The key objection raised by the ministry official was that the benchmark price for the 36 Rafale jets was pegged higher than that of the earlier 126 Rafale jet proposal negotiated by the UPA government
Almost a month before a deal for 36 Rafale fighter jets were inked between India and France in September 2016, a senior officer in the Ministry of Defence had raised questions about the deal’s benchmark price, according to a report in The Indian Express.
The senior official, who was then the Joint Secretary & Acquisition Manager (Air) in the defence ministry, and was on the Contract Negotiations Committee (CNC), had also placed his objections on record, the report says. The officer was meant to initiate the note for Cabinet’s approval.
The report adds that the objections had delayed the Cabinet note approving the deal and its signing had only happened after the objections were “overruled” by Director General (Acquisition), a senior defence ministry official.
As part of the Rafale deal file, the note sent by the JS & AM (Air), which mentions the objections, is now with the Comptroller and Auditor General of India (CAG). The CAG is studying the deal currently engulfed in a political controversy between Congress and the government.
The report adds that the CAG report on the Rafale deal is likely to be submitted by the winter session of Parliament in December. The report may have references to the Cabinet note and may also talk about how the objections were over-ruled.
The key objection raised by the JS & AM (Air) was that the benchmark price for the 36 Rafale jets was pegged higher than the benchmark price for the earlier 126 Rafale jet proposal negotiated during the Congress-led United Progressive Alliance (UPA) government.
In this case, the benchmark price is pegged to provide a reference of reasonableness of the lowest price pitched by the producer, to the CNC.
The government, on its part, maintains that the higher cost of the jets is driven by "India-specific enhancements" to the jets, even though details on this are scarce.
The proposal to purchase 126 Rafale jets, which was part of the Medium Multi-Role Combat Aircraft (MMRCA) tender, was withdrawn after India and France signed a deal for 36 Rafale aircraft during Prime Minister Narendra Modi’s visit to Paris in April 2015.
Another objection raised by the JS & AM (Air) was that European Aeronautic Defence and Space Company (EADS), the German defence manufacturer that produces the Eurofighter had offered a 20 percent discount on its bid price to the Indian government in July 2014, the report suggests. The Eurofighter was the second aircraft which had qualified in the IAF trials during the MMRCA tender process.According to the report, JS & AM (Air)’s note said that a similar 20 percent cut should be applied for rates in case of the 36 Rafale aircraft as a competitor was offering that discount.