Rafale explained: From letter of comfort to ‘missing’ bank guarantee, unmasking technical terms of deal

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Opinion poll surveys conducted in September, November, and January indicated that despite the continuous media coverage and sustained political debate on the Rafale row, the issue failed to take off as a major electoral issue.

A Business standard survey conducted in September 2018 revealed that 52 percent of respondents believed that the issue would not matter during the 2019 Lok Sabha elections. Another poll by Times now CNX found that only 10 percent think that Rafale deal is an important cause of concern. ABP News-C voter survey said that over 44.9 percent people think Rafale will not have any effect on Modi government’s image, while India today’s Political Stock Exchange (PSE) revealed that in politically important states like Uttar Pradesh and Uttarakhand, the issue has very little traction among respondents while many voters said they did not know about the matter enough to form an informed opinion.

While some would argue that this could be taken as affirmation of support for Prime Minister Narendra Modi, it mostly displays that the issue failed to engage the larger public. Both sides either resort to pithy one-liners to glaze over the complex issue, or they threw complex jargon, without adequate explanation, to take cover behind wordplay and avoid closer public scrutiny. Either way the result is that the politicos lose audience on what should have been crucial to national interest.

The Rafale deal, with its many unravelling layers, has been one of the most multi-faceted issues facing the Modi dispensation ahead of the election. To help readers understand where the government enjoys strong-footing and where it has failed to answer pointy questions, here is a lowdown on the technical jargon associated with the debate on the issue.

What is Rafale controversy?

First in 2013, the United Progressive Alliance first chose Dassault’s Rafale after floating a tender to induct new fighter crafts in the Indian Air Force fleet. The government was towards the end of its tenure and hence the negotiations were stalled amid noise on various corruption scandals. The negotiations were on for 126 fighter jets €” including the purchase of 18 off-the-shelf jets from Dassault Aviation, with 108 others being assembled in India by Hindustan Aeronautical limited €” and the eventual transfer of technology to India.

However, in April 2016, the National Democratic Alliance government set aside the progress made so far, stating immediate requirement by the Indian Air Force and planned to buy 36 aircrafts custom fitted to meet India’s requirements, straight off the shelf instead of trying to acquire technology from Dassault and make it in India. The deal incorporated 50 percent offset clause, ensuring that 50 percent of the deal’s amount will be invested in the Indian defence ecosystem, out of which France is to invest 30 percent of the total order cost in India’s military aeronautics related research programmes and 20 percent into local production of Rafale components. It is the latter 20 percent that is at the root of the entire controversy as Opposition alleges that Anil Ambani’s nascent Reliance Defence walked away with the major piece of the offset pie (on Modi’s personal intervention), while the state-run HAL was left out.

Rafale lingo simplified

Government-to-government contract (G2G contract)

Context – The rafale deal , as it exists is essentially a G2G deal, between French and Indian government. This fact has been used by the Modi government to distance itself from the choice of Reliance as one of offset partners, and also in keeping the exact price of each aircraft a secret.

A defence equipment purchase is primarily done in two ways. Either a country’s government directly purchases equipment from a foreign defence manufacturer in a purely commercial transaction, or the governments of the two nations buy/sell equipment wherein the seller government can either sell  from its own repository or procure the equipments from another local/ foreign vendors. The main point that differentiates the former from the latter is that the deal is struck between two governments and hence are seen as a method in which the procurement cycle becomes less cumbersome much faster and more importantly less controversial, according to a report on ORF.