been brought out at Para-23 above [emphasis added].”
How cost was arrived at
In fact, the INT report elaborates in paragraphs 21, 22, and 23 on how it arrived at
€574 million as the cost of loading the bank guarantee. The computations were done
on “an annual bank commission rate of 2% including confirmation charges by an
Indian bank, as communicated by SBI on 02 March 2016,” and the total commercial
impact of bank guarantees was worked out to a substantial 7.28% of the contract
value.
Table 1, sourced from the dissent note of the domain experts, shows that the aligned
cost is lower than the final negotiated price with the financial impact of bank
guarantees.
Table-1
Final price offered by

Aligned cost in € million
French side in €
Item (without Bank Guarantee
million (without Bank
costs)
Guarantee costs)
Aircraft package 7341.58* 7169
Weapons package 718.29 710.45#
Total 8059.87 7879.45

Financial impact of Bank
574
guarantees
Total 7485.87 7879.45
*The aligned costs for # Excluding the cost of

Source: Page 4 of the
aircraft package has been optional Weapons Package,
dissent note signed by
further rationalised due to supplies recommended by
the three domain
optimisation of Spares MBDA for training and
experts of the Indian
Package offered by the operational requirements of
Negotiating Team
French side IAF
The INT report reveals that the Indian negotiators repeatedly pressed the French
side to provide bank guarantees. The Ministry of Law & Justice had advised in
writing, in December 2015, that as a legal safeguard government or sovereign
guarantees should be obtained from France “in view of the Contract involving huge
pay-outs value of procurement price before actual delivery of supplies and services,
which de facto meant advance payment.” With the French side flatly refusing to
accept this demand made during the negotiations, the Indian negotiators did their
best to secure bank guarantees, which had been included in the original MMRCA
proposal made by Dassault Aviation.
Again of no avail
The INT contended at one point that “the best way to resolve the concerns of the
Ministry of Law & Justice and difference in the opinion of both sides with respect to
the impact of BG loading is to provide BG and the confirmation charges would be
borne by the Indian side.” This again proved to be of no avail.
The final INT report is silent on why the commercial impact of loading the bank
guarantees was not factored into its exercise of comparing the costs of the new deal
and the original MMRCA proposal (see Table 2). The same failure to explain the
substantial missing factor in the aligned cost comparison is encountered in the
Comptroller and Auditor General of India’s report on the Rafale deal presented in
Parliament on February 13, 2019. More on this below.
It is not difficult to discover the reason for this conspicuous failure to take into
account the commercial impact of bank guarantees and the awkward silence over
this in the two reports. A parallel track of negotiations had been activated in 2015,
unknown to most members of the INT, involving the Prime Minister’s Office and
the National Security Adviser. We may recall here that a Defence Ministry note of
November 24, 2015 had protested against the “parallel negotiations” being
conducted behind the backs of the Defence Ministry and the INT by officials of the
Prime Minister’s Office. The note stated that this had “weakened the negotiating
position of MoD and the Indian Negotiating Team”. The then Defence Secretary, G.
Mohan Kumar, had strongly endorsed this protest with his own hand-written noting,
“RM may pl. see. It is desirable that such discussion be avoided by the PMO as it
undermines our negotiating position seriously.”
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Without pointing fingers at anyone, the INT report reveals the extent to which these
parallel negotiations, which continued into 2016 and right up to the time of signing
the IGA, weakened the Indian negotiating position and benefited the French side.
The latter only had to rely on what had been agreed on along the parallel track with
officials of the PMO and the National Security Adviser or cite the draft IGA or the
Memorandum of Understanding, signed on January 25, 2016, as the effective
closure of the deal. For instance, when on March 31, 2016 the Indian negotiators
pressed for the inclusion of bank guarantees, citing legal advice from the Ministry
of Law and Justice, all that the French side had to do was to assert that “the basic
principle of Bank Guarantees had been explained several times earlier and that it
was not compatible with the structure of the IGA and that Bank Guarantees were
not acceptable.”
The more important reason for this silence on why the cost of loading bank
guarantees fails to figure in the cost comparison lies in the Indo-French Joint
Statement issued on April 10, 2015. On what was to take shape as the new Rafale
deal, it reads as follows: “Government of India conveyed to the Government of
France that in view of critical operational necessity for Multirole Combat Aircraft
for Indian Air Force (IAF), Government of India would like to acquire 36 Rafale
jets in fly-away condition as quickly as possible. The two leaders agreed to
conclude an Inter-Governmental Agreement for supply of the aircraft on terms that
would be better than conveyed by Dassault Aviation as part of a separate process
underway; the delivery would be in a time frame that would be compatible with the
operational requirement of IAF and that the aircraft and associated systems and
weapons would be delivered on the same configuration as had been tested and
approved by IAF, and with a longer maintenance responsibility by France.”
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Defence Ministry protested against PMO undermining Rafale

negotiations
Stating categorically that loading bank guarantees in the cost comparison would
have led to the conclusion that the new deal was not on “better terms” than the
original MMRCA proposal would have directly contradicted the promise made in
the Indo-French Joint Statement, which the INT report acknowledges as “the
guiding principle for determining better terms.”
However, as I reported in The Hindu of February 13, 2019, the three domain
experts on the INT, whose eight-page note of dissent is appended to the INT report,
had no such inhibitions about arriving at the conclusion that “the final price offered
by the French Government cannot be considered as ‘better terms’ compared to the
MMRCA offer and therefore not meeting the requirement of the Joint Statement”.
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In its submission made to the Supreme Court of India, the government argued that it
had obtained a Rafale deal on “better terms” than what had been envisaged in the
preceding MMRCA procurement process. This claim also figures in Volume II of
the CAG’s performance audit report relating to the Rafale deal. The CAG calculated
the cost of bank guarantees separately but did not include it in the tabulation when it
asserted that the deal signed by the Modi government was 2.86% lower than the
UPA-era bid for the French fighter jet.
However, the CAG report entered this caveat: “In the offer of 2007 M/s DA had
provided the financial and Performance Guarantees, the cost of which was
embedded in the offer because the RPF had required the Vendor to factor these
costs in the Price Bid. But in the offer of 2015 there was no such guarantee as it was
an IGA…Therefore, the total saving of ‘AAB3’ million € accruing to the vendor by
not having to pay these Bank Charges should have been passed on to Ministry.
Ministry has agreed to the Audit calculations on Bank Guarantees but contended
that this was a saving to the Ministry because the Bank guarantee charges were not
to be paid. However, Audit noted that this was actually a saving for M/s DA when
compared to its previous offer of 2007.”
Final INT Report calculations
According to the final report of the INT, the cost of bank guarantees not provided
by the French side for the new deal negotiated by the NDA government was
calculated to be €574 million. The report also explicitly noted in paragraph 69 that
the NDA government’s deal was €327.89 million lower, “without taking into
account the impact of BG (Bank Guarantee).”
A page from the final INT report, in facsimile.

In a section titled “Impact of Bank Guarantee,” the INT calculated the commercial
impact of bank guarantees for ‘Advance Payments’, ‘Performance Bond’ and
‘Warranty and MTBF Linked Bond’. The calculations were done at an annual bank
commission rate of 2%, including confirmation charges by an Indian bank, as
communicated by the State Bank of India on March 2, 2016. The total impact of
bank guarantees came to 7.28%, “which translates to approximately 574 M€ for the
offered cost of 7890M€.”
During the negotiations, the INT report notes, the French side “provided their
version of the calculations for Bank Guarantee loading, reflecting a figure of 143
M€, which was at an annual commission rate of 0.5% without confirmation by an
Indian bank”. The INT thereafter proposed that “if the Bank Guarantee charges are
so low, the French side may provide the Bank Guarantees and confirmation charges
would be borne by the Indian side as actuals. The suggestion was not agreed to by
the French side.”
The Ministry of Law and Justice had suggested that the French side should provide
the bank guarantees and that the Indian side could bear the cost of confirmation
charges of loading of bank guarantee.
The Defence Acquisition Committee (DAC), chaired by the then Defence Minister,
Manohar Parrikar, had directed the INT on July 14, 2016 to “determine BG (Bank
Guarantee) impact based on rates at the source bank and bring out its
recommendations on BG charges”.
The significance of bank guarantees in pricing
With the French side refusing to give a sovereign or government guarantee, the
Cabinet Committee on Security made a further concession by waiving the
requirement of bank guarantees from the French commercial suppliers and instead
settled for a legally non-binding ‘Letter of Comfort’ from the French Prime
Minister. By contrast, during the submission of bids for the MMRCA tender to the
UPA government, all companies, including Dassault Aviation, had submitted bank
guarantees from first class banks of international repute.
As reported in The Hindu of February 13, 2019, Sudhansu Mohanty, Financial

Adviser (Defence Services), had recommended that in the absence of a sovereign or
bank guarantee, “it would be prudent to involve the French government as far as
releases are concerned” and that a practical way of doing this was to have the Indian
government make further payments to an escrow account held under the charge of
the French government and operated under terms and conditions agreed between the
two governments. Mr. Mohanty’s recommendation too was ignored, and as noted in
Paragraph 46 of the INT’s final report, the Indian payments were to be made
directly to the two private companies, Dassault Aviation and MBDA France,
through their dedicated bank accounts opened at the French government-controlled
bank, Caisse des Depots Consignations (CDC), France.
ALSO READ
Rafale deal not on ‘better terms’ than UPA-era offer
The question of bank guarantees assumes additional importance as 60% of the

payments were to be made in advance by the Indian government to the French
commercial suppliers. These payments were to be made within 18 months of
signing the deal, that is, by March 2018, although the first Rafale fighter jet would
arrive in India only after 36 months, that is, in September 2019.
Following the publication of my investigative article on the Defence Ministry’s

November 24, 2015 note of protest against “parallel negotiations”, the former
Defence Secretary, Mr. Mohan Kumar, claimed that the note “had nothing to do
with price. It was about sovereign guarantees and general terms and conditions.” He
also asserted that “it was not about parallel negotiations, but about parallel
viewpoints. We told them that there was no need for such discussions. I have
written the note in that particular context. There was nothing very serious about it. It
was when the negotiations started and later all issues had been settled. No
interference or anything of that sort happened from the PMO in the final
negotiations.’’ He explained further that “the parallel viewpoints were related to a
collateral guarantee which India wanted in the deal. We had expressed different
opinions about that discussion. That’s all it was.’’)
What we learn from the INT report, the dissent note by the three domain experts, the
legal advice from the Ministry of Law & Justice, and also the CAG’s report is that
Mr. Mohan Kumar was being economical with the truth. First, the issue of bank
guarantees, which figured repeatedly in the negotiations, was specifically mentioned
in the Defence Ministry’s note of protest against the “parallel negotiations” that
undercut the Indian negotiating position. Secondly, the refusal by the French side to
provide bank guarantees, which had been an integral part of Dassault Aviation’s
2007 MMRCA offer, had a substantial material bearing on the pricing of the new
Rafale deal.
In a recent address at a media conclave, Prime Minister Narendra Modi asserted that
“India is feeling the absence of Rafale. The entire country is saying in one voice
today, if we had Rafale probably the result would have been different.” It is
noteworthy that nobody of consequence, either in the political opposition or in the
news media, has questioned the quality of, or the need for, the Rafale fighter jets.
What has been in question is the process of decision-making, which has in many
material respects been shown by investigative journalism to have deviated from the
standard military procurement procedures laid down, as well as the pricing and
other terms and accompaniments of the deal.
Defence Ministry protested against PMO undermining Rafale negotiations
N. Ram
FEBRUARY 08, 2019 05:00 IST
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Defence Minister Manohar Parrikar exchanges documents with his French
counterpart Jean-Yves Le Drian after signing an MoU on the purchase of 36 Rafale
fighter aircraft in the presence of French President Francois Hollande and Prime
Minister Narendra Modi at Hyderabad House in New Delhi on January 25, 2016. |
Photo Credit: R.V Moorthy
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Rafale deal
The French side took advantage of parallel parleys by the PMO that
weakened Indian team’s position.
At the height of the negotiations over the controversial €7.87 billion Rafale
deal between India and France, the Defence Ministry raised strong objections to
“parallel negotiations” conducted by the Prime Minister’s Office (PMO) with the
French side. Stating that it was clear that such parallel discussions by the PMO had
“weakened the negotiating position of MoD and Indian Negotiating Team,” a
Defence Ministry note dated November 24, 2015 brought this to the attention of the
then Defence Minister, Manohar Parrikar.
Stating that “we may advise PMO that any Officers who are not part of Indian
Negotiating Team may refrain from having parallel parlays [parleys] with the
officers of French Government,” it suggested that “in case the PMO is not confident
about the outcome of negotiations being carried out by the MoD, a revised modality
of negotiations to be led by PMO at appropriate level may be adopted in the case.”
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question, says Rahul Gandhi
According to the government’s submission to the Supreme Court of India in

October 2018, the negotiations over the Rafale deal were conducted by a seven-
member team headed by the Deputy Chief of Air Staff. There was no mention of
any role for the PMO in these negotiations.
ALSO READ
Official documents available to The Hindu reveal, however, that the Defence
Ministry protested that the position taken by the PMO was “contradictory to the
stand taken by MoD and the negotiating team.” The then Defence Secretary, G.
Mohan Kumar, made this official notation in his own hand: “RM may pl. see. It is
desirable that such discussions be avoided by the PMO as it undermines our
negotiating position seriously.”
The Defence Ministry's internal note dated November 24, 2015, in facsimile
Firm opposition
His firm opposition was recorded on November 24, 2015 on a note prepared by S.
K. Sharma, Deputy Secretary (Air-II), and endorsed by the Joint Secretary &
Acquisition Manager (Air) and the Director General (Acquisition) in the Ministry.
The new Rafale deal, which bore little resemblance to the original deal under
prolonged negotiation, was announced in Paris by Prime Minister Narendra
Modi in April 2015. This was followed by the signing of a Memorandum of
Understanding between India and France when President Francois Hollande visited
Delhi on the occasion of Republic Day in 2016. The inter-governmental
agreement for 36 Rafale fighter jets was eventually signedon September 23,
2016.
According to the Defence Ministry note, the details of the parallel negotiations
conducted by the PMO came to the Ministry’s notice only from a letter of October
23, 2015 from General Stephen Reb, the head of the French Negotiating Team. The
letter “made mention of a telephonic conversation between Shri Jawed Ashraf, Joint
Secretary in the Prime Minister’s Office and Mr. Luis Vassy, Diplomatic Adviser to
the French Minister of Defence, which took place on 20.10.2015.”
General Reb’s letter was brought to the notice of the PMO by the Defence Ministry.
The head of the Indian Negotiating Team, Air Marshal S. B. P. Sinha, AVSM VM,
Deputy Chief of Air Staff, also wrote to Mr. Ashraf.
In his reply to Air Marshal Sinha on November 11, 2015, Mr. Ashraf “confirmed
that he had held discussion with Mr Luis Vassy, Diplomatic Adviser to the French
Minister of Defence,” adding that Mr. Vassy “spoke to him on the advice of the
French President’s office and the issues referred to General Reb’s letter were
discussed.”
President Hollande had told AFP, as reported by Le Monde in September 2018, that
“asked by Agence France-Presse on the sidelines of a conference in Montreal on
Friday, he said that the name of Reliance Group had appeared as part of a ‘new
formula’ in negotiations over the Rafale deal, decided by the Modi government after
it came to power.” The reference was to the Anil Ambani-owned Reliance Defence.
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ex-President Hollande
The Defence Ministry note also stated that “the discussions between Diplomatic
Adviser to the French Defence Minister and Joint Secretary to PM tantamount to
parallel negotiations while the Indian Negotiating Team constituted by the Ministry
of Defence is undertaking the process of formal negotiations with the French side.”
Detrimental to interests
“Such parallel negotiations may be detrimental to our interests as the French side
may take advantage of same by interpreting such discussions to their benefit and
weakening the position taken by Indian Negotiating Team. This has precisely
happened in this case,” the note added.
Citing “a glaring example”, the Defence Ministry note pointed out that General Reb
in his letter had stated that “taking into consideration the outcome of discussions
between Diplomatic Adviser to the French Defence Minister and Joint Secretary to
PM, no Bank Guarantee is provisioned in the supply protocol and the letter of
comfort provides sufficient assurances of the proper implementation of the supply
protocol by the industrial suppliers.”
This, the note stated, was “contrary to the position taken by the MoD and conveyed
by Indian Negotiating Team that the commercial offer should be preferably backed
by Sovereign/Government Guarantee or otherwise by Bank Guarantee.” Another
instance of a contrary stand taken in the parallel negotiations was on the arbitration
arrangement, the note pointed out.
This is not the only instance of “parallel negotiations” in which the Indian side took
contrary positions. It has already been reported elsewhere that the National Security
Adviser, Ajit Doval, negotiated with the French side in Paris in January 2016
and The Hindu has access to documentation that confirms this. Mr. Doval’s advice
to Mr. Parrikar on doing away with a sovereign guarantee or bank guarantee for the
Rafale deal was also recorded by the then Defence Minister in a file noting.
https://www.thehindu.com/news/national/defence-ministry-protested-against-pmo-
undermining-rafale-negotiations/article26207281.ece
Rafale case: SC refuses to intervene in jets procurement

Krishnadas Rajagopal
NEW DELHI, DECEMBER 14, 2018 10:58 IST
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A file photo of a Rafale aircraft.

Court holds that there is no substance to the allegation that the government
showed any "commercial favouritism" as the choice of IOP is not in
government's realm.
The Supreme Court on Friday said it cannot embark on a judicial review into the deal for
procurement of 36 Rafale fighter jets on the basis of petitions, which seem to have been
spurred by a media interview of former French President Francois Hollande and press
coverage alleging "favouritism" by the Narendra Modi government.
"Individual perceptions cannot be the basis of a roving judicial review... The court cannot sit
as an appellate authority over each and every aspect of the deal," Chief Justice of India (CJI)
Ranjan Gogoi, who authored the judgment for a three-judge Bench, held.
The court refused to employ its considerable powers of judicial review to intervene in the
deal's decision-making process, pricing and the choice of Indian Offset Partner (IOP). It
agreed with the government that judicial review is constricted in matters of defence
procurements, inter-govenmental agreements that may be vital to national security.
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Decision-making process
The judgment by the Bench, also comprising Justices S.K. Kaul and K.M. Joseph, expressed
the court's satisfaction that there was no occasion to doubt the decision-making process which
led to the Inter-Governmental Agreement (IGA) signed on August 24, 2016 between the
French and Indian governments.
The judgment read out by the CJI said "minor variations" in the decision-making process
should not lead to the setting aside of the contract itself.
The marathon hearings in the court in November saw the government admitting there was no
sovereign guarantee from the French government on the 36 jets deal in case the aircraft’s
manufacturer, Dassault Aviation, defaulted.
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Attorney General K.K. Venugopal, had however assured there was a “Letter of Comfort”
from France, which was as good as a sovereign guarantee. But petitioners like advocate
Prashant Bhushan, former Union Ministrs Arun Shourie and Yashwant Sinha had argued that
a letter of comfort had no legal sanctity.
It was also brought to fore in the hearings that the Cabinet Committee on Security (CCS) had
approved the IGA only well over a year after the Indo-French Joint Statement of April 10,
2015, which the note said, had conveyed an “intent” to acquire 36 jets in a fly-away condition
“as quickly as possible”. The intent was announced during the Prime Minister's visit to Paris.
The Defence Procurement Procedure (DPP) 2013 mandates that acquisitions worth over Rs.
1,000 crore should be first cleared by the CCS, which is the competent financial authority.
Court restrains from delving deeper into issue
In the judgment, the court, however restrained itself from delving deeper into the issue. It
went on to repeat the government's claim that the contract was of "financial advantage to the
nation".
Besides, Chief Justice Gogoi recalled how senior IAF officers had told the court about the
need for induction of superior fourth and fifth generation fighter jets to gain air superiority.
The court said the negotiations for the revised deal for 36 jets started when the earlier
Request for Proposal (RPF) for 126 Rafale jets was all but dead.
"Our country cannot be unprepared... We cannot go into why 36 jets and not 126. We cannot
ask the government to go for 126," the Supreme Court observed.
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The Court said it could not use the mechanism of judicial review to compare the prices of
aircraft between the original RPF of 2007 for 126 jets with Dassault and the present IGA.
The Court noted that the explanatory note submitted by the government in the court on price
details claims there is "commercial advantage" in the purchase of 36 jets. The court noted that
the IGA had better terms as regards weapons and specifications.
"We say no more," Chief Justice Gogoi read out.
Acknowledges government stand
The Court acknowledged the government stand that it had no role whatsoever on the choice
of the IOP. The vendor, Dassault Aviation, chooses its own IOP.
The Court held that there was no substance to the allegation that the government showed any
"commercial favouritism" as the choice of IOP was not in the government's realm.
Mr. Shourie had argued that there was “government interference” in the choice of an IOP. He
had alleged that Reliance Defence, “a company with no defence experience”, was the IOP.
During the hearings, the Court questioned the government’s stand about having no “role” in
Dassault’s choice of an IOP. An amendment to the Offset Policy, which allows “no offset
obligations” for the first three years of a contract, had also come under the spotlight.
According to the current offset contract, Dassault needs to inform the Union government
about its IOP only by October 2019.
The Court had questioned the legality of the retrospective amendment and asked that the
formal proposal indicating details of IOPs and products for offset discharge should have been
part of the main procurement proposal.
The judgment came on a batch of petitions for an independent court-monitored CBI/SIT
investigation into the deal.
https://www.thehindu.com/news/national/rafale-case-sc-refuses-to-intervene-in-the-jets-
procurement-case/article25740682.ece
Citing The Hindu report, Chidambaram, Yechury slam govt on Rafale deal
Sandeep Phukan
NEW DELHI, JANUARY 18, 2019 11:32 IST
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Former Union Finance Minister and Congress leader P. Chidambaram. | Photo
Credit: R.V. Moorthy
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Rafale deal
The Hindu on Friday reported that the PM ’s decision to buy 36 Rafale fighter
jets from France instead of the 126 pushed the price of each fully loaded
aircraft up by 41.42%.
Opposition parties on Friday reiterated their demand for a joint parliamentary committee
(JPC) to probe the Rafale deal and accused the Narendra Modi-led government of
‘compromising on national security’ by reducing the number of Rafale fighter planes ordered,
from 126 to 36.
Addressing a press conference on The Hindu investigation, former Finance Minister P.
Chidambaram said the Modi government had ‘wronged’ the country and ensured a windfall
for Dassault Aviation, manufacturers of the Rafale fighters.
‘No explanation’
Mr. Chidambaram said ever since the renegotiated deal was signed by the Modi government
on April 10, 2015, none from the government could explain why it scaled down the order.
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“The answer to the question is now available through the splendid investigative report
published by The Hindu today. We congratulate the newspaper for the report that has been
published in public interest,” he said.
“The Air Force had asked for 13 India Specific Enhancements (ISE). The negotiated price
was €1300 million that would have to be paid under both the UPA-negotiated deal and the
NDA-negotiated deal. The twist in the story is over the amortisation or recovery by Dassault
of the cost of ISE,” said Mr. Chidambaram and added, “Under the UPA-negotiated deal, it
would have been spread over 126 aircraft. Under the NDA-negotiated deal it will be spread
over 36 aircraft.”
“It seems to me that Dassault is laughing all the way to the bank. The government has
wronged the country in two ways. Firstly, it has compromised national security by denying to
the Air Force 90 fighter aircraft that they desperately need. Secondly, it has purchased two
squadrons that will cost about €25 million more per aircraft and at 2016 exchange rate,(€25
million is equal to ₹186 crore) India will pay ₹186 crore more per aircraft,” he said.
“The windfall to Dassault is highly questionable. It is undeserved. It was certainly not
through as per negotiation, it was a deliberate decision,” Mr. Chidambaram said. He claimed
the revised terms not only ensured that Dassault could recover its cost/amortise the ‘design
and development’ cost of ISE in a shorter period of time but also get a higher ‘value of
money.’
“Should the government place an order for another 90 aircraft on Dassault, they [Dassault]
will certainly charge the ISE-loaded price at which it sold 36 aircraft, although the ISE cost
would have been recovered…Perhaps for this reason the government deleted the ‘follow on’
clause to buy more aircraft (up to 50% of the original order on the same terms and
conditions),” Mr. Chidambaram said.
Demand for JPC again
The Congress leader also questioned the manner in which decisions were taken by the Indian
Negotiating Team (INT), by a 4:3 majority.
“The vote of 4-3 itself tells a story. Has it ever happened before in a defence purchase? Why
was it so important in this deal to take every decision by a 4-3 vote brushing aside every
objection? I mean as a lawyer, I have heard about it in judgments in Courts but never in a
Government decision,” he said. “I think a JPC should be constituted and it should be
requested as far as possible to submit its report by the end of March. I think it can be done,”
he said, in reply to a question.
‘Done in great hurry’
CPI (M) general secretary Sitaram Yechury said Prime Minister Modi has been blocking a
JPC because of the facts that have been emerging now. “No doubt that the deal for 36 Rafale
fighter jets with France was done in a great hurry by Modi for the benefit of his crony
businessman, at the cost of India’s national security and at a heavy cost to the Indian
exchequer. It is crystal clear now, and no amount of spin will help,” tweeted Mr. Yechury,
tagging the news report.
“These are real issues. We must ask who is responsible for this mess. The Prime Minister did
everything. Neither the External Affairs nor Defence Minister was involved. So far he [PM]
has not spoken directly on it. He was not even present in the Lok Sabha when the issue was
debated,” CPI national secretary D. Raja told The Hindu.
https://www.thehindu.com/news/national/citing-the-hindu-report-congress-cpi-m-slam-
modi-govt-on-rafale-deal/article26023139.ece
Rafale deal documents stolen from Defence Ministry, Attorney General Venugopal tells SC
PTI
NEW DELHI, MARCH 06, 2019 13:39 IST
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Dogfight continues: The CAG report is unlikely to quell the disquiet over the Rafale
deal. AFP
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Rafale deal
He argues that the documents were marked secret and classified, and
revealing them was a violation of the Official Secrets Act.
The Union government on Wednesday told the Supreme Court that the documents
related to Rafale fighter aircraft deal have been stolen from the Ministry of Defence
(MoD), and the petitioners seeking a review of the verdict dismissing all pleas
against the purchase of the jets relied upon those papers.
A three-judge Bench, comprising Chief Justice of India (CJI) Ranjan Gogoi and
Justices S.K. Kaul and K.M. Joseph, began the open court hearing of the Rafale
case, during which former Union Ministers Yashwant Sinha and Arun Shourie and
advocate Prashant Bhushan, who had jointly filed the petition, alleged that the
Central government suppressed crucial facts when the apex court decided to dismiss
the batch of PIL (public interest litigation) petitions against the Rafale deal in
December.
When Mr. Bhushan referred to an article written by The Hindu's N. Ram,

