36 Rafale Aircraft Could’ve Been Bought 14% Cheaper: CAG Report

CAG report on Rafale deal: the Modi govt purchased some items with the aircraft that were not required by the IAF.

The government could’ve purchased 36 Rafale aircraft at 14% cheaper price. IAF requested MoD to remove some items from the aircraft which could’ve reduced the price but the latter didn’t pay any heed to it. 

(Photo: Aroop Misra/The Quint)

The CAG report on the controversial Rafale fighter jets deal was tabled in Parliament on Wednesday, 13 February. The audit report titled ‘Capital Acquisition In Indian Air Force’ says that the Modi-led government has purchased 36 Rafale fighter jets for 2.86% less than their price quoted in 2007.

The CAG report does not mention the price of the aircraft – all the figures related to the purchase of the aircraft have been redacted on the MoD’s request. It only states the comparative price of 2007 and 2016 in terms of percentage.

A deep dive into the CAG report on Rafale deal further reveals that the Modi-led government could’ve purchased aircraft at 14% cheaper had the Ministry of Defence (MoD) succeeded in removing some items from the aircraft which were not required by the Indian Air Force – and, of course, had they negotiated harder with French company Dassault Aviation.

IAF Told MoD To Reduce Items to Cut Cost: CAG

The Rafale aircraft contract consisted of six different packages – Flyaway Aircraft Package, Maintenance Package, Indian Specific Enhancements (ISEs), Weapon Package, Associated Services and Simulator Package.

Keeping in mind the “huge cost” and the “reduced number of aircraft to be purchased,” the Indian Negotiating Team (INT), which was headed by the Deputy Chief of Air Staff (DCAS), proposed to reduce the number of items under Indian Specific Enhancements, as stated in the CAG report on Rafale deal.

But Dassault Aviation refused to incorporate the request made by the INT. The CAG report says:

“M/s Dassault Aviation stated that since its price was a total package, the Ministry would have to take up the matter with the Government of France.”   

MoD Refused to Cut the Items Requested by Air Force: CAG

In August 2016, DCAS intimated to the Ministry of Defence that six items under the Indian Specific Enhancements could be reduced and further added that “it could be included if more Rafale aircraft were procured in future”.

However, the MoD turned a deaf ear to this request by DCAS. The audit report says:

“This proposal (made by DCAS) was not accepted by MoD because that was tantamount to dilution of ASQR (Air Staff Qualitative Requirements) which was not in consonance with the basic framework provided by the Joint statement on 10 April 2015 by the DAC (Defence Acquisition Council) that aircraft must have the same configuration.” 

The CAG report has pointed out that, out of six items mentioned above, four of these enhancements were not required in the technical and staff evaluations. But the government went ahead with the purchase of these unnecessary items nonetheless.

The cost of these four enhancement items was “IS4 [redacted] million Euro,” constituting about 14 percent of the ISE contracted cost.

Top CAG sources told The Quint:

“It would not be incorrect to say that the price of Rafale aircraft could’ve come down further had we negotiated further on some of the items. At the same time, I would say that IAF should improve its process of formulation of ASQRs to ensure that they correctly select the users functional parameters.”

The CAG report has given the government a reason to rejoice but the moment one deep dives into the report, it is hard not to find loopholes in the Rafale aircraft deal.