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HomeDefenceCongress raises questions on $7.8 billion Rafale deal, alleges scam

Congress raises questions on $7.8 billion Rafale deal, alleges scam

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Party accuses the BJP government of promoting financial interests of ‘crony capitalist friends’, says deal signed with France has caused huge loss to exchequer.

New Delhi: The Congress Tuesday alleged a “huge scam” in the $7.8 billion deal that was signed last year to procure 36 Rafale fighter jets from France for the Indian Air Force.

Raising questions on the cost of the contract as well as an alleged violation of procurement procedure, the Congress accused the government of promoting financial interests of “crony capitalist friends” at the cost of a defence public sector unit.

Taking on the much delayed Rafale deal that was signed after years of negotiation to provide two much-needed squadrons of fighter jets to India, party spokesperson Randeep Singh Surjewala said that the deal signed with France does not cater to technology transfer and has caused an “insurmountable” loss to the exchequer.

The Rafale deal, which was reworked by the BJP government after a two-year logjam under the Congress on pricing issues, also has a 50 per cent offset clause that mandates French companies to invest half of the contract value in Indian defence and aerospace companies.

A large part of these offsets are set to be executed by a joint venture company of the Anil Ambani-owned Reliance Defence.

The Congress Tuesday took this matter up, alleging crony capitalism and asking Prime Minister Narendra Modi for answers. It claimed that in 2012, the UPA government had negotiated a $10.2 billion base price for acquiring 126 Rafale jets but the Modi government cancelled the process and ended up paying $8.7 billion (sic) for just 36 fighter jets.

“Prime Minister Narendra Modi visits France and announces the deal for purchase of 36 Rafale Fighter Aircraft in flyaway condition. This was done unilaterally without following the Defence Procurement Procedure, without inter-governmental agreement and in absence of India’s defence minister. However, Anil Ambani, owner of Reliance Defence Limited, was present in France with PM Modi,” Surjewala said at a press conference.

The Congress alleged that according to the 2012 plan, the Rafale would be manufactured by defence PSU Hindustan Aeronautics Limited (HAL) but as per the new deal, a big share of the work is being done by Reliance Defence Limited.

“Why has the joint venture for the biggest-ever Indian defence deal between Dassault Aviation and Reliance Defence Limited not gone through the proper procedure of approval by the Union Cabinet, Cabinet Committee on Security and Foreign Investment Promotion Board,” Surjewala asked.

Response to allegations

Reliance Defence Limited rebutted these allegations in a statement, calling them “unfounded and false”. It clarified that Anil Ambani was present in France with PM Modi because he “is a member of Indo-French CEO Forum”, and that 20 Indian CEOs were present. It also clarified that as per the official press statement issued by Dassault and Reliance on 3 October 2016, “offset obligations are to be undertaken by Dassault Reliance Aerospace joint venture company, and not by Reliance Defence”, and that “over 500… Indian companies will benefit from the offsets which are nothing but an export obligation for goods and services from India”.

On the allegation that Modi had played favourites with Reliance, the company said: “Dassault Aviation selected Reliance Aerostructure Ltd as its joint venture partner. The Indian government has no role to play in this.” In addition, about the allegation that proper procedures were not followed, the company stated: “Government policy issued on 24 June 2016 allows for 49 per cent FDI in the defence sector under the automatic route, without any prior approval.”

The BJP, too, claimed that the allegations were a diversionary tactic, as the Congress’s top leadership faced the prospect of being questioned in the AgustaWestland chopper scam. “The Congress has made baseless allegations over the Rafale deal to divert public attention and to cry political vendetta,” BJP spokesperson G.V.L. Narasimha Rao said.

“None of these stunts will work; the Congress must be ready to answer who took bribes in the AgustaWestland VVIP chopper deal, as the money trail is going to become known after the extradition of Carlos Gerosa. The Modi government is known for its integrity, while the Congress is synonymous with sleaze, corruption, and crony capitalism,” he added.

This story was updated to include Reliance Defence and the BJP’s rebuttals.

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  1. Utter rubbish. Please do some basic research. Just because an Ambani company invests in a business and wins something by way of contracts, it becomes crony ?

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