Attorney General (AG) K.K. Venugopal opposed it, saying that the articles were
based on stolen documents and an investigation into the matter was on.
ALSO READ
Investigative reports by N. Ram on the Rafale deal
Mr. Venugopal said the first article by the senior journalist appeared in The
Hindu on February 8. The Hindu report on March 6 was aimed at influencing the
proceedings and that amounted to contempt of court, he added.
While Mr. Venugopal was seeking dismissal of the review petitions and raising
objections to Bhushan’s arguments based on the articles published in The Hindu, the
Bench sought to know from the Centre what had it done when it was alleging that
the stories were based on stolen material.
The AG submitted that the documents relied on by the petitioners were marked
secret and classified, and therefore, are in violation of the Official Secrets Act.
Advancing his arguments on behalf of Mr. Sinha, Mr. Shourie and himself, Mr.
Bhushan said critical facts on the Rafale deal were suppressed when the petition for
an FIR and investigation were filed.
'Suppression of facts'
He said that the top court would not have dismissed the plea for FIR and probe into
Rafale deal had there not been suppression of facts.
However, Mr. Venugopal said the documents relied upon by Mr. Bhushan were
stolen from the Defence Ministry and an investigation into the matter was on.
At this point, the CJI said that hearing Mr. Bhushan did not mean that the court was
also taking on record the documents.
The Bench rose for the lunch break, Mr. asking Venugopal to apprise it in the post
lunch session the whole development related to the stealing of the documents and
the investigation by the Centre.
https://www.thehindu.com/news/national/rafale-documents-stolen-from-defence-
ministry-a-g-kk-venugopal-tells-sc/article26445025.ece
Rafale documents: we are committed to protecting our sources, says N. Ram
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N. Ram, chairman, The Hindu Publishing Group. | Photo Credit: The Hindu
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“You may call it stolen documents... we are not concerned... nobody is

going to get any information from us on these sources. But the
documents speak for themselves and the stories speak for
themselves,” says The Hindu Publishing Group chairman.
Documents related to the Rafale dealwere published in public interest and nobody
would get any information from The Hindu newspaper on the confidential sources
who provided them, The Hindu Publishing Group chairman N. Ram said on March
6.
The documents were published because details were withheld or covered up, the
veteran journalist said as the government told the Supreme Court that
documents related to the Rafale aircraft deal have been stolen from the
Defence Ministry and an investigation into the theft is on.
“You may call it stolen documents... we are not concerned. We got it from
confidential sources and we are committed to protecting these sources. Nobody is
going to get any information from us on these sources. But the documents speak for
themselves and the stories speak for themselves,” Mr. Ram told PTI.
ALSO READ
He has written a series of articles on the Rafale deal, the latest one on March 6.
Those who put documents on the Rafale deal in the public domain are guilty under
the Official Secrets Act and contempt of court, Attorney-General K.K. Venugopal
said on March 6 before a bench hearing a batch of petitions seeking a review of the
court’s verdict dismissing all the pleas against the agreement on the fighter jet.
“I will not comment on the proceedings of the Supreme Court. But whatever we
have published has been published. They are authentic documents. And they have
been published in the public interest because these details have been withheld or
covered up,” Mr. Ram said.
“...It is the duty of the press — through investigative journalism — to bring out
relevant information or issues of great importance for the public interest,” he added.
On February 8, Mr. Ram wrote in The Hindu that the Defence Ministry raised
strong objections to “parallel discussions” conducted by the Prime Minister’s
Office during the negotiations over the ₹59,000 crore Rafale deal between India and
France.
“What we have done is completely protected under article 19 (1) (a) of the Indian
constitution — freedom of speech and expression — and also under the relevant
sections of the Right to Information Act, specifically, its section 8 (1) (i) and section
8 (2), which clearly protects this,” Mr. Ram said.
https://www.thehindu.com/news/national/rafale-documents-we-are-committed-to-
protecting-our-sources-says-n-
ram/article26447063.ece?utm_source=pushnotifications&utm_campaign=pushnotifications
&utm_medium=ALL_USER
Narendra Modi has questioned Balakot air strikes: Congress
Special Correspondent
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A Pakistani soldier stands guard at the site where Indian jets struck at Jaba, near
Balakot in Pakistan on February 26, 2019. | Photo Credit: AP
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Pulwama attack 2019
Balakot Air Strikes
Congress wants Mr. Modi to explain why he said results would have
been different with Rafale jets.
The Congress said on Sunday that it was not seeking any evidence of the cross-
border strikes by the Indian Air Force but Prime Minister Narendra Modi had
himself ‘questioned’ them by his remarks that the country was feeling the absence
of Rafale fighter jets as the results could have been different if India had these
aircraft.
“The Prime Minister has himself questioned the air strikes. He said had the Rafale
jets been there (with the IAF), the results would have been different. What is the
meaning of this,” Congress spokesperson Manish Tewari asked during a press
conference here.
Mr. Modi should himself explain what would have been different with the Rafale
jets. He held the Prime Minister responsible for the delay in induction of the French-
made fighter jets into the IAF by ‘cancelling’ the earlier negotiations.
ALSO READ
Pakistani village asks: Where are bodies of militants India says it

bombed?
The Prime Minister had on Saturday hit out at the Opposition for doubting the
armed forces on the anti-terror air strikes in Pakistan and said the country was
feeling the absence of the Rafale fighter jets.
‘Nation suffering’
“India is feeling the absence of Rafale. The entire country is saying in one voice
today, if we had Rafale probably the results would have been different. The country
has suffered a lot due to selfish interests earlier and now politics over Rafale,” he
had said at the India Todayconclave.
Other Opposition leaders also hit out at the Modi government for allegedly trying to
politically exploit the Pulwama tragedy and Air Force strikes.
ALSO READ
Balakot air strikes: Union Minister Ahluwalia’s video creates a furore
“He [Mr. Modi] started his tenure with the comment that he is not Pradhan Mantri
but Pradhan Sewak. Today he is reduced to Pradhan Pracharak. He has refused to
hold a dialogue with the Opposition. He does not take Parliament into confidence.
Instead he is busy addressing booth-level activists,” CPI leader D. Raja said.
https://www.thehindu.com/news/national/by-invoking-rafale-narendra-modi-himself-is-
questioning-balakot-air-strikes-says-congress/article26423737.ece?utm_source=taboola
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‘Cannot reveal Rafale details due to new pact’
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Govt. cites secrecy deal with France
The Union government cannot disclose details of the Rafale deal as India and
France had recently signed an agreement to protect classified information
exchanged between the two sides, according to officials.
The government told Parliament this week that the two sides signed the agreement
when French President Emmanuel Macron visited India on March 10.
“An agreement between India and France regarding the Exchange and Reciprocal
Protection of Classified or Protected Information was signed on March 10, 2018
during the visit of President of France to India,” Minister of State for Defence
Subhash Bhamre told Lok Sabha.
This new treaty would replace an agreement of 2008 and is the reason why the
government would not disclose details of the deal for the purchase of 36 Rafale
fighters from France, officials point out.
Mr. Bhamre further said: “This agreement defines the common security regulations
applicable to any exchange of classified and protected information between the two
countries.” The Minister did not provide further specifics of the agreement.
The new pact is significant in the wake of the Opposition, especially the Congress,
alleging a financial scandal in the purchase of the 36 Rafale fighter jets through a
government-to-government deal, instead of the 126 fighter aircraft deal through
competitive tendering that was under way.
https://www.thehindu.com/todays-paper/tp-national/cannot-reveal-rafale-details-due-to-
pact/article23386699.ece
N. Ram
JANUARY 18, 2019 05:12 IST
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The NDA government decided to buy 36 Rafale fighter jets from Dasault Aviation in
flyaway condition.
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Rafale deal
Narendra Modi
Big increase in Rafale's price came because a deal bypassing

mandated procedures and made in the face of official objections
resulted in €1.3 billion ‘non-recurring’ cost attributed to the ‘Design
and Development’ of 13 India Specific Enhancements being spread
over 36 instead of 126 aircraft
Prime Minister Narendra Modi’s decision, announced out of the blue in Paris on
April 10, 2015, to buy 36 Rafale fighter jets from France instead of the 126 asked
for by the Indian Air Force for seven squadrons pushed the price of each fully fitted,
combat-ready aircraft up by 41.42%. It was the National Democratic Alliance
government’s acceptance of the cost of €1.3 billion claimed for the ‘design and
development’ of 13 India Specific Enhancements (ISE), and the distribution of this
‘non-recurring cost’ over 36 instead of 126 bare-bones aircraft, that was the major
reason for the big increase in price.
The NDA government has refused to disclose even to a privileged committee of
Parliament full information on the pricing of a Rafale aircraft, contending that its
agreement with France on the ‘Exchange and Reciprocal Protection of Classified or
Protected Information’ stands in the way of such disclosure. The French
government, however, has made it clear that this inter-governmental agreement is
there only “to protect the classified information provided by the partner, which
could, in particular, impact the security and operational capabilities of the defence
equipment.” The restriction clearly does not apply to the disclosure of pricing
details. In fact, a scan of news media coverage reveals that there has been selective
background briefing by military and civilian defence officials on technical and other
supposedly sensitive details of the deal and that these briefings have helped answer
some, but not all the critical questions being asked about the Rafale deal, chiefly on
the pricing of these medium multi-role combat aircraft (MMRCA).
This article, based on information exclusively available to The Hindu, focusses on

the interesting question of how and why the price per Rafale fighter jet of the F3-R
standard, with practically the same configuration and capabilities, changed
substantially over three points, in 2007, 2011, and 2016.
In 2007, five years before M/s Dassault Aviation was declared the L1 vendor, that
is, the Lowest Bidder and the presumptive winner of the tender floated by the
United Progressive Alliance government for the supply of 126 Rafales (18 flyaway
plus 108 to be manufactured, under licence, in India by Hindustan Aeronautics
Limited), the price quoted by the vendor for one flyaway bare-bones aircraft was
€79.3 million. By 2011, the escalation cost factor had taken this per-aircraft price up
to €100.85 million. In 2016, the 9% discount on the 2011 price obtained by the
NDA government for the 36 Rafales it was buying from France through an Inter-
Governmental Agreement brought this per-aircraft price down to €91.75 million.
But that is not even half the story. Dassault claimed a €1.4 billion cost for the
‘design and development’ of 13 India Specific Enhancements, that is, additional
capabilities in the form of hardware as well as software that had been specified by
the Indian Air Force all along, and this cost was negotiated down to €1.3 billion.
What it meant was that the design and development cost, now distributed over 36
Rafale fighter jets, shot up from €11.11 million per aircraft in 2007 to €36.11
million when the deal was struck in 2016.
The Hindu has reviewed official documentation which reveals that three senior
Defence Ministry officials on the seven-member Indian Negotiating Team (INT)
objected to the high cost of €1.3 billion (brought down from the original €1.4
billion) assigned by the vendor, Dassault Aviation, to India Specific Enhancements
for the 36 Rafale fighter jets. Rajeev Verma, Joint Secretary & Acquisitions
Manager (Air), Ajit Sule, Financial Manager (Air), and M.P. Singh, Adviser (Cost)
noted: “The cost of India Specific Enhancements (ISE) was too high.” (It is also a
matter of official record that the three senior Defence Ministry officials objected to
several other aspects of the proposed inter-governmental deal, including the inflated
‘benchmark price,’ but these issues need not concern us here.)
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Citing The Hindu report, Congress, CPI (M) slam Modi govt on Rafale
deal
Objections overruled
The other four members of the Indian Negotiating Team – the Deputy Chief of Air
Staff of the Indian Air Force, who headed the team; the Joint Secretary
(Defence Offset Management Wing); the Joint Secretary and Additional Finance
Adviser; and the Assistant Chief of Air Staff (Plans) – overruled the objection. The
relevant resolution states: “The seven member Indian Negotiating Team (INT)
concluded by majority decision of 4-3 that the ISE cost of 1.3 bn euros at May 2015
EC was much better than that in the quote of 1.4 bn euros at EC 2009 in 126
MMRCA case. Further, it was concluded that ISE cost is a non-recurring cost
(NRC) and is not affected by the number of aircraft purchased. The facts were
presented to DAC [Defence Acquisition Council] which agreed to INT’s viewpoint
and it was ratified by the CCS [Cabinet Committee on Security].”
The official record shows that various aspects of the government-backed proposal
for the procurement of 36 flyaway Rafales were presented or referred back to the
DAC on five separate occasions between August 2015 and July 2016. It is surely
significant that every one of the 10 contentious issues raised within the INT was
settled by a 4-3 majority vote. The negotiating team duly completed its work and its
chairman submitted a report on August 4, 2016.
Thirteen India Specific Enhancements to the Rafale fighter jet were demanded by
the Indian Air Force. | Photo Credit: Reuters
According to the government’s notes on the decision-making process submitted to

the Supreme Court of India and shared with a group of petitioners in compliance
with the court’s orders, “the INT report and the proposal for obtaining approval of
the Cabinet Committee on Security (CCS) was processed in Ministry of
Defence…inter-ministerial consultations [took place] with Finance Ministry and
Ministry of Law and Justice,” and the proposal was placed before the CCS on
August 24, 2016. The proposal included the matter of pricing as well as other
contentious issues relating to the proposed deal.
DAC's role
It is again significant that there is no reference in the government notes to any

further role for the Defence Acquisition Council headed by Defence Minister
Manohar Parrikar. The DAC was empowered to take a decision under the Defence
Procurement Procedure, but Mr. Parrikar shied away from his responsibility and
“progressed” the matter, in other words, passed the buck, to the Cabinet Committee
on Security, as recommended by the INT chairman. All this was unsurprising
considering that more than a year earlier Prime Minister Modi had spoken his mind,
reversing the course followed over the previous decade and announcing, through an
Indo-French joint statement in Paris, a decision to buy the 36 Rafale fighter jets in
flyaway condition “on terms that would be better than conveyed by Dassault
Aviation as part of a separate process under way.” The CCS, chaired by the Prime
Minister, quickly ratified the majority decisions of the Indian Negotiating Team.
Thirteen India Specific Enhancements to the Rafale fighter jet were demanded by
the Indian Air Force as part of its urgent strategic requirement in both the UPA-era
bid and the 2016 deal. Besides the additional equipment to be fitted on the bare-
bones Rafale fighter jet, this brought in the cost assigned by M/s Dassault Aviation
to the design and development of these enhancements so that they could be
‘seamlessly’ integrated in the aircraft.
While the BJP government has refused to disclose what these 13 India Specific
Enhancements are, partly on grounds of national security, it is extremely unlikely
that this information can remain a secret from the international community of
military experts and journalists specialising in defence and security matters. In fact,
some of the information is already available in the public domain. An Indian Air
Force document, cited by The Hindu’s Special Correspondent, Dinakar Peri, in a
November 2018 report (https://www.thehindu.com/news/national/india-specific-
rafale-add-ons-after-delivery-of-all-36-fighters/article25532159.ece), states that
the 13 ISE capabilities are “not present in the Rafale aircraft being operated by other
countries.” They include capabilities relating to radar enhancements “which will
provide the force with better long range capability”, a helmet mounted display
“through which IAF pilots will be able to counter many threats simultaneously”, the
capability to start and operate from high-altitude airfields, an advanced infrared
search-and-track sensor, “a very potent electronic jammer pod”, and capabilities
pertaining to avionics. The Hindu has access to the full ISE list but will not be
presenting it here, because the technical details contained in the list, which the
government insists on keeping secret, are not strictly relevant to this story.
Special leverage?
An important question that arises is whether in 2015-2016 the NDA government
had any special leverage that might have enabled it to extract substantial price
reductions from France for the 36 fully fitted, combat-ready Rafale fighter jets. The
answer is yes – and the leverage was provided by an attractive, if not mouth-
watering, offer that came from the Eurofighter Typhoon Consortium which
comprises leading aerospace and defence companies from the United Kingdom,
Germany, Italy, and Spain. In fact, the official documentation shows that the three
dissenting members of the Indian Negotiating Team raised this issue in the
following manner: “(f) Issue-6. The 20% discount offer of EADS [European
Aeronautic Defence and Space Company] in 126 MMRCA tender was ignored. The
INT should take EADS quote for 36 Rafale delivery equivalent and then compare
prices.” The relevant INT resolution, adopted by a 4-3 majority, asserts that “the
unsolicited offer of 20% by EADS in 126 MMRCA deal” was not in line with the
provisions of the Defence Procurement Procedure and was also against Central
Vigilance Commission (CVC) guidelines, since it was given after the bidding
closed.
The Eurofighter had come through technical and flight evaluations carried out
between 2009 and 2011 along with Rafale and been found to be fully compliant
with the Indian Air Force’s MMRCA requirements. It had lost out to Rafale, on
price. With the negotiations for the acquisition of the 126 Rafale fighter jets stalling
for a complexity of reasons, the Eurofighter Consortium represented by Airbus
(formerly EADS) sensed an opportunity. In a letter dated July 4, 2014 addressed to
the then Defence Minister, Arun Jaitley, Domingo Urena-Raso, Head of Military
Aircraft, Airbus Defence and Space, outlined a fresh offer. This featured 126
Eurofighter Typhoons, a 20% reduction in the total package price “compared to the
numbers previously submitted”, improved aircraft capabilities, “favourable payment
terms”, an enhanced transfer of technology process by setting up a production line
and a Eurofighter Typhoon Industrial Park in India along with “a comprehensive
training and support programme”, and the tantalising prospect of accelerated
delivery of Eurofighter jets by diverting deliveries meant for Germany, the U.K.,
Italy, and Spain “to the benefit of the Government of India should you wish to
utilize such an accelerated program.”
Nor did the new Eurofighter offer seem entirely “unsolicited.” Sr. Urena-Raso’s
letter to Mr. Jaitley opens with this intriguing sentence: “The interest of the Indian
Government to replace its existing fighter aircraft fleet has continually attracted our
full engagement and we are hence delighted to respond to your request as conveyed
through our Nations’ Ambassador.”
The opportunity to make full use of the leverage provided by the new offer from the
Eurofighter Consortium was lost. The official stance that entertaining the offer at
that stage was impermissible under the DPP and would also be violative of CVC
guidelines was, at best, a debatable position to take. By going for an inter-
governmental agreement, in lieu of a straight commercial contract with M/s
Dassault Aviation, for the acquisition of 36 flyaway fighter jets instead of the 18
flyaway Rafales plus the 108 to be manufactured, under licence, by HAL, the Indian
and French governments as well as Dassault were, in effect, crafting a new deal.
Walking away from the deal under negotiation if the finally offered price was not
right was certainly an option – and that knowledge should have given the Indian
negotiators strong leverage with France. The leverage might even have been potent
enough successfully to push for pricing and related terms that would have matched
the Eurofighter offer.
Distributed over 36 jets
To sum up the new information presented in this article: In the 2007 bid by M/s
Dassault Aviation, the ‘design and development’ cost of €1.4 billion claimed by the
vendor for the India Specific Enhancements was to be spread over 126 aircraft.
Although this fixed cost was negotiated down to €1.3 billion in the 2016 inter-
governmental deal, it was distributed over 36 fighter jets. This straightaway meant
an increase of €25 million in the price of each aircraft as compared with the UPA-
era bid by Dassault.
The increase of €25 million was far greater than the 9% reduction in the price of a
bare-bones aircraft offered by France in 2016. That this discount was applied to the
price of a bare-bones, and not a fully fitted, combat-ready, Rafale was confirmed by
Dassault Aviation Chairman and CEO, Eric Trappier, in a November 2018
interview to ANI.
The 9% reduction was explained by Union Law Minister Ravi Shankar Prasad at a
press conference at the BJP’s headquarters on July 23, 2018: “The UPA invited
quotes for 126 aircrafts in 2007. The price quoted for Rafale was Euro 79.3 Million,
which also had inbuilt escalation formula. When the bid was opened in 2011, the
proposed cost in the bid document was 100.85 Million Euros per aircraft; however,
this also could not be finalized. When in 2016, after NDA came to power, under the
inter-government agreement the cost per aircraft finalized was 91.75 Million
Euros.” The Minister added: “Therefore the price determined during NDA
Government is 9% lesser than what was negotiated during UPA Government.
Therefore, the corresponding cost in Indian Rs 670.32 Crore per aircraft has been
conveyed to the Parliament.”
What the Law Minister’s statement failed to say was that when the ‘non-recurring’
design and development cost claimed for the India Specific Enhancements was
factored in, the per unit price negotiated by the NDA government for the 36 Rafale
fighter jets worked out to €127.86 million, which was 41.42% higher than the price
quoted by Dassault in 2007. When the escalation formula was applied, the price per
aircraft agreed to by the NDA government turned out to be 14.20% higher than the
proposed price per aircraft when the commercial bid was opened in November 2011
under the UPA government.
As confirmed by M. Trappier in his ANI interview, the 2007 and 2011 prices
mentioned by Mr. Prasad were for the 18 flyaway aircraft. The remaining108
aircraft were to be manufactured under licence by HAL in Bengaluru, for which
negotiations were at an advanced stage when the surprise announcement that India
would buy 36 flyaway Rafales from France came from Paris in April 2015. Among
other things, this meant jettisoning HAL and with it the plans for technology
transfer, building self-reliance in the defence sector, and ‘Make in India’.
What was more, in exchange for the 9% reduction in price, the Indian government
agreed to abandon the options or ‘follow-on’ clause, which was very much part of
the deal being negotiated with M/s Dassault Aviation for the 126 aircraft. Dropping
the follow-on clause – having an option for a follow-on contract to buy up to 50%
of the quantity bought earlier, under the same terms and conditions – was a
deviation from standard practice in defence contracts. In the deal under prolonged
negotiation, the UPA government had an option to buy 189 aircraft with the same
fixed cost of design and development of the India Specific Enhancements.
Watch: How a decision by Prime Minister Modi raised the prices of Rafale jets by 41%
A fairly large literature, investigative, prosecutorial, and critical, is now available on

various aspects of the Rafale deal of 2015-2016. This literature has shown or
alleged that institutions and mandated or standard procedures laid down for defence
acquisitions were bypassed; that guidelines were violated; that the benchmark price,
a sort of ceiling for the whole package, discovered by financial experts was
arbitrarily raised from €5.2 billion to €8.2 billion at political behest; that crony
capitalism was behind the NDA government’s choice of key offset partners; that the
Modi government took an indefensible risk by not insisting on a sovereign
guarantee from the French government, as advised by senior officials in the
Ministry of Law and Justice, and settling instead for a ‘Letter of Comfort’ from the
French Prime Minister, which considering M/s Dassault Aviation’s fragile financial
situation ‘is no comfort at all’ (in the eyes of a former senior bureaucrat who has
gone on record); and indeed that the Indian Air Force was short-changed by the
deal. In addition, top-level corruption and criminal misconduct have been alleged,
notably by Congress president Rahul Gandhi, and three well-known public interest
petitioners, Yashwant Sinha, Arun Shourie, and Prashant Bhushan, who along with
two others took their case to the Supreme Court of India but could not succeed.
Comparisons have been drawn with the Bofors scandal, by protagonists as well as
antagonists, towards different ends. The process of decision-making on a vital
defence acquisition in 2015-2016 does bear an eerie resemblance to how decisions
were made in 1985-1986; but unlike Bofors, where journalistic investigation was
able to uncover corruption disguised as ‘commissions’ paid secretly into Swiss bank
accounts, no money trail has been discovered so far in the current case. What seems
guaranteed is that we have not heard the last of l’affaire Rafale.
https://www.thehindu.com/news/national/modis-decision-to-buy-36-rafales-shot-the-
price-of-each-jet-up-by-41/article26019165.ece?homepage=true
What is the Supreme Court verdict in Rafale deal case all about?
Krishnadas Rajagopal
DECEMBER 22, 2018 20:23 IST
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Rafale deal
The Hindu Explains
What is it?
The Supreme Court’s December 14 judgment declining to intervene in the Rafale

deal may have erred in English grammar to “misinterpret” what the government
actually said in a confidential note on pricing details. Or, as the Opposition says, it
may have been an outcome of half-truths presented by the government. The
Congress says the government misled the court. The government asked the court to
“correct” its judgment. Its eight-page application is an explanation of the purported
intent of the English tenses used in the confidential note. But experts say the
judgment is poor in details. The court seems to have let the government hold the
rudder. Prime Minister Narendra Modi was a respondent-in-person in the case.
How did it come about?
The controversy boils down to two lines in paragraph 25 of the judgment

pronounced by a three-judge Bench, led by Chief Justice of India Ranjan Gogoi.
The first line says “the pricing details have, however, been shared with the
Comptroller and Auditor-General (CAG), and the report of the CAG has been
examined by the Public Accounts Committee (PAC).” The second line is: “Only a
redacted portion of the report was placed before Parliament and is in public
domain.” The judgment gives the impression that the CAG report was placed before
the PAC. In its correction application, the government clarified that the lines in the
judgment were an erroneous reproduction of the ones used in the note. The lines in
the sealed cover note were “the government has already shared the pricing details
with the CAG. The report of the CAG is examined by the PAC. Only a redacted
version of the report is placed before Parliament and in public domain.” The
government said the note only stated “procedure,” which is that once the CAG
report is ready, it would be placed before the PAC. Further, a redacted portion of the
CAG report is placed in Parliament and in the public domain for national security. It
said the court translated a simple “is” to a much complicated “was”.
Why does it matter?
The judgment came on four petitions questioning the decision-making process in the
purchase of 36 Rafale fighter jets in a fly-away condition. They sought transparency
in the price and a CBI/SIT probe. The petitioners, including former Union Ministers
Yashwant Sinha and Arun Shourie and senior lawyer Prashant Bhushan, alleged that
a “novice,” Reliance Defence, was chosen as the Indian Offset Partner (IOP) in the
multi-crore deal. The petitions came in the immediate backdrop of former French
President Francois Hollande’s remarks in an interview that France was not given
much of a choice by India in an IOP. They claimed that on the previous deal for 126
Rafale jets, Hindustan Aeronautics Limited was suddenly jettisoned when the
“intent” to purchase 36 jets was announced on April 10, 2015, during Mr. Modi’s
visit to Paris. Second, the government has no role in the Rafale manufacturer
Dassault Aviation’s choice of an IOP, thanks to an amendment in the offset policy,
which allows “no offset obligations” for the first three years of a contract. Third, the
Cabinet Committee on Security, the highest clearance body for defence purchases,
approved the signing of the Inter-Government Agreement (IGA) for the
procurement of the 36 jets only on August 24, 2016. That is, well over a year after
the Indo-French joint statement of April 10, 2015.
What lies ahead?
The verdict concluded the allegations were mere “individual perceptions.” The court
refused to go into a “fishing enquiry.” It ruled out any evidence of “commercial
favouritism” towards Reliance Defence as India had no role in choosing an IOP. It
said the petitions were “taking advantage” of Mr. Hollande’s statements. The
judgment, authored by Chief Justice Gogoi, said there were no doubts about the
suitability of the Rafale jets. The petitioners may file a review petition, which will
go before the same Bench. The correction application may come up for an open
court hearing in January.
https://www.thehindu.com/news/national/what-is-the-supreme-court-verdict-in-rafale-
deal-case-all-about/article25808342.ece
MoD’s note on Rafale wasn’t about parallel negotiations, but parallel viewpoints: Former
Defence Secretary G Mohan Kumar
According to a report Friday in The Hindu, a Defence Ministry note dated November 24,
2015, flagged the PMO’s discussions to then Defence Minister, Manohar Parrikar.
By Express News Service |New Delhi |Updated: February 9, 2019 6:48:33 am
The Defence Secretary from May 2015 to May 2017 when the Rafale deal was signed, Kumar Friday
said the parallel discussions by the PMO on the Rafale deal had nothing to do with price.
Almost ten months before India and France inked the final agreement to purchase 36 Rafale
aircraft in September 2016, the Ministry of Defence (MoD) had objected to “parallel”
discussions conducted by the Prime Minister’s Office with Paris saying this “weakened the
negotiating position of MoD and Indian Negotiating Team”.
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According to a report Friday in The Hindu, a Defence Ministry note dated November 24,
2015, flagged the PMO’s discussions to then Defence Minister, Manohar Parrikar. In the
note, then Defence Secretary G Mohan Kumar wrote: “RM may pl see. It is desirable that
such discussions be avoided by the PMO as it undermines our negotiating position seriously.”
RM was a reference to Raksha Mantri.
Kumar Friday told The Indian Express that the noting was not about “parallel negotiations”
but about “parallel viewpoints” and that the PMO had not interfered in the final negotiations.
In the 2015 MoD noting, Kumar was responding to a note by Deputy Secretary (Air-II) S K
Sharma, who wrote: “We may advise PMO that any Officers who are not part of Indian
Negotiating Team may refrain from having parallel parlays (parleys) with the officers of
French Government. In case the PMO is not confident about the outcome of negotiations
being carried out by the MoD, a revised modality of negotiations to be led by PMO at
appropriate level may be adopted in the case.”
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To these concerns of the MoD, Parrikar wrote: “It appears that PMO and French president’s
office are monitoring the progress of the issue which was an outcome of the summit meeting.
Para 5 appears to be an over reaction. Def Sec may resolve issue/matter in consultations with
Pr. Sec to P.M.” Para 5 was a reference to Sharma’s note. Parrikar’s noting was put out by
news agency ANI.
The Defence Secretary from May 2015 to May 2017 when the Rafale deal was signed,
Kumar Friday said the parallel discussions by the PMO on the Rafale deal had nothing to do
with price.
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Referring to The Hindu report that the MoD objected to the PMO undermining the Rafale
negotiations, Kumar said he had written the stated note in a particular context.
“It was not about parallel negotiations, but about parallel viewpoints. We told them that there
was no need for such discussions. I have written the note in that particular context. There was
nothing very serious about it. It was when the negotiations started and later all issues had
been settled. No interference or anything of that sort happened from the PMO in the final
negotiations.’’
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He said parallel viewpoints mentioned in the note had nothing to do with the price issue.
“The parallel viewpoints were related to a collateral guarantee which India wanted in the
deal. We had expressed different opinions about that discussion. That’s all it was.’’
He said the note was written a year before the negotiations were finalised. “At the initial
stage, there would be several teething problems, which have to be settled. It was written in
that circumstance. The PMO said about parallel opinion about the collateral guarantee. There
was no other issue. What I had expressed is a point of view which came at a particular time,’’
he said.
Kumar also said it was his duty to inform the minister. “Hence I wrote… It was only an
internal matter and such discussions take place in offices. It was not meant for public debate.
I had expressed my views very freely and I had the freedom to do so,’’ he said.
In September last year, The Indian Express reported that a senior MoD officer, who was part
of the Contract Negotiations Committee (CNC), had raised questions about the Rafale deal’s
benchmark price and put his objections on record. That officer was S K Sharma. He was then
Joint Secretary & Acquisition Manager (Air) in the MoD and the one meant to initiate the
note for the Cabinet’s approval.
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Sources had confirmed to The Indian Express that the officer’s objections delayed the
Cabinet note to approve the deal and its signing, which only happened after his objections
were “overruled” by another senior MoD official, Director General (Acquisition).
Sharma’s note, as JS & AM (Air), was part of the Rafale deal file with the office of the
Comptroller and Auditor General (CAG), studying the deal. On Friday, The Hindu reported:
“According to the Defence Ministry note, the details of the parallel negotiations conducted by
the PMO came to the Ministry’s notice only from a letter of October 23, 2015 from General
Stephen Reb, the head of the French Negotiating Team. The letter ‘made mention of a
telephonic conversation between Shri Jawed Ashraf, Joint Secretary in the Prime Minister’s
Office and Mr. Luis Vassy, Diplomatic Adviser to the French Minister of Defence, which
took place on 20.10.2015’.”
“General Reb’s letter was brought to the notice of the PMO by the Defence Ministry. The
head of the Indian Negotiating Team, Air Marshal S. B. P. Sinha, AVSM VM, Deputy Chief
of Air Staff, also wrote to Mr. Ashraf. In his reply to Air Marshal Sinha on November 11,
2015, Mr. Ashraf ‘confirmed that he had held discussion with Mr Luis Vassy, Diplomatic
Adviser to the French Minister of Defence,’ adding that Mr. Vassy ‘spoke to him on the
advice of the French President’s office and the issues referred to General Reb’s letter were
discussed’.”
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The report also said that ‘the discussions between Diplomatic Adviser to the French Defence
Minister and Joint Secretary to PM tantamount to parallel negotiations while the Indian
Negotiating Team constituted by the Ministry of Defence is undertaking the process of
formal negotiations with the French side’.”
https://indianexpress.com/article/india/he-now-says-it-was-not-about-parallel-
negotiations-but-parallel-viewpoints-g-mohan-kumar-rafale-fighter-jets-5575896/
India-specific Rafale add-ons after delivery of all 36 fighters
Dinakar Peri
NEW DELHI , NOVEMBER 18, 2018 21:03 IST
The IAF has sought 13 India-specific enhancement capabilities for the aircraft.
13 enhancements to be done locally in batches of 7
The enhanced capabilities of the Rafale fighter aircraft sought by India will be
incorporated after all the 36 jets are delivered, according to sources in
the Defence Ministry.
There are 13 India Specific Enhancement (ISE) capabilities sought by the Indian Air
Force (IAF) and they would be incorporated in batches after April 2022, an official
source said.
“After the 36th jet is delivered, the first 35 aircraft would be modified in India by
Dassault Aviation at the rate of seven aircraft a month so that all 36 aircraft would
be of the same capability by September 2022,” the official source with knowledge
of the matter said.
67-month wait
The first Rafale for India made its maiden flight on October 30 in France and is
designated RB 008. It will, however, be the last to be delivered to the IAF in April
2022, 67 months after the signing of the Inter-Governmental Agreement (IGA).
“This aircraft would be used to test and certify the ISE, which can only be employed
after certification,” the official stated.
An IAF document accessed by The Hindu states that the 13 ISE capabilities are “not
present in the Rafale aircraft being operated by other countries. These capabilities
pertain to radar enhancements, which will provide the force with better long range
capability. One of the specific capability being acquired is the ‘helmet mounted
display’ through which IAF pilots will be able to counter many threats
simultaneously.
“Another very significant capability enhancement sought is the ability to start and
operate from high altitude airfields,” the document states. The enhancement
includes an advanced infra red search-and-track sensor and a very potent electronic
jammer pod. “The remaining ISE capability pertain to avionics,” the document
stated.
In September 2016, India and France signed a €7.87 billion IGA for 36 Rafales in
fly-away condition following the surprise announcement by Prime Minister
Narendra Modi in April 2015 citing “critical operational necessity” of the IAF.
As per the IGA, deliveries begin 36 months from the signing of contract and will be
completed in 67 months. The government has consistently maintained that the deal
for 36 jets was done to ensure quick delivery of fighter aircraft to the IAF, which is
facing a drop in squadron strength.
Egyptian model
In contrast, Egypt which signed a €5.2 bn deal for 24 Rafale jets — 16 two-seater
and eight single-seater variants — in February 2015, took delivery of the first batch
of three aircraft in July of the same year.
Commenting on this, Air Marshal M. Matheswaran (retd.), who oversaw the

Medium Multi-Role Combat Aircraft (MMRCA) procurement in the past, said
structural changes required would be carried out in all aircraft during
manufacture and only software upgrades are carried out later.
“There would be some software standards which would be incorporated once the
production standards are ready. This can be done quickly,” he said.
It was good that some of the testing would be done in India, as the IAF would be
involved and gain from the process, he said.
On the quick deliveries to Egypt, he observed that Dassault Aviation may have
taken them off from the French assembly line as Egypt acquired the same variant.
Another officer, Air Vice Marshal Amit Aneja (retd) too echoed these views. He
said the upgrade rate of seven a month meant “it is software integration”, which is
inserted and upgraded.
“The aircraft looks the same. It is the capability enhancement. It is all about
avionics, sensors and sensor fusion. And sensor fusion capability is the most critical
aspect today,” he pointed out.
https://www.thehindu.com/news/national/india-specific-rafale-add-ons-after-delivery-of-
all-36-fighters/article25532159.ece
India to buy 36 Rafale jets in ready condition
PTI
PARIS:, APRIL 10, 2015 23:05 IST
Francois Hollande said "The two countries signed an agreement on
proceeding forward on the atomic project of Jaitapur."
Marking a breakthrough in the protracted talks for striking the French Rafale jet
deal, Prime Minister Narendra Modi announced here on Friday that India would
buy 36 of the fighter planes in flyaway condition, citing critical operational
requirements of the Indian Air Force.
Mr. Modi made the announcement at a joint press conference with French President
Francois Hollande after their summit talks at Elysee Palace.
“Keeping in mind the critical operational necessity of fighter jets in India, I

have talked to him [Hollande] and requested for 36 Rafale jets in flyaway
condition as quickly as possible under a government-to-government deal,” he
said.
An agreement on proceeding forward on the stalled nuclear project in Jaitapur in

Maharashtra was among the 17 pacts signed after the talks between Modi and
Hollande.
The Jaitapur project, where French company Areva is to set up six nuclear reactors
with a total power generation capacity of about 10,000 MW, has been stuck for long
because of differences over the cost of the power generated.
The agreement between India’s Larsen and Toubro and France’s Areva is aimed at
cost reduction by increasing localisation and to improve the financial viability of the
Jaitapur project.
Narendra Modi
✔@narendramodi
Here is the list of agreements signed between India and France

http://nm4.in/1yiXQ33
1,896
12:09 AM - Apr 11, 2015
Dinakar Peri reports from New Delhi:

The original deal was for 126 fighter aircraft under the Medium Multi-Role Combat
Aircraft contest, which began in 2007. Dassault Rafale was shortlisted in 2012
after rigorous evaluation but negotiations have been stuck over pricing and
delivery guarantees for the aircraft manufactured by Hindustan Aeronautics
Ltd. (HAL) in India.
A direct purchase will drive down the costs as there is no technology transfer
involved and the delivery of aircraft will be faster.
Depleting fleet swung Rafale deal

The major reasons for the direct purchase of 36 Rafale jets from France are the fast-
depleting fighter strength of the Indian Air Force, unending delays in the Medium
Multi-Role Combat Aircraft negotiations and the steep price rise.
The fighter aircraft strength has fallen drastically to 34 squadrons from the
sanctioned 42 and is set to further dip with the phasing out of MiG-21s and MiG-
27s in the next few years. The Chief of the Air Staff, Air Chief Marshal Arup
Raha, has flagged the issue on several occasions. The MMRCA and the Light
Combat Aircraft (LCA) Tejas, the replacements, are nowhere on the horizon. Also
with the price crossing $20 billion, funding this was a concern for the government
with other major modernisation programmes in the offing.
PTI adds:
Another pact reached during negotiations related to pre-engineering agreements

between the NPCIL and AREVA in connection with studies that is intended to bring
clarity on all technical aspects of the Jaitapur plant so that all parties (AREVA,
ALSTOM and NPCIL) can firm up their price and optimise all provisions for risks
still included at this stage in the costs of the project.
France also informed India of its decision to implement a scheme for expedited 48
hours visa issuance for Indian tourists.
Noting that Mr. Hollande had supported the “Make in India” initiative, especially in
the defence sector, Mr. Modi said that in the area of nuclear power, France had been
a major partner with India.
France also announced an investment of 2 billion euros in India as Mr. Modi invited
French companies to pump in money in technology in the fastest-growing economy.
France will invest 2 billion euros in India, Mr. Hollande announced at a CEO forum
here.
He said France would partner India in urban development of infrastructure such as

railways and defence and nuclear sector.
Narendra Modi
✔@narendramodi
Thank you President @fhollande for the boat ride on the Seine. #France #Paris
https://instagram.com/p/1TcgL1s_4Z/ 11:37 PM - Apr 10, 2015
Modi has ‘Naav Pe Charcha’ with French President
Mr. Modi and Mr. Hollande enjoyed a joint boat cruise on La Seine river here which
was described as “ Naav Pe Charcha” (chat on the boat).
MR. Hollande was seen giving details to Mr. Modi about various areas as the boat
cruised through the river.
Many people enjoying a boat ride in the river at that time were seen waving at the
dignitaries, including French ministers.
The two leaders had the boat ride after their detailed discussions, focusing on
cooperation in the areas of civil nuclear energy, defence, space and trade.
Mr. Modi is visiting France in the first leg of his nine-day three-nation tour that will
take him to Germany and Canada also.
It was the first time that Modi had ‘Naav Pe Charcha’ with any world leader.
Earlier, Mr. Modi has had ‘ Chai Pe Charcha’ (chat over tea) with some world
leaders, including US President Barack Obama during his visit to New Delhi in
January and Japanese Prime Minister Shinzo Abe during the Indian leader’s visit to
that country last year.
The concept of ‘ Chai Pe Charcha’ came to be known during Modi’s campaign for
Lok Sabha polls last year. During that, he used ‘ Chai Pe Charcha’ as an election
plank.
* This article has been corrected for a statistical error.

https://www.thehindu.com/news/national/prime-minister-narendra-modis-visit-to-
france/article7090006.ece
India, France ink €7.87 billion agreement for 36 Rafales
SPECIAL CORRESPONDENT
NEW DELHI, SEPTEMBER 23, 2016 13:07 IST
The deal includes aircraft in fly-away condition, weapons, simulators,
spares, maintenance, and Performance Based Logistics support for
five years.
India on Friday concluded an Inter-Governmental Agreement (IGA) with France for

the purchase of 36 Rafale fighter jets at a cost of €7.87 billion, the first fighter
aircraft deal since the purchase of Sukhois from Russia in the late 90’s.
The deal was signed by Defence Minister Manohar Parrikar and his French
counterpart Jean Yves Le Drian. Eric Trappier, Dassault Aviation Chairman and
CEO, was also present.
The deal comes after 17 months of tough negotiations since Prime Minister
Narendra Modi announced the decision in April 2015 for direct purchase of the
jets in fly-away condition, citing “critical operational necessity” of the IAF.
“Rafale is a potent aircraft and will add to the capability of the IAF,” Mr. Parrikar
told media persons.
The Rafale is a twin-engine, multi-role fighter aircraft. According to Dassault, it
is capable of carrying out all combat missions: air defence, interception, ground
support, in-depth strikes, reconnaissance, anti-ship strikes and nuclear deterrence.
The last part is of particular interest to India and these aircraft are likely to succeed
Mirage fighters for nuclear warhead delivery as part of India’s nuclear doctrine.
“The IGA does not put any restrictions on its use,” a senior defence official
said in what would be welcome news for India’s strategic planners.
The basic cost of the aircraft is about €91 million or about Rs. 680 crore and
little over Rs.1600 crore per aircraft for the whole deal. Defence sources said the
agreement has many components, which are better that the original deal and the best
part is the weapons package.
The weapons package includes Meteor radar guided Beyond Visual Range
(BVR) missile considered the best in the class with range of over 150 km and
Scalp long range air to ground missiles.
Defence officials said that the Meteor has a superior range than anything available
in the region. “Our air superiority will be retained,” an official observed.
What does the deal Includes?
The deal includes the aircraft in fly-away condition, weapons, simulators,

spares, maintenance, and Performance Based Logistics support for five years.
“For five years we do not have to spend on maintenance,” sources said.
Warranty is extendable by two years by factoring inflation and further by another
five years upon negotiation.
NOTE: For the entire deal inflation has been capped at a maximum of 3.5 % or
current rate whichever is lowest.Officials said that inflation in Europe is at one
percent and expected to continue so, which means that there will be savings in
the course of the deal.
Dassault will begin aircraft deliveries after 36 months and complete in 67

months. France will also provide logistics and ground support and ensure that
there is 75 percent i.e. 27 aircraft are operationally available at any time.
“There will be steep penalties if they don’t adhere to timelines,” sources said. In
contrast Su-30 fleet has an operational availability between 55-60 percent.
The aircraft will be customised as per the requirements of the IAF which include
Helmet Mounted Displays, radar warning receiver, infrared search and track among
others.
Unlike the practice in defence deals, this deal does not have an optional clause.
Under optional clause another 50 percent of the contract additional units can be
procured at the same price after conclusion of the main contract.
Offset clause
There is a 50 percent offset clause under which French industry will invest half the
contract value back in the country which is expected to develop some expertise
domestically in the aerospace sector.
Officials said 74 percent of the 50 percent offset value should be exported from
India. This is expected to result in Euro 3 billion over the next 7 years. There is also
a six percent technology sharing component, which is being discussed with the
Defence Research and Development Organisation (DRDO).
(An earlier version of this article mistakenly mentioned PM Modi announcing the
decision of direct purchase in April 2014. The date is actually April 2015. The error
has been corrected.)
https://www.thehindu.com/news/national/India-France-ink-%E2%82%AC7.87-billion-
agreement-for-36-Rafales/article14995775.ece
N. Ram
Rafale deal
It also overruled Financial Advisers’ recommendation for an escrow

account after PMO forced a waiver of sovereign or bank guarantee
The €7.87-billion Rafale deal between India and France involved major and
unprecedented concessions from the Indian government, with critical provisions for
anti-corruption penalties and making payments through an escrow account dropped
days before the signing of the inter-governmental agreement (IGA).
This has significant political implications for the Narendra Modi government which
has claimed that eliminating corruption is a major plank of its agenda for
governance and promised action against alleged corruption in defence deals struck
during the United Progressive Alliance Government.
It is significant that neither this nor other important information published by The
Hindu on the “parallel negotiations” conducted by the Prime Minister’s
Office and the National Security Adviser seems to have found a place in the
material submitted by the government to the Supreme Court of India.
Financial Adviser Sudhansu Mohanty’s observations in an official note, in facsimile
The high-level political intervention meant that standard Defence Procurement
Procedure (DPP) clauses on “Penalty for use of Undue Influence, Agents/Agency
Commission, and Access to Company accounts” of Dassault Aviation and MBDA
France were dropped by the Indian government in the supply protocols.
Under the terms of the IGA signed between India and France in Delhi on September
23, 2016, Dassault is the supplier of the Rafale aircraft package while MBDA
France is the supplier of the weapons package to the Indian Air Force.
Official documents available to The Hindu reveal that the Defence Acquisition
Council (DAC) chaired by the then Defence Minister, Manohar Parrikar, met in
September 2016, and “ratified and approved” eight changes in the IGA, supply
protocols, offset contracts and offset schedules (see Box 1). This was done after the
IGA and associated documents had been approved by the Cabinet Committee on
Security (CCS), chaired by Prime Minister Modi on August 24, 2016.
Box 1: The DAC ratified and approved the following:
 Revised Article 5 of the IGA.

 Revised Clause 21 (Arbitration) of the Supply Protocols.
 Non-inclusion of the Standard DPP Clauses related to 'Penalty for Undue
Influence', 'Agents/ Agency Commission' and 'Access to Accounts' in the Supply
Protocols.
 Inclusion of additional Articles 9 to 17 of Offset Contracts to those specified in
model Offset Contract of DPP 2013.
 Revised Article 9 of the Offset Contracts aligned with the xx clause of the Supply
Protocols.
 Revised Article 12 of the Offset Contracts aligned with the Contract.
 Revised Offset Schedules of DA and MBDA.
The most significant among these eight changes, recorded in a note signed by Vice
Admiral Ajit Kumar, DCIDS (PP&FD) who was the member-secretary of the DAC,
is at sub-para (c). This states: “Non-inclusion of the Standard DPP Clauses related
to ‘Penalty for Undue Influence,’ ‘Agents/Agency Commission’ and ‘Access to
Company Accounts’ in the Supply Protocols.”
It is highly significant that these clauses were dropped by the Indian government
from the supply protocols. While the IGA was the overarching agreement between
the governments of India and France, the supply protocols were to be executed by
Dassault and MBDA, the two private companies.
This direct dealing with the commercial suppliers, under cover of an IGA, was
highlighted in a detailed note of dissent signed by three members of the Indian
Negotiating Team — M.P. Singh, Adviser (Cost), A.R. Sule, Financial Manager
(Air), and Rajeev Verma, Joint Secretary and Acquisitions Manager (Air). The
document, which is available to The Hindu, reveals that these three members took a
strong stand against what was being rammed through. On the direct dealing with the
two companies, they noted: “Notwithstanding the fact that the procurement is on
Government-to-Government basis, the IGA involves ‘Transfer of Rights and
Obligations’ relating to supplies of equipment and related industrial services by
French Government to the French Industrial Suppliers, and the payment is also
being made to the French Industrial Suppliers and not to the French Government;
therefore, it is not advisable to sacrifice the basic requirement of financial
prudence.”
Sections on penalties
The Rafale deal was signed between India and France under the terms of DPP-
2013. The Standard Clauses in Contract are mentioned in Enclosure 8 of DPP-2013.
This has sections on penalties for the use of undue influence, an integrity pact,
agents/agency commission and Access to book of accounts. Paragraph 37 of
Request for Proposal (RFP) in DPP-2013 states that “the Standard Contract
Document at Chapter V of DPP2013 [bit.ly/DPP-2013] indicates the general
conditions of contract that would be the guideline for all acquisitions.”
Despite the DPP stating explicitly that the Standard Contract Document “would be
the guideline for all acquisitions”, the Indian government chose to remove these
clauses from the supply protocols with the two private defence suppliers. This
assumes particular importance as the government also chose to do away with a
sovereign or bank guarantee from France and settled for a letter of comfort,
which is not legally binding, from the French Prime Minister.
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The letter of comfort issued by the French Prime Minister on September 8, 2016
(put out by ANI) states that “assuming that Dassault Aviation or MBDA France
meet difficulties in execution of their respective supply protocols and would have to
reimburse all or part of the intermediary payment to Government of the Republic of
India, the Government of the French Republic will take appropriate measures so as
to make sure that said payments or reimbursements will be made at the earliest.”
Govt. intervention
This letter of comfort came after another last-minute intervention by the Indian
government in September, when the Cabinet Committee on Security chaired by the
Prime Minister issued a corrigendum to the note forwarded by the Defence Ministry
for the CCS, doing away with the requirement for an escrow account operated by
the French government to make payments to the two companies. This proposal to
amend the IGA, which had been approved by the CCS on August 24, 2016, was
moved by Smita Nagaraj, Director General Acquisition, in the Defence Ministry.
Safeguards
The proposal, which states that “this issues under the direction of Raksha Mantri,”
asked the CCS to issue a corrigendum to the minutes, amending Para 50(b) of the
note giving approval to the IGA. It reads: “Raksha Mantri has directed that attention
of Secretariat is drawn to the fact that in the context of the proposal contained in
Para 50(b) of the CCS Note, stated that in the event of payment into escrow account
is not found feasible, MOD shall work out alternative safeguards in consultation
with the French Government, in which an assurance will be obtained from the
French Government to provide effective oversight of utilization of payments
released to the French industrial suppliers.”
The amended Para 50(b) of the CCS Note approving the IGA [see Box 2] did away
with the need for ensuring that the payments made by the Indian government were
done through an escrow account operated by the French government. The escrow
account was a measure of financial prudence: the payments would be released by
the French government to Dassault and MBDA with the concurrence of the Indian
government.
The proposal to have an escrow account operated by the French Government was
recommended by Sudhansu Mohanty, Financial Adviser (DS) on January 14, 2016.
It was in Note-263, which begins with this qualification, “I wish I had sufficient
time to go through the entire file and mull over the various issues raised. However,
in view of the fact that the file has to be submitted to RM immediately, I would like
to make the following quick observations from the Finance point of view.”
Important observation
One of Mr. Mohanty’s important observations was: “In the absence of a

sovereign/bank guarantee, in a case like this where an IGA is to be signed, it would
be prudent to involve the French Govt. as far as releases are concerned. This
possibly could be done through an Escrow account or a variant of the same where
the money released by the buyer (Govt. of India) is paid to the Escrow account held
under the charge of French Govt. to make further payments to the firm as per terms
& conditions agreed to by the Indian and French Govt. through IGA. This would
make French Govt. morally and materially responsible for the procurement so
proposed. Since they are one of the parties to the IGA and also jointly and severally
responsible for the execution of the supply protocol, they should not be having any
reservation about it.” Evidently, the French government did.
Mr. Mohanty’s note, it is now known, came after the Prime Minister’s Office
(PMO) and National Security Adviser Ajit Doval chose to waive the sovereign or
bank guarantee from France. As reported by The Hindu on February 8, 2019,
Defence Ministry officials had objected to the “parallel negotiations” being
conducted by the PMO, which was “undermining the process of formal negotiation
with the French side… may be detrimental to our interests as the French side may
take advantage of same by interpreting such discussions to their benefit and
weakening the position taken by the Indian Negotiating Team. This has precisely
happened in this case.” The Defence Ministry note, which was dated November 24,
2015, cited as “a glaring example” how the parallel negotiations had undercut “the
position taken by MoD and conveyed to Indian Negotiating Team that the
commercial offer should be preferably backed by Sovereign/Government Guarantee
or otherwise by Bank Guarantees.”
Contrary positions
Another example cited in the note was the contrary positions taken on the arbitration
arrangement.
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negotiations
The then Defence Secretary, G. Mohan Kumar, who now says “there were no
parallel negotiations” and that the Rafale deal was negotiated in the “most
transparent way”, had endorsed the protest note in his own hand on November 24,
2015: “RM may pl. see. It is desirable that such discussions by avoided by the PMO
as it undermines our negotiating position seriously.”
The need for a sovereign or a bank guarantee was also highlighted by the Ministry
of Law and Justice in its communications to the Defence Ministry, documents
available to The Hindu show.
Active push
As for the part played by Mr. Parrikar in the Rafale deal, what has been established
is this. From a stance of being non-committal, as evidenced by his hand-written
notation of January 11, 2016, he shifted later that year to actively pushing for the
changes, giving the financial experts little time to study the proposals.
He chaired the September 2016 meeting of the Defence Acquisition Council that
“ratified and approved” the eight changes, including the decision to drop the
provision of penalties for corruption in the supply protocols with the private
companies.
In his official capacity, he also directed the issue of a proposal that led to doing
away with the provision for an escrow account as a financial safeguard.
https://www.thehindu.com/news/national/government-waived-anti-corruption-clauses-in-
rafale-deal/article26231793.ece
N. Ram
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Rafale deal
This is among the key findings of the three domain experts on the
Indian Negotiating Team
Three senior Defence Ministry officials who were the domain experts on the seven-
member Indian Negotiating Team (INT) came to a well-substantiated and clear
conclusion that the Narendra Modi government’s new Rafale deal for 36
flyaway aircraft was not on “better terms” than the offer made by Dassault
Aviation during the procurement process for 126 aircraft under the United
Progressive Alliance government. They also concluded that the delivery schedule of
even the first 18 of the 36 flyaway Rafale aircraft in the new deal was slower than
the one offered for the 18 flyaway aircraft in the original procurement process.
Contrary to claims
These findings are directly contrary to the two central claims made by the Indian
government of a cheaper deal and faster delivery of fighter aircraft, claims that have
been affirmed before the Supreme Court of India in official submissions.
Further, the three officials registered serious concern over the Indian government’s
acceptance of a ‘Letter of Comfort’ in lieu of a sovereign or government guarantee
or bank guarantees, legal issues relating to the IGA, offset issues, and Dassault
Aviation’s restrictive trade practices.
The three domain experts on the INT were M. P. Singh, Adviser (Cost), a Joint
Secretary-level officer from the Indian Cost Accounts Service; A.R. Sule, Financial
Manager (Air); and Rajeev Verma, Joint Secretary & Acquisitions Manager (Air).
They recorded their views in a strong note of dissent, dated June 1, 2016, submitted
at the end of the negotiations to the Deputy Chief of Air Staff (DCAS) in his
capacity as chairman of the negotiating team.
Click here to see all eight pages of the note of dissent by domain experts in the
INT
The INT was for a firm and fixed benchmark price, but the French side converted the
initial commerical offer of a fixed price into one based on an escalation formula.
Their eight-page note expressing deep concern and unease over the terms of the new
deal is an important document and is reproduced here. It was written more than a
month after the INT’s negotiations with the French side were completed and three
months before the inter-governmental agreement was signed, on September 23,
2016. (As for the competence of the three officials in relation to the others on the
INT to deal with the issues that figured in the negotiations, see this article in ‘The
Wire’ by Sudhansu Mohanty, former Controller General of Defence Accounts
who was Financial Adviser, Defence Services at the time)
Commenting on the final €7.87 billion cost of the new Rafale deal, the domain
experts stated that “the reasonability of price offered by the French Government is
not established. Even the final price offered by the French Government cannot be
considered as ‘better terms’ compared to the MMRCA [medium multi-role combat
aircraft] offer and therefore not meeting the requirement of the Joint Statement.”
Out of sync
 A dissent note by members of the Indian Negotiating Team found that the French
side's offer did not conform to the promise of better terms contained in the joint
statement issued by PM Narendra Modi and ex-President Francois Hollande on
April 10, 2015. An extract from the joint statement:
 14. Government of India conveyed to the Government of France that in view of the
critical operational necessity for Multirole Combat Aircraft for Indian Air Force,
Government of India would like to acquire [36] Rafale jets in fly-away condition as
quickly as possible. The two leaders agreed to conclude an Inter-Governmental
Agreement for supply of the aircraft on terms that would be better than conveyed by
Dassault Aviation as part of a separate process underway.
Terms and time frame
This was a reference to the Indo-French Joint Statement issued on April 10, 2015
during Mr. Modi’s visit to France. It promised that the new deal to acquire 36
Rafale jets in flyaway condition through an inter-governmental agreement would be
on “terms that would be better than conveyed by Dassault Aviation as part of a
separate process under way” and that the delivery would be in “a time frame that
would be compatible with the operational requirement of the IAF.”
The joint statement also confirmed that the aircraft and associated systems would be
delivered in “the same configuration as had been tested and approved by IAF, and
with a longer maintenance responsibility by France.”
The concerns and differences registered by the three senior Defence Ministry
officials in the seven-member negotiating team bring under a cloud the two major
defences of the new Rafale deal by the National Democratic Alliance government,
namely, that this deal was on better terms and with a faster delivery schedule than
the deal under negotiation under the UPA government and also under the NDA
government until April 10, 2016. These were also the essential arguments presented
by the government in the Supreme Court of India. Whether this note by the three
domain experts on the INT was part of the material submitted in a sealed cover to
the court is not known, but it could be of relevance to the review petition on the
judgment which is pending in the court.
ALSO READ
The government informed the Supreme Court of India in documents submitted

in October 2018 that Mr. Modi made the announcement on the new deal in Paris
because of an urgent need to arrest the decline in the number of fighter squadrons
with the IAF. However, the three Defence Ministry officials had noted that “in the
MMRCA process, the first 18 flyaway aircraft were delivered between T0+36
months to T0+48 months whereas in the delivery schedule offered by the French
side, the first 18 aircraft will be delivered between T0+36 months and T0+53
months.” Significantly, the Rafale aircraft delivered to the Indian Air Force will not
have full operational capability: the 13 India Specific Enhancements (ISE) will be
fitted in India “in batches after April 2022, when the 36th Rafale is delivered, 67
months after the signing of the IGA (see report by Dinakar Peri in The Hindu).
55.6% more than the benchmark price

ALSO READ
negotiations
One of the most contentious issues about the Rafale deal, which went up for
resolution to the Cabinet Committee on Security (CCS) chaired by the Prime
Minister, was the benchmark price. This is a number discovered in advance by
financial experts which acts as a ceiling on the finally negotiated price of the whole
package. The three officials pointed out in their note that the Defence Procurement
Procedure (DPP) stipulated that in all cases the Contract Negotiating Committee
“should establish a benchmark and reasonableness of price in an Internal Meeting
before opening the Commercial Offer.” In this case, the Defence Acquisition
Council had directed on August 28 and September 1, 2015 that the benchmark price
should be decided and finalised by the INT before starting price negotiations.
Following a detailed technical process, which factored in the necessary
equalisations and adjustments, the benchmark price determined for the aircraft and
weapons packages in the new deal was €5.06 billion.
ALSO READ
Here the note from the three domain experts provides crucial and hitherto
unpublished information on how the final price for the whole Rafale package shot
up to €7.87 billion: “It is highlighted that the initial commercial offer from the
French side was for firm and fixed price which was converted to price based on
escalation formula during the price negotiations. The benchmark price prepared by
INT was for firm and fixed price and not adjusted to price based on escalation
formula. The final price offered by the French Government (which is escalation
based) is 55.6% above the benchmark (which is for firm and fixed price).
Considering the future escalations till the time of delivery, the gap in the benchmark
and the final price would further increase. Minor adjustments towards costs of
Technical Publications, Advance Training of IAF Pilots and Technicians and Role
Equipment would not make much dent to this huge gap.”
Eurofighter offer is much cheaper
The offer which also figured in the determination of the benchmark price was from
M/s EADS, the maker of the Eurofighter Typhoon, the only other aircraft to qualify
the UPA-era trials along with Rafale. “During the benchmarking exercise,” the note
reveals, “the INT had noted that the offer of 20% discount by M/s EADS was
absolute without any escalation factor except some modifications in the payment
terms.” Factoring in an additional 5% discount as the negotiating margin, the Indian
Negotiating Team applied a discount of 25% on the M/s EADS cost as one of the
inputs for the benchmarking exercise.
“Even without taking this discount into consideration, the offer of French
Government is still substantially higher than the price offered by M/s EADS
(adjusted to the scope of 36 Rafale Aircraft Procurement) when compared on firm
and fixed price as per broad assessment carried out with the MMRCA Cell.”
Cost of bank guarantees
Contrary to the argument put forth by the government that the UPA-era commercial
offer and the deal signed by Modi government are not comparable, the note states
that in the DAC on May 13, 2015, where the case for the 36 Rafale flyaway aircraft
was first approved, G. Mohan Kumar, the Defence Secretary, “suggested that the
‘Benchmark Price’ and comparison of how much lesser it was, vis-à-vis the earlier
Price (since this was a commitment to the PM by the French Government) should be
arrived at and placed on record before proceeding any further.”
“To establish ‘better terms for price’,” the note goes on to narrate, “the French side
was repeatedly asked to align the commercial offers submitted by Industrial
Suppliers in MMRCA process to the scope of supplies as per 36 Rafale
procurement.” However, “the French side refused to take cognizance of this aspect.”
Did the PMO undermine Rafale negotiations?
“The commercial offers in the MMRCA process were aligned by the INT after
factoring in the scope of supplies as per 36 Rafale procurement and compared with
the final offer made by the French side,” the note adds. While the commercial offers
submitted by Dassault Aviation during the UPA government were based on the
submission of bank guarantees against advance payments, the final price offered to
Modi government was without any sovereign or government guarantee or bank
guarantees.
The aligned cost, which included the bank guarantee cost, was €8.059 billion, which
came down to €7.48 billion after the commercial impact of bank guarantees of
7.28% was deducted. The final price offered by the French to the Modi government
was “still 5.3% higher than the Aligned Cost of the commercial quotes submitted by
M/s Dassault Aviation and M/s MBDA in MMRCA procurement process.”
Delivery schedule
The other claim made by the NDA government is that it has negotiated for the
Indian Air Force a better delivery schedule than what was under prolonged process
during the UPA government. The note says that “as per the DAC meeting held on
28-08-2015 and 01-09-2015 the delivery schedule incorporated in draft IGA is
T0+37 months to T0+60 months,” but “the delivery schedule finally offered by the
French side is T0+36 months to T0+67 months.”
But the clinching evidence for the three officials is the delivery schedule of the 18
flyaway aircraft in the UPA-government contract. Their note says that “in the
MMRCA process, the first 18 flyaway aircrafts were being delivered between
T0+36 months to T0+48 months whereas in the delivery schedule offered by the
French side, first 18 aircrafts will be delivered between T0+36 months and T0+53
months.”
Exorbitant cost of ISE ‘design & development’
As reported in The Hindu of January 18, 2019, the big difference in the per-aircraft
price between the two deals – one being negotiated under the original MMRCA
procurement process, the other concluded by the NDA government – was the
distribution of the exorbitant cost for the “design and development” of 13 India
Specific Enhancements over 36 instead of 126 aircraft. More details have emerged
in this note which, while validating The Hindu’s investigative findings on this issue,
provide greater clarity on what this “design and development” cost of the ISEs was
all about.
“During the MMRCA procurement process,” the note of dissent reveals, “the
aircraft offered by M/s Dassault Aviation did not meet certain ASQRs [Aerospace
Supplier Quality Requirement] stipulated in the MMRCA RFP. M/s Dassault
Aviation offered to meet these deficiencies at an additional cost. M/s Dassault
Aviation termed these deficiencies as India Specific Enhancements (ISEs) for which
an Additional Commercial Proposal was accepted from M/s Dassault Aviation in
the MMRCA procurement process with the approval of the DAC.”
Watch: How a decision by Prime Minister Modi raised the prices of Rafale jets by 41%
However, the note clarifies that “the MMRCA offer of M/s Dassault Aviation,
including the Additional Commercial Proposal, was an un-negotiated offer and
reasonability of all elements of cost was yet to be established.”
The note goes on to say that “it was particularly noted by the INT that the
Additional Commercial Proposal of 1400 million Euros towards NRC for Design
and Development of ISE was exorbitant and unrealistic. The price has been further
escalated in the final offer and then reduced factoring in global discounts given by
the French side and also the financial impact due to alignment of advance/stage
payments schedule with the MMRCA offer.”
A comparison with the mid-life upgrade of Mirage-2000, supplied by Dassault

Aviation, was highlighted by the three members: “The Mirage MLU Contract of
July 2011 wherein price for D&D was only 348 million Euros; therefore, the price
quoted for ISE in the final offer is exorbitantly high.”
The report by the Comptroller and Auditor General of India on the deal is long
overdue. The institution is constitutionally empowered and proudly terms itself the
‘Supreme Audit Institution of India’ at its website. Whether the rich information in
this note of dissent by the three domain experts on the INT, and other documents
that have come to light through independent journalistic investigation, will find its
way into the CAG report and the conclusions drawn will be widely followed across
the media and political spectrum.
https://www.thehindu.com/news/national/rafale-deal-not-on-better-terms-than-upa-
era-offer/article26253566.ece
GOVERNMENT
The Irrationality Behind the Benchmark Price of the Rafale Deal
It is evident that the majority view on benchmark price was that of the so-called
lightweights, while the minority view was that of the domain experts.
Credit: Reuters/Charles Platiau

Sudhansu Mohanty
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GOVERNMENT
09/FEB/2019
Of the several much-debated issues on the Rafale deal, one important aspect is
the benchmarking of prices before negotiation. As widely reported and discussed in the
media, the way the benchmark was fixed has been rather contentious.
This issue, among others, has become the inflection point in the entire Rafale deal.
What emerges from the media stories is that there was a difference of views among the
Contract Negotiation Committee (CNC) members on the benchmark price worked out by
the Adviser (Cost). While a few members went along with him on the benchmark price,
others demurred. Thereafter it seems to have been put through a democratic process – a
decision on the basis of majority views.
The majority, so the story goes, didn’t agree to the benchmark price of €5.2 billion, as
worked out by the Adviser (Cost), and instead suggested €8.2 billion.
Watch | PMO Undermined Defence Ministry in Rafale Negotiation
But more materially, how could a majority view (4-3) overrule the minority view in the
CNC, when the decisions are supposed to be collegiate? All over the entire DPP 2013, the
term “collegiate” has been used in ‘collegiate vetting’ or ‘collegiate manner’ or ‘collegiate
discussions’. The term “collegiate” emphasises “a work environment where responsibility
and authority is shared equally by colleagues…”
The difference in the two views expressed in the CNC seems to have arisen due to use of
an “aligned cost table” based on the 2007-RFP’s “non-deal” to arrive at the higher
benchmark price.
It is here that paragraph 52 of DPP 2013 is relevant:
“Cases for which contracts have earlier been signed and benchmark prices are
available, the CNC [contract negotiation committee] would arrive at the reasonable price,
taking into consideration the escalation/ foreign exchange variation factor.”
Since there were no signed contracts on the item and thus no benchmark price was
available, it’s baffling how the benchmark price was revised upwardly, by use of this
intriguing “aligned cost table”. The “aligned cost table” used by the majority view in the
CNC was based on the benchmarking of the 2007-RFP non-deal that wasn’t relevant, and
thus had no foundation. Not to reiterate that this higher benchmarked price of €8.2 billion
flew on the face of express provisions of the DPP 2013.
If there were differences of opinion on benchmarking among members of the CNC, with
three crucial members – joint secretary and acquisition manager, finance manager, and
advisor (cost) who had the relevant domain expertise on benchmarking – plumping for
€5.2 billion, while others sought enhancement to €8.2 billion on an “aligned cost table”,
the details doubtless deserve a close look-in to see if there were any irrationalities and
illogicalities.
If what has been put out in public space is correct, it is evident that the majority view on
benchmark price was that of, what I may say, the so-called lightweights in the CNC, while
the minority view was that of the domain experts.
A quick look at the profile of each CNC member vis-à-vis their expertise will bear this
out.
To start with, one member (JS, DOMW) on the majority side, had no role whatsoever to
play on fixation of benchmark price. His nomination was contingent on inclusion of the
offset proposal, and his role strictly confined to the offset issue. Nor does he have any
expertise on benchmark price.
Another member, JS & Additional Financial Adviser, too had no direct role to play in the
benchmark price fixation. His job profile in the MoD concerns overseeing financial
matters pertaining to revenue procurements and he is an outsider to the CNC on matters of
defence capital procurement. Also, not being a permanent member of the CNC as spelt out
in DPP 2013 but a member nominated in this case by the RM, he can’t be deemed as a
core member so far as benchmark price fixation goes.
Also read: The National Security Advisor Had No Locus Standi to Negotiate the Rafale
Contract
The same goes for the other two members, the Deputy Chief of Air Staff (DCAS) chairing
the CNC, and the Assistant Chief of Air Staff (Plans) who, as per procedure, is nominated
as the member-secretary of CNC by the Chairman (DCAS): their core competence lies
elsewhere, not on working out the nitty-gritty of the benchmark price.
On the other hand, the crucial man is the Adviser (Cost) [a JS-level officer from the Indian
Cost Accounts Service (ICoAS)] who works out the cost-sheets of various items based on
his domain expertise and who attends the CNC as and when required, specifically to
perform such mandates. He is helped along by the Finance Manager (Air) – another JS-
level officer – who is the whole time finance expert meant only for defence capital
acquisition and is acquainted with the cost elements.
The third and crucial member is the JS & Acquisition Manager (Air) who anchors all
defence capital acquisitions and is familiar with all capital procurements/costing of various
items.
This is not to forget the aspects of ToT and licensed production cost, plus the cost of
setting up the facility in India in the so-called non-deal of RFP-2007 that will likely pan
out post the RFI (Request for Information) of April 2018. To take into account this amoun t
and to amortise the cost per unit and then to work out the figure for 36 Rafale in fly-away
condition and arrive at the “aligned cost table” can hardly be considered rational. The
logic is flawed because it is invalid.
To elaborate, going by the RFP-2007 this expenditure was to be amortised over the entire
spectrum of 1o8 aircrafts to be manufactured in India and the 18 Rafale aircrafts in fly-
away condition from France.
“The costs of the aircraft would include direct acquisition including that of weapons and
missiles, warranty for first two years, licence royalty for manufacture in India, cost of
technology transfer and costs of initial training.”
Beyond this issue of amortisation, it’s well to remember that even the depreciated value of
the facility set up in India, upon closure of this production line, too has a residual value
(not a small sum), and needs to be costed.
Amortisation in its classical sense is applied to intangible assets. When funds are invested
for setting up a facility that is quantity-neutral, it is natural that the greater the number the
better it gets for the investor. With the cost of such investment deemed inexorable, the
higher the number the lesser the cost per unit with the investment spread across a wider
spectrum, thus pulling down the unit price.
How logical is it then to apportion this expenditure over 36 units instead of a much higher
number as envisaged in the RFP-2007 “non-deal”? Clearly this can’t be viewed as a
prudent and reasonable benchmark price to buy from public funds. It’s much too simplistic
a calculation to convince even the gullible and the uninitiated.
Éric Trappier, head of Dassault Aviation, at the Le Bourget airshow near Paris in 2015.
Credit: Dassault
Often in the public slugfest, another crucial issue that segues and flows out of the present
buy has been missed out. It is critical, because beyond the 36 Rafale aircraft it will
inevitably raise many gnawing questions for future buys. For one, will this Rafale deal not
impact on future benchmark price determination of fighter jets among different vendors
that includes Dassault Aviation?
Will, then, Dassault not willy-nilly get a head start over other vendors in overall
assessment/evaluation of future fighter aircraft RFP(s)? How contractually ‘correct’ and
moral will that be? Will it not endow on Dassault a witless advantage vis-à-vis other
competing firms, especially on India specific enhancements (ISE) (or by any other
technical specifications these are spelt out in the Request for Proposal (RFP)) that lately
have been much in the news and are said to be the vital elements in pushing up the cost of
the Rafale deal beyond the cost of bare-bone aircraft?
Also read: High Transfer of Technology Costs Made UPA’s Rafale Deal Much Cheaper
than NDA’s
Throw in the new variable of strategic partners and ‘Indian Production Agency’ already
indicated in the RFI, and you get a sense of the besetting issue staring at us.
Given this backdrop – using the “aligned cost table” – to arrive at benchmarked price and
the resultant advantage embedded for Dassault in the form of setting-up of ISE
developmental facility for benchmarking in the Rafale case, it boggles one’s mind how a
levelled field could be worked out and offered to all vendors for MMRCA or fighter jets as
in the April 2018 RFI. It is hard to think of a levelled field that could be on offer in the
imminent future to all vendors without putting Dassault at an unevenly high advantageous
perch.
Does it, then, follow that the seeds of disparity have already been sown, albeit unwittingly,
and shall stay the course regardless, as long as similar technical specifications hold? It is
hard to second-guess on so convoluted an issue.
Notwithstanding all that has been said, it doubtless couldn’t be much of an ask to let the
citizens know on what grounds the benchmark price proposed by CNC’s domain experts
was overruled.
The justifications adduced to negate and overrule the benchmark price are vital – on it
hinges one of the most important aspects of the whole Rafale polemics.
If the logic to overrule is overpowering and convincing, it would smother all doubts and
give the present brouhaha a quiet burial.
Shouldn’t the government then not be transparent on this aspect instead of taking
refuge under the secrecy agreement?
Sudhansu Mohanty worked as Controller General of Defence Accounts and then as

Financial Adviser, Defence Services before retiring on May 31, 2016.
https://thewire.in/government/irrationality-rafale-deal-benchmark-price
Rafale Deal: The Mystery of the 3-Billion-Euro Price Hike
How did the benchmark price for 36 Rafales go up from 5.2 billion euros to 8.2 billion euros
and on what basis did the Modi-led Cabinet Committee on Security agree to pay more per
plane than the MMRCA RFP had envisaged for the same configuration?
From the judgment, it is clear that the bench believed that the pricing details had been shared
with the CAG and that the report of the CAG was examined by the PAC. Credit: PTI/Ravi
Choudhary
Ravi Nair
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GOVERNMENT
SECURITY
18/NOV/2018
New Delhi: On November 14, the Supreme Court reserved its verdict on the PIL
questioning the Modi government’s controversial decision to purchase 36 Rafale fighter
jets from France in flyaway condition by cancelling the then 95% negotiated RFP for 126
aircraft.
On the same day, drawing on internal correspondence between the ministries of law and
defence, The Wire had reported how the Modi government failed to secure from France a
sovereign guarantee for the deal’s implementation and settled instead for a ‘letter of
comfort’. The issue also figured prominently in the court’s hearings.
The only problem with such a letter – says Sudhanshu Mohanty, who was the Financial
Advisor (Defence Services) in the Ministry of Defence from October 2015 to May 2016 –
is that it “provides no comfort at all”. It was during his tenure that the deal for 36 Rafales
was negotiated. Prior to becoming FA in MoD, Mohanty was the Controller General of
Defence Accounts (CGDA). Speaking to the Economic Times a day after the Supreme
Court wrapped up its hearings, he said that the bench mark price (BMP) set for 36 Rafales
at the start of the negotiation by the contract negotiation committee (CNC) was 5.2 billion
euros but that later it was increased to 8.2 billion euros. What he said is worth quoting in
full:
“It has been brought out that the negotiating team came up with a benchmark price that
was overruled by the ministry. It wouldn’t be fair on my part to comment on the
benchmark price. The more relevant question that needs to be asked is: On what grounds
was this overruled? What logic and justifications were adduced on file to overrule the
points made by senior ministry officials who negotiated the contract? Further, as per the
information available in public domain, the Defence Acquisition Council headed by the
defence minister and consisting of all top MoD honchos didn’t recommend the case, and
instead left it to the Cabinet Committee on Security to take a call. Why? This needs to be
looked into. For, not in my fallible memory of defence capital acquisition can I recall such
a thing — because it is strange, even queer.”
This is very important because the government submitted a detailed answer in the Supreme
Court (though it was undated and unsigned and was not an affidavit) saying it had
followed all the guidelines prescribed by the Defence Procurement Procedure (DPP) 2013.
Since the prescribed procedure would presumably have involved the DAC recommending
a case and not leaving it to the CCS, the government’s claim that it followed all the steps
prescribed by the procurement guidelines does not appear to be accurate.
Para 51 of DPP 2013 states: “In all cases, CNC (Contract Negotiation Committee) should
establish a benchmark and reasonableness of price in an internal meeting before opening
the commercial offer.”
Para 26 of the government’s reply to the Supreme Court states: “The INT (Indian
Negotiating Team) report was finalised and signed on July 21, 2016.” And it boasts of how
the INT negotiated “better price, delivery and terms in comparison with 126 MMRCA
case”.
Para 27 confirms, “Chairman of INT submitted the report on August 4, 2016 and
recommended the case to be progressed for CCS (Cabinet Committee on Security)
approval and signing the IGA (Inter Government Agreement).” “The proposal was placed
before the CCS on August 24, 2016. The approval of Cabinet Committee on Security for
the signing of the IGA for procurement of 36 Rafale aircraft was accorded on August 24,
2016.”
Here is the contradiction. When the negotiations started in May 2015 (as per para 25 of the
government’s answer to the Supreme Court) an expert committee led by MoD official
M.P. Singh (advisor-cost) determined the benchmark price to be 5.2 billion euros. Singh
and his colleagues were over-ruled by others in the ministry but even so, the DAC “didn’t
recommend the case” and kicked the ball up to the CCS. And it was the CCS which took
the decision to accept the hike in the benchmark price.
In other words, if the benchmark price had to be increased at the last minute by the CCS –
basically a group of ministers led by Prime Minister Modi and comprising Arun Jaitley,
Manohar Parrikar, Rajnath Singh and Sushma Swaraj – who have no technical know-how
or expertise in the subject matter, how can the government say it followed all the
procedures? It is apt to remember here that the three MoD officials – Rajeev Verma, (then)
joint secretary (Air), A.R. Sule (then) finance manager (Air) and M.P. Singh himself –
raised objections on the revised benchmark price and they were either transferred or sent
on leave as the government bulldozed its way.
The irony is that the entire controversy over the price of the 36 Rafales can be traced back
to this hike in benchmark price. Had the government stuck to the 5.2 billion euro
benchmark price, it would have produced a price similar to what was “discovered” via the
126 MMRCA RFP process.
As Ajai Shukla has reported in the Business Standard, the total cost of the 126 Rafales
under the MMRCA deal RFP was 19.5 billion euros and included the same configuration
of weapons and other related accessories and terms and conditions in comparison to the
Modi government’s deal, which costs 7.8 billion euros for 36 aircraft in flyaway condition
from France, 2 billion euros more than what the cost might have been if the MMRCA RFP
had been used as the benchmark.
Buckling on the arbitration issue
DPP 2013, Schedule 1, Appendix H Para 2.5 reads: “The arbitration tribunal has its seat in
New Delhi or such other places in India as may be decided by the arbitrator”. Para 2.6 says
“The arbitration proceedings shall be conducted in India under the India Arbitration and
Conciliation Act, 1996 and the award of such Arbitration tribunal shall be enforceable in
India courts only”.
A 2016 note from MoD on the Rafale negotiations accessed by The Wire makes it clear
that on French insistence, the Modi government agreed to change the seat of arbitration out
of India. And it clearly mentions that the government didn’t insist on a sovereign
guarantee or adequate bank guarantee.
It says in para 3: “To briefly recapitulate, it was considered essential that the proposed
IGA retains the character of Government to-Government Agreement for this procurement.
As may be seen in Encl 13A, it was stated in out reference to MoL&J the core elements of
G-to-G character seem to be:
1. The responsibility for the supply of equipment and related industrial services and
performance of the entire contract remains with the foreign government;
2. Dispute resolution mechanism at Government-to-Government level only.
Para 4 reads: “With reference to the peculiar nature of proposed IGA for procurement of
36 Rafale aircraft, certain issues arose during the course of negotiations which include the
issues of Transfer of rights and obligations by French Government to the French Industrial
Suppliers, Arbitration between Government of India and French Industrial Suppliers,
French side not agreeing to provide Sovereign/Government Guarantee, etc. which were
referred to MoL&J in this context for examination to ensure that the Government to
Government character of the proposed Agreement is being retained and the legal and
financial interests of Government of India are adequately protected.”
Para 5 says : “….While giving the legal advice as a whole, MoL&J concluded by stating
that the suggestions, modifications and improvements discussed above in respect of draft
IGA and draft Supply protocols ma1, be considered and suitably addressed to, as deemed
appropriate. It was further suggested that on matters of administrative policy, a conscious
decision may accordingly be taken at an appropriate level as the issues / suggestions are
required to be suitably addressed to by the administrative department before the vetting of
draft IGA & draft Supply Protocols and also in view of secretary MoD’s note dated l
l.12.2015 for the urgency in the matter. …. However, as stated in para 3 of Note 231 (copy
at Encl 15A), MoL&J have not specifically responded on the issue of G-to-G character
getting affected by the provisions proposed by the French side, especially by transfer of
rights and obligations by French Government through French Industrial Suppliers,
Arbitration with French industrial suppliers and absence of Government / Sovereign
Guarantees etc. as raised in Note 223 referred to above. MoL&J have also not commented
on certain other issues such as technical arrangement, implications of different country
laws etc.”
Para 6 & 7 clearly states, National Security Advisor (NSA) was with the Indian
Negotiating Team (INT) in France on Jan 12 and 13, 2016.
Para 6 Reads: “After receipt of above legal advice, discussions have taken place during the
meetings of INT on these issues, in the meetings in MoD and also in the meeting of NSA
and Member Secretary, INT, with the French side in Paris”.
Para 7 says: “As per the advice of MoL&J, the French side was requested to incorpo rate a
clause on ‘Joint and Several Responsibility’ in respect of Article 3.1. Article 4.3 was
amended in the meeting of NSA and Member Secretary, INT with the French side in Paris
on 12 &. 13 January 2016 and was further amended after discussions in MoD.”
These notes make it evident that National Security Advisor Ajit Doval was the person who
facilitated the acceptance of a “Letter of Comfort” from France instead of a sovereign
guarantee.
In a nutshell, none of the committees comprising experts and bureaucrats approved

the 3 billion Euro hike in benchmark pricing, but it was the Cabinet Committee on
Security headed by Prime Minister Modi which decided on it. And it is the same CCS
which agreed on a letter of comfort from France instead of a mandatory sovereign
guarantee on a G to G deal.
It is hard to see how the Modi government could have told the Supreme Court that the
procurement contract for 36 Rafales was according to the procedures set in DPP 2013.
https://thewire.in/security/rafale-deals-narendra-modi-anil-ambani-dassault-aviation
The National Security Advisor Had No Locus Standi to Negotiate the Rafale Contract
Negotiations for defence capital procurement in India do not provide, let alone foresee, for
any 'Sherpa' help.
National security advisor Ajit Doval. Credit: Reuters/Ng Han Guan/Pool
Sudhansu Mohanty
6.2K
interactions
GOVERNMENT
06/FEB/2019
One of the most intriguing aspects of the Rafale deal that defies understanding is the
proactive role played by Ajit Doval, the National Security Advisor (NSA), in the
finalisation of the terms and conditions of the contractual details.
The puzzle stays, because Doval had no locus to negotiate the Rafale deal. He was not a
part of the officially-appointed and legitimately-anointed Contract Negotiation Committee
(CNC) under DPP 2013, notwithstanding his high office of National Security Advisor. Nor
was he a co-opted member nominated to the CNC (or INT, as christened on official
records put out in the media) by the Raksha Mantri (RM), who, given the NSA status, rank
and position, wasn’t within his right to do so.
The DPP 2013 grants the NSA no role whatsoever in the negotiation and finalisation of
defence contracts. This is what Para 47 of DPP 2013 says about the Contract Negotiating
Committee:
“The process of commercial negotiations will commence, wherever necessary, after Staff
Evaluation Report has been accepted by the Director General (Acquisition) and the TOC
Report has been accepted by the Defence Secretary, as applicable. The standard
composition of the CNC shall be as indicated at Appendix B to this procedure. Any change
in the composition of the CNC may be effected with the approval of Director General
(Acquisition).
Where considered necessary, a Service officer or any officer other than from the
Acquisition Wing of the MoD may be nominated as Chairman of the CNC with the prior
approval of Raksha Mantri. The concerned organisations/ agencies should ensure that their
representatives in the CNC have adequate background and authority to take a decision
without any need to refer back to their organisation/ agency. The CNC would carry out all
processes from opening of commercial bids till conclusion of contract. The sealed
commercial offers of the technically accepted vendors shall be opened by the CNC at a
predetermined date and time under intimation to vendors, permitting such vendors or their
authorised representatives to be present. The bids of the competing firms shall be read out
to all present and signed by all members of the CNC.”
The standard CNC composition as per Appendix B alluded to in para 47 of the DPP 2013
is reproduced below:
“A. FOR SERVICES & COAST GUARD –ABOVE ` 200 CRORE
1. Acquisition Manager – Chairman.

2. Technical Manager.
3. Finance Manager.
4. Advisor (Cost).
5. DGQA/DGAQA/DGNAI Representative.
6. Procurement Agency Representative.
7. User Representative.
8. Representative of Contract Management Branch at SHQ.
9. Repair Agency Representative.
10. Under Secretary concerned.
11. Member Secretary to be nominated by the Chairman.
Notes:
(i) If with ToT – rep of DDP, DRDO and Production Agency to be included as member.
(ii) Participation of Adviser (Cost) is not required in every CNC and it has to be on
actual requirement basis, as determined by the Chairman.
(iii) If the CNC is chaired by a Service Officer in category A above, then reps may be
nominated in place of officers mentioned at Serial no. 1,2,3 of A above.
(iv) If Offset included, then rep of Defence Offset Management Wing (DOMW) to be
included as member.
(v) In the absence of the designated member, the authorised representative would be
deemed to be suitably empowered to take decisions.
(vi) Approval of Director General (Acquisition) to be solicited for any change in the
compositions mentioned above.”
For the sake of absolute certitude, go search the DPP 2013 with the words “National
Security Advisor” or “NSA”. It throws up no result, a confirmation that the DPP 2013
(even DPP 2016) envisions no role for the NSA in defence capital procurement. This is
what makes the active participation of the NSA all the more problematic.
A model of the Rafale fighter, outside the French ambassador’s office at the Embassy of
France in New Delhi. Credit: The Wire
The ‘sherpa’ role
Unless, of course, unbeknownst to the citizens of this country, Doval played the ‘sherpa’
(emissary) to act on behalf of Prime Minister Narendra Modi. The term ‘sherpa’ was
originally used informally by the states of the European Union, where personal
representatives prepare work for the Intergovernmental Conference (IGC) meetings.
While the position of a chief negotiator can be traced back under varying names to the first
days of the European Union process, the name has caught on as an official reference since
2005 on the designation of a high-profile group on competition regulation in the European
chemistry that names officially a “Sherpa-Subgroup”.
Negotiations for defence capital procurement in India do not provide, let alone foresee, for
any Sherpa help. Nor does it even envisage or assign any role to him in the IGA-based
contractual matter. The reason is clear. The negotiations – both technical and commercial
– are done by domain experts. And in the case of Indo-French IGA, the Indian PM himself
had already made the pronouncement in Paris on April 10, 2015, and there was no need or
likelihood of another summit meeting between the Indian PM and the French president.
Even granting that there was an off-chance of such summit meeting(s), was Doval
officially appointed as the PM’s Sherpa? No government notification was issued, nor does
any media report attest to this fact.
Also Read: High Transfer of Technology Costs Made UPA’s Rafale Deal Much Cheaper
than NDA’s
For the sake of argument, were he the official Sherpa, his appointment would still be
considered extra-mural and extra-procedural under the DPP 2013 (as also in the DPPs that
preceded and succeeded the 2013 version) – to discuss and negotiate the terms and
conditions of the contract, which is solely and wholly the CNC’s preserve, as prescribed in
the DPP 2013. Of relevance here is the fact that the term INT alluding to the Indian
Negotiating Team has been used as a euphemism for the CNC or Contract Negotiation
Committee, quite possibly to accommodate the NSA.
Not to one’s knowledge has there been a single instance where any authority outside the
MoD was so appointed to play an active role in an ongoing negotiation process. Nor do
officials other than the authorised CNC members even inside the MoD have anything to do
with the ongoing CNC’s negotiations, leave aside negotiating upfront with the vendor or
OEM. This is disquieting.
More disquieting is the fact that his interventions as unofficial Sherpa put paid to
observing laid down procedures that didn’t help the nation’s interest. Going by
information available in public domain, insistence on sovereign guarantee by the French
government was done away with and the quirky tokenism of a legally unenforceable
‘Letter of Comfort’ given in exchange.
Dassault’s financial state
Also, it needs no recalling that Dassault Aviation, given its none-too-sound financial state,
was overly keen on clinching the Indian deal. India, on the other hand, had far more
choices in the international arms market for fighter aircraft, as was apparent then on the
basis of multi-vendor scenario that had emerged.
It may not be much of a stretch to say that the scenario was quite akin to a monopsony
(though not the copybook way) where in a big ticket purchase the potential buyer (India)
was in a vantage position to call the shots and dictate terms to the seller. More so, in the
wake of the discount offer of Eurofighter in July 2014. Why this situation was not
exploited in adding to India’s bargaining power and leveraged to India’s advantage is a
matter of conjecture. But that it was a failure on India’s part to seek advantage of its
buyer’s position to fashion a better deal is hard to gloss over.
It inevitably brings to the fore another concomitant issue: what’s the best time for a buyer
to sign an IGA? Before or only after the negotiations are over? An announcement or
conclusion of an IGA before negotiation had begun will likely push the buyer to the wall,
while negotiations without the albatross of an IGA announcement gives the buyer a freer
hand to extract optimal negotiating and contractual mileage. Doubtless an open-ended
negotiation frees the negotiators from any baggage and grants the flexibility to protect
public funds.
Adding to India’s woes is the arbitration in Geneva under the UNCITRAL, which betrays
the sanctity and raison d’être of an IGA. For what’s an IGA if contractual matters have to
be adjudicated not by the two IGA-signing nations but by an outside body? It assails the
very foundation and morality of an IGA.
Yet, that doesn’t exhaust the weaknesses of this IGA-laden Rafale contract, adjudged as
having “broadly” followed the procedures by the Supreme Court. The long shadows it will
cast on Indian public governance can’t be ignored. The sanctity and purity enshrined in the
extant DPP – of faithful implementation of a bespoke procedural system free from
allegations of interference – has been breached. It will likely to have a telling effect on all
future defence procurement, both revenue and capital.
Lingering doubts in the citizen’s mind
Another fall-out is the lengthening shadow that will loom on other processes and
procedures, not necessarily defence, but on the entire spectrum of government apparatus. It
is well to remember that it’s easy to break a good tradition but rather hard to break a bad
one. The raison d’être of DPP is to keep any extraneous pressure at bay and to insulate
public spends from such influences. Each such infraction not only infringes the sanctity of
DPP but also seeds the vector for future outrage.
How, then, for the government, even now, to clear the air, for as someone said, when in
doubt – disclose? That will not only help scotching any lingering doubt(s) in the citizen’s
mind but also add to the credibility of the government and set the tone for all future
procurement cases. Let the Services’ interests too not be allowed to suffer.
Also Read: Ajit Doval’s New Job Description Won’t Change India’s National Security
Management
Else, the case will very likely be alluded to or invoked as a precedent to justify so -called
‘minor’ deviations – that aren’t so ‘minor’ as may be made out to be – perpetrated in day-
to-day functioning.
It will be open to abuse and easy for monkey tricks by citing this as an example, or by
plucking some curmudgeon acts or ideas or processes out of context to negate or twirl a
rightful course of action envisaged under prescribed procedures. That will be unfortunate
and shall obscure a warning that may be timelier now than we would like to believe.
Sudhansu Mohanty worked as Controller General of Defence Accounts and then as

Financial Adviser, Defence Services before retiring on May 31, 2016.
https://thewire.in/government/the-national-security-advisor-had-no-locus-to-negotiate-
the-rafale-contract
Ajit Doval's New Job Description Won't Change India's National Security Management
Making the NSA the chairman of the Strategic Policy Group of the National Security Council
could be part of an effort to paper over the real problems relating to the dysfunctional defence
system.
NSA Ajit Doval. Credit: Facebook/Ajit Doval

Manoj Joshi
358
interactions
SECURITY
13/OCT/2018
At first sight, the decision to make National Security Adviser Ajit Kumar Doval the
chairman of the Strategic Policy Group (SPG) of the National Security Council (NSC)
would appear as though the government is working overtime to repair the rusted national
security mechanisms of the country. The move has come along with other changes in the
NSC system, and a couple of months after it took an even more consequential decision to
appoint Doval the chair of the Defence Planning Committee, which virtually runs the
Ministry of Defence.
A closer look would, however, reveal that this is, to quote Shakespeare, a lot “of sound
and fury signifying nothing”. The Modi government has a record of making announcement
and grand declarations that turn out to be just that – announcements and declarations. The
changes in relation to Doval’s job description also appear to amount to that.
Worse, they could also be part of an effort to paper over the real problems relating to the
dysfunctional defence system and the government’s inability to adequately address them.
This is manifested most clearly by a little-noticed decision to replace Major General
(retired) B.C. Khanduri as the chairman of the parliament’s Standing Committee on
Defence (SCOD). Earlier this year, under his leadership, the SCOD came out with an
authoritative report revealing the extent of the problems of the Indian armed forces.
Also read: How India Walked a Tightrope to Ink the S-400 Missiles Deal With Russia
To come to the latest decision on the SPG: the defence secretary was the designated chair
of the SPG and now he has been replaced by the NSA. Some media commentary has gone
over the top in suggesting that this gives Doval primacy over the entire government
because key officials like the Reserve Bank of India governor and the cabinet secretary are
also members of the SPG. That is simply not true, because the SPG carries out a specific
function in relation to national security issues and there is nothing unusual in having the
NSA chair it.
Actually, having the cabinet secretary in the chair was a bit of an anomaly, a holdover
from the era when he was, indeed, the chief coordinator of India’s national security policy,
including the nuclear weapons programme. That situation ended with the appointment of
Brajesh Mishra as the first NSA.
A six-member NSC headed by the prime minister was set up in November 1998. The body
comprised of the SPG consisting of senior officials like the chiefs of the intelligence
agencies, the heads of the three armed forces, and other senior secretaries to the
government as the key executive tier of the new body responsible for the inter-ministerial
coordination of the national security system. At the second tier was the National Security
Advisory Board comprising retired officials and non-government persons. Both these
bodies and the NSA’s office were serviced by a National Security Council Secretariat.
The NSC was viewed as a body that would take a holistic view of national security issues
based on the advice and specialist studies done by its constituent bodies, but the executive
action on them would remain the purview of the Cabinet Committee on Security. The fact
that the two bodies had a common membership helped the decision-making process.
In setting up the NSC, the government had hoped that it would bring a fresh angle to the
traditional approaches to security. This would be facilitated by the independent advisers in
the NSC system. But over time, things didn’t quite work that way. With former
government officers dominating the alternate channels of advice, there was little by way of
out-of-the-box thinking.
Also read: The Army Has Bared Its Iron Fist in Kashmir – and Wants Everyone to Know It
In any case, the NSC itself met fitfully over the years, and while the NSAB was always
active, the SPG went through long periods when it simply did not meet.
Looking back, it is clear that the NSC system has not quite stabilised. To start with, the
Joint Intelligence Committee was subsumed under the NSCS which was given the job of
tasking the intelligence agencies. However under M.K. Narayanan, the JIC was again
revived and the tasking system abandoned.
When Doval became NSA, he initially did away with the NSAB and chose not to have a
military adviser, with the incumbent Lieutenant General Prakash Menon being re-
designated Officer on Special Duty. Later a truncated NSAB came up with former
ambassador to Russia P.S. Raghavan at its head, but without its crucial component of non -
governmental experts. The chairman JIC R.N. Ravi, who was also the interlocutor for the
Naga talks, has recently been re-designated as deputy NSA (internal). He is one of three
such officials – Rajinder Khanna, former R&AW chief is deputy NSA looking after
intelligence work and former diplomat Pankaj Saran deals with diplomatic issues. Whethe r
the JIC has also again been subsumed by the NSCS is not clear.
The position itself has changed tenor since its first iteration. Its first incumbent Satish
Chandra was “deputy to the NSA”, a notionally higher position. Subsequently, NSAs
experimented with having one or two deputies. And now Doval has decided on
three. According to a report, Lieutenant General V.G. Khandare, the former Defence
Intelligence Agency chief, may now be appointed military adviser to the NSA.
Does the change of the chairmanship of the SPG amount to anything? Unlikely. As we
have noted in the case of the Defence Planning Committee, the NSA simply has too much
on his plate to devote time to issues of reform and restructuring that are needed in the area
of defence. He is the principal security adviser to the prime minister, responsible for
managing India’s policies towards Pakistan, China and the US. He manages India’s
nuclear deterrent and, because of his background, also supervises the intelligence agencies.
True, he has some highly capable people to assist him in carrying out his numerous tasks.
But at the end of the day, the buck does stop with him.
Manoj Joshi is a Distinguished Fellow, Observer Research Foundation, New Delhi.
https://thewire.in/security/ajit-doval-nsa-national-security
High Transfer of Technology Costs Made UPA’s Rafale Deal Much Cheaper than
NDA's
Questions surrounding costs associated with technology transfer, India-specific

enhancements and the Eurofighter's offer still remain.
French Navy Rafale fighter jets are seen aboard the upgraded "Charles de Gaulle" aircraft
carrier off the coast of Toulon, France, November 14, 2018. Credit: Reuters/Christophe
Simon
M.K. Venu
4.8K
interactions
GOVERNMENT
30/JAN/2019
There is no answer yet to one key question regarding the Rafale fighter jet deal which was
indirectly raised by the recent expose by N. Ram in The Hindu.
The UPA’s 126 aircraft involved technology transfer as an essential part of the project.
There is a considerable price India would have paid for technology transfer. Technology
absorption and indigenisation doesn’t come free. There is a big cost attached to it. So, the
price that India would have paid for tech transfer was embedded in the price of 126 aircraft
that the UPA had proposed to buy.
This cost would also have been proportionately added to the 18 Rafale jets which would
have come in fly-away condition from France.
However, the 36 Rafale jets bought by the NDA in fly-away condition does not include the
transfer of technology (ToT) costs. Therefore, when we compare the per aircraft cost o f 36
jets contracted by the NDA with that of the 18, which UPA would have bought in fly-away
condition, it is necessary to reduce the cost of technology transfer/indigenisation
embedded in the price of 18 Rafale jets.
Also read: Modi Govt’s Rafale Deal Was 40% More Expensive Per Aircraft Than
Dassault’s Earlier Offer: Report
If this is done, the price of per aircraft under UPA may fall sharply. This exercise has not
been done by anyone, not in the least the government which is trying to hide these facets
of the deal.
If the cost of tech transfer is removed from the UPA deal, then the price per aircraft for 18
jets should become much cheaper than what is being paid by NDA per aircraft. It is this
aspect of the price difference – and a considerable one at that – which is still shrouded in
mystery.
The price difference per aircraft between the UPA and NDA deal would really widen way
beyond the 14% arrived at by The Hindu’s investigation. Defence analysts say if the cost
of technology transfer is removed from the UPA deal, then the NDA deal per aircraft could
get even costlier .
“There is a considerable cost incurred on technology transfer as entire teams of foreign

manufacturing companies spend some years to help transfer the technology to local
manufacturing. In the case of Rafale, the India specific enhancements would cost a lot to
indigenise,” says Sudhanshu Mohanty, former Secretary-Defence Accounts, who
examined costing aspects of the deal before retiring in 2016.
The Hindu’s article also raised the issue of how Rafale’s rival bidder, Eurofighter, had
made a fresh offer to NDA which was 20% cheaper. Mind you, even this cheaper offer
included transfer of technology as it was made against the UPA’s 126 aircraft deal.
Mohanty says the government could have used the Eurofighter offer to beat Rafale further
down, if nothing else.
Also read: Yashwant Sinha, Arun Shourie, Bhushan: Rafale Deal Caused Great Loss to
Exchequer
So, when Modi decided to jettison the transfer of technology factor from the new deal to
buy 36 aircraft in fly-away condition it was incumbent on the PMO to ask what would
rival fighter jet maker Eurofighter have paid for a similar configuration without tech
transfer. This was not done.
So naturally it has become impossible – in the absence of credible data and information –
to compare the price of a Rafale jet with and without the cost of technology transfer
embedded in it.
The Hindu’s article also raises the issue of amortisation cost of the 13 India specific
enhancements specially being built by Rafale in France, which costs €1.3 billion. In one
case, €1.3 billion is spread across 36 aircraft and in the UPA deal it is spread across 126
aircraft and also across 50 follow-on jet purchases at a later stage. This cost difference also
remains largely unexplained as the NDA government removed the follow-on offer clause.
This means in any follow-on purchase of the same fighter jet, India will pay a much higher
cost for India specific enhancements than seen in the UPA deal.
Also read: Rafale Deal: The Mystery of the 3-Billion-Euro Price Hike
Another important question arises. If tomorrow, Rafale again participates in a bid floated
by the defence ministry to acquire MMRCA fighters, will India end up paying a higher
fixed cost per aircraft – based on the earlier deal for 36 and not 126 – for India specific
enhancements? These are troubling questions which will not go away in the face of
extreme non- transparency in the deal.
In one sense, Rafale has a clear advantage over other MMRCA bidders in future as it
already has built the India specific enhancements for the country. They are already
developing the know-how and the necessary infrastructure in France for India -specific
enhancements .
Mohanty says it would have been much better if these technologies were developed in
India with HAL. That would have truly bolstered national security in future.
https://thewire.in/government/high-transfer-of-technology-costs-upa-rafale-deal-cheaper-
nda
Rafale deal: dissent note by domain experts in the Indian Negotiating Team
N. Ram
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Here are images of the eight-page dissent note by three members of
the Indian Negotiating Team on the new Rafale deal.
MORE-IN
Rafale deal
The findings of the three domain experts in the Indian Negotiating Team are directly
contrary to the two central claims made by the Indian government of a cheaper deal
and faster delivery of fighter aircraft, claims that have been affirmed before the
Supreme Court of India in official submissions.
The INT was for a firm and fixed benchmark price, but the French side converted the initial
commercial offer of a fixed price into one based on an escalation formula.
1/8
The final price of €7.87 billion offered by the French side, which is escalation-based, is
55.6% higher than the firm and fixed benchmark price of €5.06 billion fixed by the INT.
2/8
M/s EADS, which had technically qualified, had given an offer of 20% discount on a fixed
basis before negotiation. After adjustment for 36 aircraft, the price offered by the French side
was much higher.
3/8
Dassault Aviation did not align the procurement cost of 36 Rafale aircraft with the
corresponding offer in the MMRCA procurement process, which is of paramount importance
in terms of the Indo-French Joint Statement. When the counter offer of 30% discount was
made, the French side refused to take cognizance of this aspect.
4/8
Taking into account the financial impact of the bank guarantees (without even factoring in the
effect of escalation), the final price offered by the French side was still 5.3% higher than the
aligned cost of the commercial quotes submitted by M/s Dassault Aviation and M/s MBDA
in the MMRCA procurement process.
5/8
During the MMRCA procurement process, Dassault Aviation did not meet certain ASQRs
(Aerospace Supplier Quality Requirement) stipulated and the private French company offered
to meet these deficiencies at an additional cost, terming them 'India Specific Enhancements'.
6/8
Accepting a Letter of Comfort from the French Prime Minister instead of Sovereign
guarantee/Government guarantee or Bank guarantees would go against basic requirements of
financial prudence.
7/8
The delivery schedules offered by the French side were longer than what was asked. Dassault
Aviation had a backlog in deliveries for the Financial Year 2015 of 83 aircraft to various
countries. The final delivery of the first 18 aircraft was slower than in t he MMRCA proposal.
https://www.thehindu.com/news/national/rafale-deal-dissent-note-by-domain-experts-in-
the-indian-negotiating-team/article26252605.ece/photo/1/
India-specific Rafale add-ons after delivery of all 36 fighters
Dinakar Peri
NEW DELHI , NOVEMBER 18, 2018 21:03 IST
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The IAF has sought 13 India-specific enhancement capabilities for the aircraft.
13 enhancements to be done locally in batches of 7
The enhanced capabilities of the Rafale fighter aircraft sought by India will be
incorporated after all the 36 jets are delivered, according to sources in
the Defence Ministry.
There are 13 India Specific Enhancement (ISE) capabilities sought by the Indian Air
Force (IAF) and they would be incorporated in batches after April 2022, an official
source said.
“After the 36th jet is delivered, the first 35 aircraft would be modified in India by
Dassault Aviation at the rate of seven aircraft a month so that all 36 aircraft would
be of the same capability by September 2022,” the official source with knowledge
of the matter said.
67-month wait
The first Rafale for India made its maiden flight on October 30 in France and is
designated RB 008. It will, however, be the last to be delivered to the IAF in April
2022, 67 months after the signing of the Inter-Governmental Agreement (IGA).
“This aircraft would be used to test and certify the ISE, which can only be employed
after certification,” the official stated.
An IAF document accessed by The Hindu states that the 13 ISE capabilities are “not
present in the Rafale aircraft being operated by other countries. These capabilities
pertain to radar enhancements, which will provide the force with better long range
capability. One of the specific capability being acquired is the ‘helmet mounted
display’ through which IAF pilots will be able to counter many threats
simultaneously.
“Another very significant capability enhancement sought is the ability to start and
operate from high altitude airfields,” the document states. The enhancement
includes an advanced infra red search-and-track sensor and a very potent electronic
jammer pod. “The remaining ISE capability pertain to avionics,” the document
stated.
In September 2016, India and France signed a €7.87 billion IGA for 36 Rafales in
fly-away condition following the surprise announcement by Prime Minister
Narendra Modi in April 2015 citing “critical operational necessity” of the IAF.
As per the IGA, deliveries begin 36 months from the signing of contract and will be
completed in 67 months. The government has consistently maintained that the deal
for 36 jets was done to ensure quick delivery of fighter aircraft to the IAF, which is
facing a drop in squadron strength.
Egyptian model
In contrast, Egypt which signed a €5.2 bn deal for 24 Rafale jets — 16 two-seater
and eight single-seater variants — in February 2015, took delivery of the first batch
of three aircraft in July of the same year.
Commenting on this, Air Marshal M. Matheswaran (retd.), who oversaw the

Medium Multi-Role Combat Aircraft (MMRCA) procurement in the past, said
structural changes required would be carried out in all aircraft during manufacture
and only software upgrades are carried out later.
“There would be some software standards which would be incorporated once the
production standards are ready. This can be done quickly,” he said.
It was good that some of the testing would be done in India, as the IAF would be
involved and gain from the process, he said.
On the quick deliveries to Egypt, he observed that Dassault Aviation may have
taken them off from the French assembly line as Egypt acquired the same variant.
Another officer, Air Vice Marshal Amit Aneja (retd) too echoed these views. He
said the upgrade rate of seven a month meant “it is software integration”, which is
inserted and upgraded.
“The aircraft looks the same. It is the capability enhancement. It is all about
avionics, sensors and sensor fusion. And sensor fusion capability is the most critical
aspect today,” he pointed out.
https://www.thehindu.com/news/national/india-specific-rafale-add-ons-after-delivery-of-
all-36-fighters/article25532159.ece
Masood Azhar down with renal failure?
PTI
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A file photo of the JeM chief Masood Azhar in Islamabad. | Photo Credit: AP
“Recent reports indicate that Masood Azhar is now afflicted with renal
failure and is under treatment at the Army hospital in Rawalpindi, the
headquarters of the Pakistan Army,” a senior security official said.
Masood Azhar, founder of the terrorist group Jaish-e Mohammad (JeM), is

suspected to be suffering from renal failure and is under regular dialysis at an Army
hospital in Rawalpindi, officials said here on Saturday.
The remarks from security officials comes after Pakistan Foreign Minister Shah
Mahmood Qureshi said on Friday that the JeM chief was “unwell“.
“Recent reports indicate that Masood Azhar is now afflicted with renal failure and is
under treatment at the Army hospital in Rawalpindi, the headquarters of
the Pakistan Army,” a senior security official said.
Mr Qureshi had said: “He [Azhar] is in Pakistan, according to my information. He is

unwell to the extent that he can’t leave his house, because he’s really unwell”.
The JeM chief was a close associate of Al Qaeda chief Osama bin Laden, and also
known as the Pakistani cleric who brought jihad into the religious discourse at
mosques in the U.K., the official said. The JeM claimed responsibility for the
February 14 Pulwama attack.
The influence of the 50-year-old overweight terrorist mastermind was so huge that,
when he was released by India in exchange for freeing the hijacked Indian Airlines
aircraft IC-814 on December 31, 1999 in Kandahar, Laden hosted a banquet for him
the same night.
In the banquet, Laden recalled how he and Azhar had first worked together in 1993,
the official said.
Azhar was arrested for preaching jihad in Jammu and Kashmir in 1994. One of his
British recruits, Omar Shaikh, as a member of the terrorist group Harkat-ul-Ansar
(HuA), kidnapped four western tourists in India in 1994 in order to secure the
release of Azhar.
However, security agencies succeeded in releasing the hostages and arresting

Shaikh.
Again in 1995, five western tourists were kidnapped by HuA and eventually killed
in order to gain the release of Azhar.
Almost immediately after Azhar’s release, Jaish-e-Mohammad was formed and it

carried out its first suicide attack in Jammu and Kashmir in April 2000 by striking
the Badami Bagh cantonment in Srinagar.
The 24-year-old bomber, Asif Sadiq, was one of Azhar’s earliest recruits and
student from Birmingham. At this time, Azhar also began using several al-Qaeda
recruits, another official said.
In 1979-1989, after he suffered injuries in the Soviet—Afghan War, he was chosen

as the head of Harkat-ul-Ansar’s department of motivation.
In the early 1990s, Azhar became the general secretary of Harkat-ul-Ansar and
visited international locations to recruit, raise funds and spread the message of pan-
Islamism.
Among his destinations were Zambia, Abu Dhabi, Saudi Arabia, Mongolia, the
United Kingdom and Albania, the second official said.
He also went to Kenya to meet an al-Qaida affiliate of Somalia in 1993 and in
August 1993, Azhar entered the UK for a speaking, fund-raising, and recruitment
tour with the message of jihad.
Azhar made contacts in Britain with people who helped to provide training and
logistical support for terrorist plots.
In January 1993, Azhar visited Bangladesh along with Sajjad Afghani, a terrorist
leader to facilitate the intrusion of Afghani to India.
Azhar was part of Harkat-ul-Mujahideen or Harkat-ul-Ansar, when he was arrested

in 1994 in India for spreading hate.
Azhar formed Jaish-e-Mohammad after his release in 1999 when Indian Airlines
flight IC 814 was hijacked and taken to Kandahar.
Since then, the JeM has been involved in terror attacks in the country.
The terror group was responsible for the attack on Indian Parliament on December
13, 2001 in which nine security personnel and officials were killed.
On January 2, 2016, a heavily armed group of JeM attacked the Pathankot airbase in
which seven security personnel were killed.
The JeM also carried out the attack on Uri brigade headquarters on September 18,
2016, killing 17 soldiers and injuring 30 others.
https://www.thehindu.com/news/international/masood-azhar-down-with-renal-
failure/article26420260.ece?utm_source=taboola
Four infiltration routes from Balakot identified by security agencies
Vijaita Singh
NEW DELHI, FEBRUARY 27, 2019 23:30 IST
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Cordoned off: Pakistani soldiers patrol an area near the Balakot camp on
Wednesday. | Photo Credit: AP
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Pulwama attack 2019
Balakot Air Strikes
Hilltop camp trained militant recruits in combat and use of weapons
Security agencies have identified four routes along the Line of Control in Kupwara
that were being used by the Jaish-e-Mohammad (JeM) cadres trained at the Balakot
camp in Pakistan to infiltrate into India.
A note prepared by the intelligence agencies on the camp that was hit by Indian Air
Force jets in the early hours of Tuesday said the terrorists were shown videos of the
Babri Masjid demolition and that of the hijack of the IC-814 Indian Airlines flight
in 1999 to radicalise them.
The note was prepared based on the interrogation of a JeM terrorist arrested in
India. They were shown videos of alleged atrocities against Kashmiris by the Army.
Camp functioned under cover of madrasa
Spread over six acres, the camp has six buildings with a capacity to house 600
people.
“It is suspected that the camp is functioning under the cover of Madrasa Ayesha
Sadiq,” the note said.
It said the JeM terrorists trained at Balakot first travelled to Kel in Pakistan-
occupied Kashmir and from there, infiltrated into India from the Kupwara side.
The infiltration routes passed through Dudhniyal, the Kainthawali forest, the
Magam forest, Lolab and Kachama and Kralpora.
At the Balakot camp, the JeM terrorists undergo different types of training courses
such as a three-month advanced combat course known as Daura-e-Khas, an
advanced armed training course called Daum-al-Raad and a refresher training
programme, the note said.
“Militants there are being trained in handling weapons such as AK 47, machine
guns, rocket launchers, under-barrel grenade launchers and grenades. Apart from
basic training in handling of weapons, they are trained in jungle survival, ambush
and communication, using GPS and map- reading,” the note said.
It said the terrorists started their day at 3 a.m. with namaaz and reading of the
Koran, followed by three hours of rigorous physical exercise.
They were trained in camouflaging, besides operating wireless sets and matrix
sheets. Leisure activities included football.
As reported earlier, the facility was headed by by Jaish chief Masood Azhar’s
brother-in-law Yusuf Azhar. It was located on a hilltop in a forest far from the
civilian area in Khyber Pakhtunkhwa’s Balakot, around 200 km from Islamabad.
Situated on the banks of the Kunhar river, the camp offered the opportunity of
aquatic training to terrorists. The trainers at the camp were “ex-Army personnel”.
https://www.thehindu.com/news/national/four-infiltration-routes-from-
balakot/article26390972.ece?utm_source=taboola
Modi misused Rafale deal to benefit Dassault Aviation, alleges Congress
Sandeep Phukan
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Prime Minister Narendra Modi visits the National Cemetery in Seoul, South Korea on
February 22, 2019. | Photo Credit: Reuters
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Indian National Congress
Narendra Modi
Time has come to lodge an FIR against PM, says Congress

spokesperson Randeep Surjewala
Congress spokesperson Randeep Surjewala on Wednesday said Prime Minister

Narendra Modi misused the Rafale fighter aircraft deal to benefit Dassault Aviation,
the company that manufactures the fighter jets.
It was a clear-cut case of 13 1 (D) under the Prevention of Corruption Act and the
time had come to lodge an FIR against Mr. Modi, he said.
At a press conference, Mr. Surjewala cited The Hindu’s report on March 6. He

said Mr. Modi had gifted away ₹4,305 crore worth of bank guarantees despite the
Finance and Law Ministries flagging it.
“While calculating, the cost of India Specific Enhancements (ISE) that almost ran to
₹10,000 crore, was not included,” said Mr. Surjewala. During the United
Progressive Alliance regime, the cost of ISE was ₹83 crore an aircraft but under the
National Democratic Alliance rule, it was ₹271 crore an aircraft.
Mr. Surjewala said transfer of technology was the most expensive part of a deal.
“But this deal didn’t have it at all. If you add nearly ₹10,000 crore, the cost of the
Rafale deal is close to ₹70,000 crore.”
The decision to buy the 36 Rafale jets were taken by National Security Adviser Ajit
Doval, he alleged. “It was not taken by the Indian Negotiation Team. Mr. Doval was
in France and he did the final negotiation. He was neither authorised by the Cabinet
Committee on Security nor was he a part of the team,” said Mr. Surjewala.
“Time has come for the Prime Minister to prove that he is not guilty by submitting
himself to an FIR and an inquiry,” Mr. Surjewala added.
Official Secrets Act
On Attorney General K.K. Venugopal saying in the the Supreme Court that Official
Secrets Act be invoked against those who published file notings, Mr. Surjewala
said it was an attempt to enslave the media.
“The Congress party will stand with the media. If the government has guts, please
go ahead with cases against the media and the citizens. Modi ji perhaps feared of
such a scenario where he could come under scanner and that’s why the NDA
changed the Prevention of Corruption Act and added that prior written sanction is
necessary,” he said.
People were the biggest court and Mr. Modi was trying to change the narrative, as
unemployment was at its peak, he said.
On the ‘mosquito’ comment of Gen. V.K. Singh (retd.), Mr. Surjewala said it
was not surprising since Gen. V.K. Singh had called former Army Chief Gen D.
Suhag a ‘daaku’ (robber).
https://www.thehindu.com/news/national/modi-misused-rafale-deal-to-benefit-dassault-
aviation-congress/article26447176.ece?utm_source=taboola
Probe everybody including PM Modi in Rafale deal: Rahul Gandhi
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Congress president Rahul Gandhi, along with party spokesperson Randeep
Surjewala, addresses the media in New Delhi on Thursday. | Photo
Credit: Sandeep Saxena
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PM Modi performed bypass surgery in Rafale deal, says Rahul Gandhi
Accusing the government of manipulating institutions to "save" Prime Minister

Narendra Modi in the Rafale deal, Congress president Rahul Gandhi on Thursday
said it has spoken of investigating the media over the theft of Rafale documents but
has not probed those involved in the "scam of over ₹30,000 crore".
Investigate everyone but probe Modi as well, Mr. Gandhi told a press conference,
accusing the Prime Minister of performing a "bypass surgery" in the purchase of the
fighter aircraft for corruption, including benefiting businessman Anil Ambani.
Officials Secrets Act
To a question whether the Officials Secrets Act (OSA) should be scrapped, Mr.
Gandhi replied, “The Hindu has clearly shown the PM is involved in Rafale deal. I
can't say whether the Officials Secrets Act should be scrapped, but you [The Hindu]
are being punished for being brave."
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Enough evidence to prosecute PM Modi for corruption in Rafale deal,

says Rahul Gandhi
In Defence Ministry files, it is written that the Prime Minister's Office (PMO)
carried out parallel negotiations in the fighter jet deal, then why can't the PM be
investigated, he asked.
The government has constantly rejected the allegations levelled by the Congress
with the BJP accusing Mr. Gandhi of spreading lies to torpedo the Rafale deal due
to his vested interests. Mr. Ambani has also rejected corruption allegations.
A day after the government told the Supreme Court that the Rafale files were stolen
from the Defence Ministry, the Congress chief took a dig, saying the documents
have disappeared like two crore jobs for youths, right price for farmers' produces
and the promised ₹15 lakh for everybody.
Targeting Mr. Modi, Mr. Gandhi said the files have disappeared in the same way as
jobs did following demonetisation and implementation of the GST.
Hitting back at Mr. Modi for calling the Congress a "poster boy" following the
Balakot air strike, Mr. Gandhi said "it is he who is Pakistan's poster boy, not us" as
he noted that the Modi government allowed Pakistan spy agency Inter-Services
Intelligence (ISI) to probe the Pathankot terror attack.
Mr. Modi had also invited the then Pakistan Prime Minister Nawaz Sharif to attend
his swearing in and then went to the country to meet him as well, he said.
(With inputs from Sandeep Phukan)

https://www.thehindu.com/news/national/congress-president-rahul-gandhi-addresses-
media-on-rafale-
deal/article26453900.ece?utm_source=pushnotifications&utm_campaign=pushnotifications
Enough evidence to prosecute PM Modi for corruption in Rafale deal, says Rahul Gandhi
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Congress president Rahul Gandhi at a rally. | Photo Credit: Vivek Bendre

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“The corruption and malfeasance in Rafale deal is out in the open. PM

Modi misused his office to give benefits to Dassault Aviation and
caused loss to the public exchequer”
Asserting that the Centre’s claim of the Rafale file being stolen was an attempt to
destroy evidence and a cover-up, Congress president Rahul Gandhi on Wednesday
said Prime Minister Narendra Modi should be prosecuted.
The Congress also said that even if the NDA government tries to “gag the media
or/and arrest every citizen” the party will not be deterred from speaking the “truth.”
“There is now enough evidence to prosecute the PM in the #RafaleScam. The trail
of corruption begins & ends with him. That crucial Rafale files incriminating him
are now reported “stolen” by the Govt, is destruction of evidence & an obvious
coverup,” Mr. Gandhi tweeted with the hash tag #FIRagainstCorruptModi.
“The time has now come to register an FIR against PM Modi and every other
individual so that a time-bound investigation takes place in this entire saga of Rafale
corruption reaching the highest echelons of power,” said Mr. Surjewala.
“It is now crystal clear that blatant and massive corruption has taken place in the
Rafale deal. It is undoubtedly established that Modi ji misused his office as Prime
Minister to grant undue benefit to Dassault Aviation and caused a loss to the public
exchequer. This is a clear-cut case under Section 13 (1) (d) of the Prevention of
Corruption Act, 1988 and different provisions of Indian Penal Code,” he said.
Following The Hindu’s expose on Wednesday, the Congress extensively cited the
Indian Negotiation Team (INT) to argue that Mr. Modi “misled Parliament and
duped the country.”
The Congress alleged that despite insistence from the Defence, Law and Finance
Ministries on taking a bank guarantee to the tune of ₹4305 crore from Dassault
Aviation, the Cabinet Committee on Security (CCS), chaired by the Prime Minister,
waived it off.
Mr. Surjewala alleged that the Modi government’s publicly declared value of
₹59,000 crore to buy 36 Rafale fighter jets off the shelf doesn’t include ₹9750 crore
for the India-specific enhancements (ISE).
If these are added to the cost, then the deal is nearly ₹70,000 crore and the ISE
per aircraft has gone from ₹82 crore during UPA to ₹271 crore under the
NDA, he said.
The Congress also alleged that the decision to buy 36 Rafale jets was not taken by
the INT but National Security Adviser (NSA) Ajit Doval, who was neither
authorised by the INT nor the CCS.
https://www.thehindu.com/news/national/enough-evidence-to-prosecute-pm-modi-for-
corruption-in-rafale-deal-says-rahul-gandhi/article26448702.ece
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AFP Dispatch “Rafale/India: JV with

Reliance will deliver about 10% of
overall offsets (Dassault Aviation
CEO)”
2018/10/11
Group
Our joint-venture with India’s Reliance will meet about 10% of Dassault Aviation’s
offset (compensations) obligations required by the 36 Rafale fighters contract with
New Delhi, said Thursday Eric Trappier, the CEO of Dassault Aviation, to AFP as the
choice of this company is disputed in India.
AFP – October 11, 2018 – Translation by Dassault Aviation
Our joint-venture with India’s Reliance will meet about 10% of Dassault Aviation’s offset
(compensations) obligations required by the 36 Rafale fighters contract with New Delhi,
said Thursday Eric Trappier, the CEO of Dassault Aviation, to AFP as the choice of this
company is disputed in India.
1) The Rafale India contract makes provision for offsets to be provided by yourselves in
the country. Where are you with these offsets?
Eric Trappier: To clarify matters, what is called “offset” in English is usually translated into
French as “compensation” or “contrepartie”. The reference is the contract we signed and
which is called “Offset contract”. With regard to the staff and trades unions organizations,
Dassault Aviation uses the term “obligation contractuelle d’offset” or “obligation
contractuelle de compensation ”.
Signing an offset contract is a requirement of Indian law (Defence Procurement Procedure).

The implementation of offsets is an obligation and, under the Indian regulation, the choice of
the partners belongs to us.
In full compliance with this regulation, Dassault Aviation therefore decided to set up the
DRAL joint venture with Reliance and build a plant in Nagpur, which should enable us to
meet about 10% of these offset obligations. We are in negotiations with about a hundred
Indian companies and partnerships have already been concluded with about thirty of them.
2) Why did you choose Reliance over HAL as your Indian partner in the JV?
Eric Trappier: Dassault Aviation decided to establish a long-term presence in India through
DRAL, a joint enterprise in which governance is provided by an Indian Chief Executive
Officer and a French Chief Operating Officer. Dassault Aviation therefore exercises technical
and industrial control over the operations, applying its standards and its flexibility. This JV
will produce parts for the Falcon 2000 and Rafale. The choice of the Nagpur site, in central
India, was dictated by the availability of land with direct access to an airport runway.
3) Are you confident for the future despite the current controversies in India?
Eric Trappier: Controversies are always unfortunate but we remain calm. Things are
progressing rapidly. We set up DRAL on 10 February 2017 and the plant project was
officially launched on 27 October 2017.
The first phase of the project involves building a temporary hangar to house the production
tool and enable staff training to begin as rapidly as possible. This temporary hangar was
completed in March 2018. Activities started on 18 April in the presence of senior executives
from Dassault Aviation and the local authorities. We hired an Indian CEO, Mr.
Sampathkumaran S. T., who has more than 20 years’ experience in the aeronautical industry.
We have hired and trained Indian managers and workers. The first Falcon 2000 parts should
roll off the line at the end of the year.
A second phase started in July 2018, with the construction of a final building, completion
being scheduled for July 2019. This building will allow a ramp-up in industrial activities. The
cooperation between Dassault and India, which has existed for 65 years, has been given fresh
impetus by Make in India and we are proud to be able to contribute to it.
https://www.dassault-aviation.com/en/group/news/afp-dispatch-rafaleindia-jv-reliance-will-deliver-
10-overall-offsets-dassault-aviation-ceo/
Rafale: Modi govt. gave

unprecedented waivers in offset
agreements
N. Ram
APRIL 09, 2019 05:00 IST
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The total offsets to be delivered in the Rafale deal by Dassault Aviation (and its 21 Tier-1 sub-vendors) together with
MBDA (and its 12 Tier-1 sub-vendors) have been fixed at 50% of the contract value. File
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DPP-2013 provisions relating to arbitration, access to books of

accounts, and penalties for the use of influence, commission
agents not met
The Cabinet Committee on Security (CCS) headed by Prime Minister
Narendra Modi gave exceptional and unprecedented waivers to M/s
Dassault Aviation and M/s MBDA in the offset contracts they signed with
the Indian government on September 23, 2016 as part of the €7.87 billion
Rafale deal. These waivers, granted on August 24, 2016 at the highest
level of political decision-making, were exemptions given to the two
private French companies from having to comply with provisions of the
Standard Contract Document of the Defence Procurement Procedure,
DPP-2013.
The waivers concerned two key issues — the provisions to be made in the
offset contracts for arbitration (Article 9) and access to books of accounts
of the industrial suppliers (Article 12).
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These had been sent up to the CCS for its “final review and approval” by
the Defence Acquisition Council (DAC) headed by Defence Minister
Manohar Parrikar. He had evidently felt uncomfortable with sanctioning,
at his level, major deviations from the Defence Procurement Procedure.
But that was not all.
Two other mandated provisions of DPP-2013 that prohibit the “Use of
Undue Influence” and “Agents/ Agency Commission”, Articles 22 and 23
respectively of the Standard Contract Document, and provide for
penalties against private industrial suppliers in case of transgressions, had
been quietly dropped along the way by the DAC. Curiously, while the
deletion of these vital integrity provisions from the Supply Protocols,
which were themselves only annexures to the Inter-Governmental
Agreement (IGA), went up to the CCS for “final review and approval”,
their deletion from the offset contracts, which had been insisted on by the
French industrial suppliers, did not have to.
These salient facts, which were not disclosed by the government in its
submissions to the Supreme Court of India, as well as other aspects of an
open-ended and murky set of offset arrangements which were enabled by a
major change in offset policy in August 2015, come to light in the final
report of the Indian Negotiating Team (INT), dated July 21, 2016, to
which The Hindu has access.
ALSO READ
No bank guarantees meant a more expensive new Rafale deal
What needs to be noted is that nothing in our current series of

investigative articles raises any questions about the quality of the Rafale,
or indeed the rival EurofighterTyphoon, combat jet, or about the need to
modernise the Indian Air Force. Interestingly, and as a matter of record,
this was also the case during The Hindu’s Bofors investigation of the late-
1980s, when neither the quality of the Bofors, or the rival Sofma, howitzer
nor the need to upgrade the Indian Army’s artillery resources was in
question.
0% offsets in first three years

There has been a major political controversy over Dassault Aviation’s
choice of Indian Offset Partners (IOPs), notably Anil Ambani’s Reliance
Group, and the non-transparent arrangements for the discharge of offset
obligations. Offsets are ‘domestic content-based requirements’ imposed on
an exporting foreign entity by an importing government or public entity as
a quid pro quo for placing a large order with the exporting entity. ‘Offset’
is usually rendered in French as ‘contrepartie’ (compensation), as Eric
Trappier, Chairman and CEO of Dassault Aviation, pointed out in
an interview to AFP.
Highlights
 CCS gives exceptional waivers to Dassault & MBDA in offset contracts, exempts them
from aligning Arbitration (Article 9) & 'Access to books of account (Article 12) provisions
with DPP-2013 Standard Contract.
 Defence Minister Manohar Parrikar, uncomfortable with major deviations from DPP-
2013, gets DAC to send unresolved issues up for "final review and approval" by CCS.
 DAC drops DPP-2013 provisions on penalties for "Use of Undue Influence" and
"Agents/Agency Commission" from offset contracts.
 Offset obligations of around ₹30,000 crore are heavily back-loaded, to be discharged
over 7 years, with zero discharge in first 3 years and 57% in 7th year.
 INT's efforts on offset issues weakened by parallel NSA talks.
 Controversy breaks out over non-transparent & openended offset arrangements and
choice of Reliance Group as Dassault's only publicly known offset partner.
The total offsets to be delivered in the Rafale deal by Dassault Aviation

(and its 21 Tier-1 sub-vendors) together with MBDA (and its 12 Tier-1
sub-vendors) have been fixed at 50% of the contract value. The contracted
offset obligations, which are valued around ₹30,000 crore, are to be
discharged over a period of seven years beginning in the fourth year, that
is, from October 2019.
The discharge of offset obligations is heavily loaded on to the last two
years of the seven-year period. According to the offset schedule, the two
private French companies (along with their Tier-1 sub-vendors) will
discharge 0% of the value of the total offsets for ‘Make in India’ in the
first three years and 4% in the fourth year. After that, while Dassault (and
its Tier-1 sub-vendors) will discharge 16% and 23% of the value of offsets
in years five and six, the corresponding figures for MBDA (and its Tier-1
sub-vendors) will be 9% and 30%. No less than 57% of the value of total
offset obligations will be discharged in the seventh year.
The INT’s final report reveals that the initial proposal of Dassault Aviation
and MBDA had nearly 88% of offset obligations loaded on to the seventh
year. The avenues proposed for offset discharge were also far from
satisfactory. A meeting held in the Defence Ministry on January 4, 2016
decided that in view of advice received from the Ministry of Law and
Justice, the French side should be informed that the offsets “will have
impact on the commercial proposal” and that the French industrial
suppliers should be advised to submit revised offset proposals urgently.
“After extended negotiations and on INT’s insistence”, the report goes on
to say, “DA and MBDA reduced the offsets in the last two years (6th &
7th) and brought down the offset obligations in the last year from 88% to
57%. Another milestone was achieved as INT was able to persuade DA to
increase the percentage of offsets in the avenue ‘direct purchase’ from the
initial value of 9% to 72% and reduce offsets in the avenue ‘investment in
kind (equipment)’ from the initial value of 30% to 20%. This would
facilitate greater direct investment in India by the French vendors.”
Summary of offset proposal of Dassault Aviation

% of offset/Make in India
Avenue for offsets/ Make
in India Year Year Year Year
Year 5 Year 6 Year 7
1 2 3 4
Direct purchase of eligible

products 0% 0% 0% 1% 10% 17% 44%
FDI in joint ventures
(equity investment) 0% 0% 0% 1% 0% 0% 0%
Direct purchase through
investment in kind 0% 0% 0% 0% 1% 2% 4%
through ToT
Investment in kind in
terms of equipment 0% 0% 0% 2% 5% 4% 9%
Provision of equipment
and/or ToT,
Technology acquisition
by DRDO
Annual offset obligation 0% 0% 0% 4% 16% 23% 57%
(*)Technology Acquisition (TA) projects with DRDO are foreseen to be

incuded in the Offset Contract, following discussions to take place
between Dassault and the DRDO after coming into force of the Offset
Contract. Depending on the outcome of these discussions, the Offset
Schedule will be amended to reflect the TA projects and their associated
offset value agreed between Dassault and the DRDO. However, such
amendment will not affect the Annual Offset obligation indicated in the
table above.
Summary of offset proposal of MBDA
Avenue for Yearly fulfilment of offset*

Total
offsets/Made
in India Year Year Year Year Year
Year 6 Year 7 offset**
1 2 3 4 5
Direct
purchase or
executing 0% 0% 0% 0% 2% 6% 12% 20%
export
orders
(avenue 3.1
(a)] 2
FDI (avenue
3.1 (b)] 0% 0% 0% 0% 0% 2% 0% 2%
Investment
in kind
through ToT
to Indian 0% 0% 0% 0% 1% 0% 1% 2%
enterprises
[avenue 3.1
(c)]
Investment
in kind in
terms of
provision of
Equipment 0% 0% 0% 2% 4% 14% 26% 46%
to Indian
enterprises
(avenue 3.1
(d)]
Provision of
equipment
and/or ToT
to
government
institutions
including 0% 0% 0% 2% 2% 8% 18% 30%
DRDO
Technology
acquisition
by DRDO
(avenue 3.1
(e) & (f)]
Annual
offset / Make
in India 0% 0% 0% 4% 9% 30% 57% 100%
obligation
(%)
*Yearly fulfillment of offset/Make in India obligation (in %) of the total

offset/Make in India obligation)
**Total Offset/ Make in India (%)
French reluctance to mention ‘offsets’

The INT report reveals that the French negotiators were initially “not
ready to mention the word ‘offsets’ in the IGA” but upon insistence by the
Indian side, they “relented and added ‘Make in India’ initiative through
Offsets at Article 12 of the IGA”. The proposal originally submitted by
Dassault Aviation and MBDA was titled ‘Rafale Make in India initiative
in the frame of the procurement of 36 Rafale aircraft’. This “neither
mentioned the word ‘Offset’ nor provided the desired
avenues/percentages/yearly discharge, etc., as mandated by the DPP-2013
guidelines”. It was only after extended discussions that the two industrial
suppliers agreed to provide their offset offer “as per the format specified in
DPP-2013”.
Article 12 of the IGA reads: “The French Party will facilitate the
implementation of ‘Make in India’ initiative by the Industrial Suppliers
notably through offsets as specified through direct contracts between the
Indian Party and the Industrial Suppliers for 50% value of the Supply
Protocol”.
However, the INT report notes, certain Articles of the offset contracts
“were not consistent with the standard contract document provided in
DPP-2013. Specifically, the French side was not ready to include the
Articles on ‘Arbitration’, ‘Use of Undue Influence’, ‘Agents and Agency
Commission’, ‘Access to Book of Accounts’ and ‘Offset Performance
Bond’.”
ALSO READ
The two waivers

Dassault Aviation and MBDA proposed the inclusion of the same clause
on arbitration in the offset contract as in the IGA. Article 16 of the IGA,
the dispute resolution provision, stipulates that both parties make their best
efforts to settle the dispute through direct negotiations and that if any
dispute cannot be settled through direct negotiations within 24 months, it
will be settled in accordance with the arbitration clause of the Supply
Protocols.
Article 21 of the Supply Protocols stipulates that all disputes be settled by
direct discussions and that if any dispute cannot be resolved in this way
within 24 months, it will be settled by arbitration in accordance with the
prevailing United Nations Commission on International Trade Law
(UNCITRAL) Arbitration Rules in Geneva.
The Indian negotiators contended that the IGA formulations could not be
applied to the offset contracts, which would be signed directly by the
Government of India with the two industrial suppliers. The offset contracts
were clearly not part of the IGA. Acting on directions from the DAC, the
INT repeatedly pressed the French side to` agree to the alignment of
Article 9 of the offset contract with Article 21A of Chapter V of the
Standard Contract Document of DPP-2013. But Dassault Aviation and
MBDA dug in and refused to do this, citing three reasons: “(i) Simple and
efficient wording; (ii) Agreed by both governments; (iii) No confusion or
risks of overlap in Arbitration procedure for any dispute spreading from
the Supply Protocols to the Offset Contract.”
ALSO READ
The INT’s efforts on this issue had been weakened, if not undermined, by
the parallel talks conducted by the National Security Adviser, Ajit Doval,
in Paris in January 2016. The Indian negotiators found themselves up
against a wall. Eventually, in July 2016, two months before the Rafale deal
was signed, the DAC decided to send the issue of the lack of alignment of
Article 9 — the arbitration provision in the offset contracts with the
French industrial suppliers — with the mandated DPP-2013 provisions to
“the government”. On August 24, 2016, the Cabinet Committee on
Security decided to give a waiver on this issue to the two French
companies.
Subject to France’s blocking statute

The INT report reveals that although the French side agreed to have a
provision on ‘Access to Book of Accounts’ (Article 12) included in the
offset contracts, it “introduced an additional formulation over and above
the DPP guidelines”, which read: “However Dassault shall comply with
French Law No. 80-538 dated 16 July 1980.” This is France’s
controversial blocking statute which criminalises the communication of
economic, commercial, industrial, financial, or technical documents or
information to foreign individuals or foreign legal entities. France’s anti-
corruption agency, the Service Central de Prévention de la Corruption, has
recommended changes in Law No. 80-538, and in December 2016 a new
anti-corruption law was enacted. But the blocking statute remains in
place and can be invoked if needed.
The INT report shows that despite being repeatedly asked to remove the
additional formulation, the French side insisted that “they are bound to
consider the French law as stated”. In July 2016, the DAC directed that
“Article-12 of the Offset Contract on ‘Access to Book of Accounts’ which
has been aligned with the Mirage 2000 MLU Contract, may be placed for
a decision by the Govt”. This waiver was also approved by the CCS on
August 24, 2016.
Offsets are made for controversy

Offsets, as we have seen, are domestic content-based obligations that the
buyer imposes on the seller as compensation for placing a large order.
Although the practice is often criticised for being trade-distorting, non-
transparent, and riddled with corruption and has been generally prohibited
by the World Trade Organisation (with an exception made for protection
of the essential interests of a country’s national security), offsets are
increasingly in vogue in the defence sector.
India’s “Defence Offset Guidelines”, which form Appendix D of DPP-
2013, lay down that the Defence Acquisition Council may, after
consideration by the Services Capital Acquisition Plan Higher
Categorisation Committee (SCAP HC), “prescribe varying offset
obligations above 30 percent or waive the requirement of offset
obligations in special cases.” In the original process, initiated by the
United Progressive Alliance government, to procure 126 Medium Multi-
Role Combat Aircraft (MMRCA) as well as in the new Rafale deal for 36
fly-away Rafale jets, the DAC prescribed offset obligations to the extent of
50% of the contract value.
It is important to note that the offset contracts, which were concluded
between the Government of India and the two private French companies,
were not part of the Indo-French Inter-Governmental Agreement.
Although signed on the same day, September 23, 2016, as the IGA, the
two offset contracts were completely separate from it. This crucial fact
was brought up in the official talks by the Indian Negotiating Team with a
singular lack of success, mainly because their efforts had been undercut by
the “parallel negotiations” conducted by officials of the Prime
Minister’s Office and the National Security Adviser.
The significance of these offset-related issues and the ‘unacceptability’ of
the French demands were brought out sharply by M. P. Singh, Adviser
(Cost), A. R. Sule, Financial Manager (Air), and Rajeev Verma, Joint
Secretary and Acquisitions Manager (Air), the three domain experts on the
seven-member INT, in their June 1, 2016 note of dissent: “The offsets are
not part of the G to G agreements and therefore the Offset Contract must
be in line with the one prescribed in the Defence Procurement Procedure
(DPP). In the MMRCA process also, the French Industrial Suppliers
would have been required to follow the Offset Guidelines and the Standard
Clauses of Contract prescribed in DPP. The proposed draft Offset Contract
is still not aligned with the one prescribed in the DPP. The arbitration
clause proposed by the French Industrial Suppliers in the draft Offset
Contract is not as per the DPP and cannot be agreed to. The French
Industrial Suppliers have insisted upon reducing the maximum ceiling for
penalty from 20% as prescribed in the DPP to 8.5% of the Offset value,
which is not acceptable. The French Industrial Suppliers are not agreeing
to the requirement of confirmation of Performance Bank Guarantee for
Offset Contract from Indian Public Sector Banks located in India. The
French Industrial Suppliers proposed to include a clause on ‘Access to the
Book of Accounts’ subject to French Law, which is not acceptable.”
As the official negotiations got under way, it became clear that the August
5, 2015 amendment to the DPP-2013 “Offset Policy Guidelines” allowed
Dassault Aviation and MBDA a great deal of leeway. They were no longer
required to submit their offset plans, including the identities of their IOPs,
the details of their work share and specific products, and supporting
documents indicating IOP eligibility at the bid stage, as laid down earlier.
They were not even required to provide this information at the time of
signing the IGA and the offset contracts. They are now required to provide
the information to the Indian government only “at the time of seeking
offset credits or one year prior to discharge of offset obligations through
that IOP”.
Questions that won’t go away

The controversy over Dassault’s choice of offset partners will not go away
any time soon. As has been widely reported, Anil Ambani’s Reliance
Group, with its subsidiaries, entered the defence manufacturing sector
in January 2015. Reliance Defence Limited was incorporated on March
28, 2015, that is, two weeks before the new Rafale deal was announced in
Paris; Reliance Aerostructure Limited (in which Reliance Defence Limited
was a 99.988% shareholder as of March 31, 2018), was incorporated on
April 24, 2015; and in October 2016 Dassault Aviation formed a joint
venture with Reliance Aerostructure Limited’s subsidiary, Reliance
Aerospace. The joint venture, which was incorporated in February 2017,
has been named Dassault Reliance Aerospace Limited (DRAL).
The allegations revolve round the charge of crony capitalism – the charge
led by Congress president Rahul Gandhi that as a quid pro quo for the new
Rafale deal the NDA government had secretly nominated the younger
Ambani scion as Dassault’s leading offset partner. It may be recalled that
the controversy took off in September 2018, after the former French
President, François Hollande, told Mediapart, the independent French
online investigative journal: “We didn’t have any say in this matter. It is
the Indian government which had proposed this service group, and
Dassault who negotiated with Ambani. We didn’t have the choice, we took
the interlocutor who was given to us.”
The allegations gained traction when Mediapart reported that it had
obtained an internal Dassault document that revealed that “a senior
executive of the French group told staff representatives that the joint
venture with Reliance was agreed as a ‘compensation’ in the Rafale deal
and that it was both ‘imperative and obligatory’ for Rafalein securing the
fighter contract”.
The allegations have been denied by Dassault Aviation, by Anil Ambani,
and by the NDA government, which has maintained that it has had nothing
to do with the aircraft manufacturer’s choice of IOPs and has not even
received official word on who they are.
However, the Dassault chief, Eric Trappier, has gone on record to say that
DRAL, the joint venture that was building a manufacturing facility in
Mihan, Nagpur, would make components of the Legacy Falcon 2000
series of civil jets and deliver “about 10% of these offset obligations”.
What part Reliance Defence Limited, other Indian companies, or the
Defence Research and Development Organisation (DRDO), will play in
the discharge of the offset obligations in the Rafale deal will be known
only in the months and years to come.
Our present state of knowledge is that a group that entered the

defence manufacturing sector some weeks before a new Rafale deal
was announced in Paris is the only publicly known offset partner.
Read all investigative reports by N. Ram on the Rafale deal

here.
https://www.thehindu.com/news/national/rafale-modi-govt-gave-unprecedented-waivers-in-offset-
agreements/article26775545.ece?utm_source=pushnotifications&utm_campaign=pushnotifications
France: Changes Urged to French Blocking

Statute
Published 05 December 2013 by Pech de Laclause, Bathmanabane & Partners
French Anti-corruption Agency Recommends Amendment to the
French Blocking Statute
To counteract the breadth of United States discovery rules, France enacted

a blocking statute that criminalizes the very act of exporting information
requested in the course of non-French legal proceedings. The result is a
tension on foreign litigants in US courts, who face sanctions when they
object to discovery on the basis of the French blocking statute. Now there
is a new attempt by the French government to mediate this tension, in
particular where potential corruption issues are alleged.
In its 2012 annual report, published in July 2013, the French anti-corruption
agency, the Service Central de Prévention de la Corruption (Central Office
for the Prevention of Corruption, or "SCPC"), recommends amending the
French blocking statute. The SCPC is an inter-ministerial agency, part of
the French Government and is formally attached to the French Ministry of
Justice.
The report states that a significant and growing number of French

companies are involved in foreign judicial or administrative proceedings,
during the course of which they are obliged to cooperate with foreign
authorities and directly provide them with business documents regarding
their internal structure and business model. The US courts are clearly the
forum intended by this report.
In such circumstances, the French blocking statute (the restriction on

disclosure of information within France for use in a non-French judicial
proceeding relating to the communication of economic, commercial,
industrial, financial or technical documents and information to foreign
individuals or legal entities, as codified at French Penal Code Law no. 80-
538 dated 16 July 1980) is only occasionally invoked by French companies,
even though this text prohibits, subject to criminal sanctions, the
communication of information or documents for use within foreign
proceedings, unless obtained within the scope of The Hague Convention of
18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial
Matters.
SCPC believes that French companies may be hesitant to use the blocking
statute out of fear of possible sanctions from US courts if they do not
disclose the requested information and that non-cooperation with these
authorities might damage their business reputation. SCPC reports that in
2011, an innovative procedure was put in place between French and US
authorities, with SCPC serving as an intermediary to ensure that
documents requested by the US authorities demonstrated a useful purpose
for use in the US proceedings and did not affect the interests protected by
the French blocking statute. SCPC consulted the relevant French Ministries
to know which restrictions to apply to the disclosure of information.
Building on this experience, SCPC now advocates the adoption of an

amendment of the French blocking statute in order for the SCPC to be the
statutory intermediary between US authorities (such as the Department of
Justice and the Security Exchange Commission) and the French
companies in all cases in which corruption is alleged.
December 2013
https://www.irglobal.com/article/france-changes-urged-to-french-blocking-statute-3615
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Dassault – Reliance Aerospace

manufacturing facility in Mihan, Nagpur
inaugurated
2017/10/27
Group
Friday, October 27, 2017, Eric Trappier, Chairman of Dassault Aviation and Anil D.
Ambani, Chairman of the Reliance Group laid the Foundation Stone for the Dassault
Reliance Aerospace Limited manufacturing facility in Mihan, Nagpur located in
India’s western state of Maharashtra.
FRENCH DEFENCE MINISTER FLORENCE PARLY, UNION MINISTER NITIN

GADKARI AND CHIEF MINISTER DEVENDRA FADNAVIS GRACE THE
OCCASION
FOUNDATION STONE JOINTLY LAID BY DASSAULT CHAIRMAN, ERIC

TRAPPIER AND RELIANCE GROUP CHAIRMAN, ANIL D. AMBANI
MIHAN – Nagpur, India –Friday, October 27, 2017 : Eric Trappier, Chairman of Dassault
Aviation and Anil D. Ambani, Chairman of the Reliance Group today laid the Foundation
Stone for the Dassault Reliance Aerospace Limited manufacturing facility in Mihan, Nagpur
located in India’s western state of Maharashtra.
The Foundation Stone was laid in the presence of Ms. Florence Parly, Minister of Armed
Forces of the French Republic; Shri. Nitin Gadkari, Union Minister for Road Transport and
Highways of India, who is also the Member of Parliament of the city of Nagpur; and Shri.
Devendra Fadnavis, Chief Minister of the State of Maharashtra; and H.E. Mr. Alexandre
Ziegler, Ambassador of France to India. Also present were over 200 dignitaries from the
State and City administration and local industry.
The Dassault-Reliance manufacturing facility Dhirubhai Ambani Technology Park is located

in the Mihan SEZ adjoining Nagpur International Airport. Under this Joint Venture (51%
Reliance Infrastructure 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.
The Joint Venture also represents a unequalled Foreign Direct Investment (FDI) by Dassault
Aviation of over 100 Million Euros, the largest such Defence FDI in one location in India.
The DRAL facility will train thousands of skilled workers in aviation assembly and
integration, and lead to huge employment generation in Nagpur and its surrounding areas. It
will also attract and house an organic ecosystem of over 200 MSME’s to secure the
component and avionics manufacturing needs of Rafale and Falcon Jets.
Dassault Aviation Chairman, Mr. Eric Trappier, declared that “this Foundation Stone laying
demonstrates Dassault’s firm commitment to implementing Prime Minister Modi’s “Make in
India” program. It gives the 65 year-long strong association of Dassault-Aviation in India a
new momentum and the will of future manufacturing developments.”
Reliance Group Chairman, Anil D. Ambani, stated “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. The Reliance Dassault partnership will bring high levels of Technology Transfer. It
will make India a major supplier into the global aviation supply chain. It will be the endeavor
of both Dassault and Reliance to fully support Prime Minister Modi’s “Make in India” and
“Skill India” policies and to accelerate India’s pursuit of self sufficiency in the aerospace
sector.”
ABOUT DASSAULT AVIATION:

With over 10,000 military and civil aircraft delivered in more than 90 countries over the last
century, Dassault Aviation has built up expertise recognized worldwide in the design,
development, sale and support of all types of aircraft, ranging from the Rafale fighter, to the
high-end Falcon family of business jets and military drones. In 2016, Dassault Aviation
reported revenues of €3.6 billion. The company has 12,000 employees.
www.dassault-aviation.com
ABOUT RELIANCE GROUP:

http://www.relianceada.com/
Reliance Group, led by Chairman Sh. Anil D. Ambani, is among India’s top 5 business
houses, with a leadership position in telecommunications, power, infrastructure, financial
services, and media and entertainment.
In January 2015, the Group entered the Indian Defence manufacturing sector, acquired a
state-of-the-art Naval Shipyard, and is rapidly developing its Air, Land and Sea Defence
manufacturing capabilities in collaboration with leading global defence firms.
The Group has over 250 million customers, serving 1 in every 5 Indians, and over 8 million
shareholders, amongst the largest shareholder families in the world.
The net worth of the Group is Rs 100,000 Crore (US $ 16 billion), and the total asset base is
Rs 267,000 Crore (US $ 43 billion). It is an equal opportunity employer with 100,000 strong,
highly competent workforce comprising different nationalities.
Through a robust Corporate Social Responsibility programme, the Group touches lives of
millions every day.
https://twitter.com/reliancegroup https://www.facebook.com/reliancegroup/
© Dassault Aviation
CONTACTS
DASSAULT AVIATION: MILITARY COMMUNICATION:
Nathalie Bakhos
+33 (0)1 47 11 92 75
nathalie.bakhos@dassault-aviation.fr
RELIANCE GROUP:
Singh Daljeet
+91 93120 14099 / +91 98188 02509
daljeet.s.singh@relianceada.com
Dassault – Reliance Aerospace
manufacturing facility in Mihan, Nagpur
inaugurated
2017/10/27
Group
Friday, October 27, 2017, Eric Trappier, Chairman of Dassault Aviation and Anil D. Ambani,
Chairman of the Reliance Group laid the Foundation Stone for the Dassault Reliance
Aerospace Limited manufacturing facility in Mihan, Nagpur located in India’s western state
of Maharashtra.
FRENCH DEFENCE MINISTER FLORENCE PARLY, UNION MINISTER NITIN

GADKARI AND CHIEF MINISTER DEVENDRA FADNAVIS GRACE THE
OCCASION
FOUNDATION STONE JOINTLY LAID BY DASSAULT CHAIRMAN, ERIC

TRAPPIER AND RELIANCE GROUP CHAIRMAN, ANIL D. AMBANI
MIHAN – Nagpur, India –Friday, October 27, 2017 : Eric Trappier, Chairman of Dassault
Aviation and Anil D. Ambani, Chairman of the Reliance Group today laid the Foundation
Stone for the Dassault Reliance Aerospace Limited manufacturing facility in Mihan, Nagpur
located in India’s western state of Maharashtra.
The Foundation Stone was laid in the presence of Ms. Florence Parly, Minister of Armed
Forces of the French Republic; Shri. Nitin Gadkari, Union Minister for Road Transport and
Highways of India, who is also the Member of Parliament of the city of Nagpur; and Shri.
Devendra Fadnavis, Chief Minister of the State of Maharashtra; and H.E. Mr. Alexandre
Ziegler, Ambassador of France to India. Also present were over 200 dignitaries from the
State and City administration and local industry.
The Dassault-Reliance manufacturing facility Dhirubhai Ambani Technology Park is located

in the Mihan SEZ adjoining Nagpur International Airport. Under this Joint Venture (51%
Reliance Infrastructure 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.
The Joint Venture also represents a unequalled Foreign Direct Investment (FDI) by Dassault
Aviation of over 100 Million Euros, the largest such Defence FDI in one location in India.
The DRAL facility will train thousands of skilled workers in aviation assembly and
integration, and lead to huge employment generation in Nagpur and its surrounding areas. It
will also attract and house an organic ecosystem of over 200 MSME’s to secure the
component and avionics manufacturing needs of Rafale and Falcon Jets.
Dassault Aviation Chairman, Mr. Eric Trappier, declared that “this Foundation Stone laying
demonstrates Dassault’s firm commitment to implementing Prime Minister Modi’s “Make in
India” program. It gives the 65 year-long strong association of Dassault-Aviation in India a
new momentum and the will of future manufacturing developments.”
Reliance Group Chairman, Anil D. Ambani, stated “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. The Reliance Dassault partnership will bring high levels of Technology Transfer. It
will make India a major supplier into the global aviation supply chain. It will be the endeavor
of both Dassault and Reliance to fully support Prime Minister Modi’s “Make in India” and
“Skill India” policies and to accelerate India’s pursuit of self sufficiency in the aerospace
sector.”
ABOUT DASSAULT AVIATION:

With over 10,000 military and civil aircraft delivered in more than 90 countries over the last
century, Dassault Aviation has built up expertise recognized worldwide in the design,
development, sale and support of all types of aircraft, ranging from the Rafale fighter, to the
high-end Falcon family of business jets and military drones. In 2016, Dassault Aviation
reported revenues of €3.6 billion. The company has 12,000 employees.
www.dassault-aviation.com
ABOUT RELIANCE GROUP:

http://www.relianceada.com/
Reliance Group, led by Chairman Sh. Anil D. Ambani, is among India’s top 5 business
houses, with a leadership position in telecommunications, power, infrastructure, financial
services, and media and entertainment.
In January 2015, the Group entered the Indian Defence manufacturing sector, acquired a
state-of-the-art Naval Shipyard, and is rapidly developing its Air, Land and Sea Defence
manufacturing capabilities in collaboration with leading global defence firms.
The Group has over 250 million customers, serving 1 in every 5 Indians, and over 8 million
shareholders, amongst the largest shareholder families in the world.
The net worth of the Group is Rs 100,000 Crore (US $ 16 billion), and the total asset base is
Rs 267,000 Crore (US $ 43 billion). It is an equal opportunity employer with 100,000 strong,
highly competent workforce comprising different nationalities.
Through a robust Corporate Social Responsibility programme, the Group touches lives of
millions every day.
https://twitter.com/reliancegroup https://www.facebook.com/reliancegroup/
© Dassault Aviation
https://www.dassault-aviation.com/en/group/press/press-kits/dassault-reliance-aerospace-
manufacturing-facility-in-mihan-nagpur-inaugurated/

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No bank guarantees meant a more expensive new Rafale deal

The “Report of the Indian Negotiating Team on Procurement of 36 Rafale Aircraft

How cost was arrived at

Final price offered by

Aircraft package 7341.58* 7169

Weapons package 718.29 710.45#

Total 8059.87 7879.45

Total 7485.87 7879.45

*The aligned costs for # Excluding the cost of

Defence Ministry protested against PMO undermining Rafale

Government waived anti-corruption clauses in Rafale deal

Final INT Report calculations

A page from the final INT report, in facsimile.

The significance of bank guarantees in pricing

As reported in The Hindu of February 13, 2019, Sudhansu Mohanty, Financial

Rafale deal not on ‘better terms’ than UPA-era offer

The question of bank guarantees assumes additional importance as 60% of the

Following the publication of my investigative article on the Defence Ministry’s

Defence Ministry protested against PMO undermining Rafale negotiations

The Hindu’s Rafale exposé: Revelations put Supreme Court ruling in

According to the government’s submission to the Supreme Court of India in

Rafale case: SC refuses to intervene in jets procurement

A file photo of a Rafale aircraft.

SC verdict on Rafale deal: Congress should apologise to Modi, says BJP

Supreme Court judgment in Rafale deal case

Rafale deal case: A timeline

When Mr. Bhushan referred to an article written by The Hindu's N. Ram,

Investigative reports by N. Ram on the Rafale deal

“You may call it stolen documents... we are not concerned... nobody is

Investigative reports by N. Ram on the Rafale deal

Narendra Modi has questioned Balakot air strikes: Congress

Pakistani village asks: Where are bodies of militants India says it

Balakot air strikes: Union Minister Ahluwalia’s video creates a furore

‘Cannot reveal Rafale details due to new pact’

Govt. cites secrecy deal with France

Big increase in Rafale's price came because a deal bypassing

This article, based on information exclusively available to The Hindu, focusses on

According to the government’s notes on the decision-making process submitted to

It is again significant that there is no reference in the government notes to any

Distributed over 36 jets

A fairly large literature, investigative, prosecutorial, and critical, is now available on

The Supreme Court’s December 14 judgment declining to intervene in the Rafale

How did it come about?

The controversy boils down to two lines in paragraph 25 of the judgment

Why does it matter?

What lies ahead?

Defence Secretary G Mohan Kumar

Explained: Mediation as a way out in Ayodhya - a short history

Mehbooba Mufti holds protest against Jamaat-e-Islami ban

Why the Brahmaputra needs long bridges

India-specific Rafale add-ons after delivery of all 36 fighters

13 enhancements to be done locally in batches of 7

Commenting on this, Air Marshal M. Matheswaran (retd.), who oversaw the

India to buy 36 Rafale jets in ready condition

“Keeping in mind the critical operational necessity of fighter jets in India, I

An agreement on proceeding forward on the stalled nuclear project in Jaitapur in

Here is the list of agreements signed between India and France

Dinakar Peri reports from New Delhi:

Depleting fleet swung Rafale deal

Another pact reached during negotiations related to pre-engineering agreements

He said France would partner India in urban development of infrastructure such as

* This article has been corrected for a statistical error.

India, France ink €7.87 billion agreement for 36 Rafales