Rafale deal: secrecy pact renewed in March, but cost details already revealed

Govt renewed secrecy pact with France in March, but governs technical details, not prices

By Ajai Shukla

Business Standard, 22nd July 18

The Bharatiya Janata Party (BJP)-led government, in declining to provide commercial details of its purchase of 36 Rafale fighters for the Indian Air Force (IAF), has sheltered behind a 2008 confidentiality agreement between New Delhi and Paris.

But on Friday, while arguing in parliament that the United Progressive Alliance (UPA) had signed the secrecy pact, the government kept silent on the fact that the agreement had expired this year. Nor did it mention that on March 28, during French President Emmanuel Macron’s visit to India, it renewed the pact for a decade more.

That detail is buried in a parliamentary question that the defence ministry answered in March. Also evident from its answer is the limited scope and nature of the Indo-French agreement.

On March 28, Minister of State for Defence Subhash Bhambre toldparliament: “An Agreement between India and France regarding the Exchange and Reciprocal Protection of Classified or Protected Information was signed on 10th March, 2018 during the State Visit (sic) of President of France to India. This agreement defines the common security regulations applicable to any exchange of classified and protected information between the two countries.”

Business Standard learns that the 2008 Indo-French agreement had covered exactly the same ground.

Experts say the scope of that pact – i.e. the “exchange of classified and protected information between the two countries” – does not include commercial details and costs. Its scope only extends to tactical and technical details relating to the capability of the platform in question, and its performance and tactics in combat.

The French government statement, issued on Friday, also asserts the confidentiality of “security and operational capabilities”, not price details. Paris said the agreement “legally binds the two States to protect the classified information provided by the partner that could impact security and operational capabilities of the defence equipment of India or France.” (emphasis added)

Further, as The Wire reported on Saturday, Macron himself is ambiguous about what France wants to be kept confidential. In an interview to India Today TV on March 9, Macron said: “There are some discussions to be organised by the Indian government, and they will have to consider which details they would want to be revealed to the Opposition and Parliament. I am not one to interfere in such a discussion and you too must realise that we have to consider commercial sensitivities.” (emphasis added)

Given that Paris routinely makes public details about what its military pays for each Rafale buys, Macron would be unlikely to restrain New Delhi from doing so.

Furthermore, the government is submitting the Rafale contract to a Comptroller and Auditor General audit. There is little reason to withhold cost details from a privileged parliamentary panel, such as the Standing Committee on Defence. 

On Wednesday, Bhambre had told Parliament: “The Comptroller and Auditor General (C&AG) is conducting the audit of the Capital Acquisition System of Indian Air Force including the Rafale aircraft.”

Air Vice Marshal Nirdosh Tyagi (Retired), who handled IAF procurements in 2008-2011, including the aborted tender for 126 medium multi-role combat aircraft (MMRCA), says the government should not shy away from revealing cost details of the 36-Rafale contract. “The is little reason to apprehend that other potential Rafale customers might benefit from knowing details of the Indian contract. Each contract has different components and comparing two contracts like comparing apples to oranges,” says Tyagi.

Further, the defence ministry has already revealed full details of the Rafale purchase. On September 23, 2016 – after then defence minister Manohar Parrikar inked an Inter-Governmental Agreement with his French counterpart, Jean-Yves Le Drian, while officials signed commercial components of the Rafale contract – a top defence ministry official conducted an off-the-record media briefing, giving out minute details of the Rafale contract.

Based on that briefing, the media reported widely the details that the government now calls confidential.

In Business Standard (September 24, 2016 “India signs euro 7.8-billion deal for 36 Rafale fighters”) it was reported that the average cost of each Rafale was fixed at Euro 91.7 million (today Rs 740 crore). At that price, 36 bare-bones aircraft cost Euro 3.3 billion (today Rs 26,610 crore).

With Euro 1.7 billion more (today Rs 13,710 crore) for India-specific enhancements to the fighter, the cost of 36 Rafales added up to Euro 5 billion (today Rs 40,318 crore). That means each Rafale fighter cost Euro 138.8 million (today Rs 1,120 crore).

Cost breakdown of 36-Rafale contract

Expenditure item	Details of expenditure	Cost
Cost of aircraft
Single-seat Rafale fighters	28 @ Euro 91.07 million each	Euro 2.55 billion
Twin-seat Rafale fighters	8 @ Euro 94 million each	Euro 0.75 billion
India-specific enhancements	Helmet sights, radar receiver, radio altimeters, Doppler radar, cold start	Euro 1.7 billion
Total cost of 36 fighters		Euro 5.0 billion
Cost per fighter	Averaging for single/twin seaters	Euro 138.9 million
Cost of weaponry
Including Meteor, SCALP missiles	Total cost of weapons, mainly from French firm, MBDA	Euro 700 million
Maintenance expenses
Spare parts and items	Needed to keep aircraft flying	Euro 1.8 billion
Performance based logistics	Guarantee of 75% availability	Euro 350 million
TOTAL COST	Aircraft cost plus add-ons	Euro 7.85 bn

The ministry provided extensive details of the India-specific enhancements, which included “helmet mounted display sights” that allow pilots to aim their weapons merely by looking at a target; a “radar warning receiver” to detect enemy radar and “low band jammers” to foil it; a radio altimeter, Doppler radar and extreme cold weather starting-up devices for airfields like Leh.

The ministry official said another Euro 2.8 billion were paid for spares worth Euro 1.8 billion (today Rs 14,500 crore), weaponry worth Euro 700 million (today Rs 5,645 crore), and a logistics package of Euro 350 million (today Rs 2,822 crore) that requires the French to ensure that at least 75 per cent of the Rafale fleet is available at all times for the next five years. 

Further details were provided. The defence ministry said the weapons package includes Meteor “air-to-air missiles” that can shoot down aircraft 120-140 kilometres away. Also being provided was the Storm Shadow cruise missile for striking airfields, military headquarters and strategic infrastructure 500 kilometres away.

It was also revealed that the first Rafale must be delivered within 36 months, i.e. in September 2019. Dassault is to execute the entire order within 67 months, which means the last Rafale must join the IAF by April 2022.

The defence ministry also gave out details of the payment schedule. The IAF was required to pay a 15 per cent “signing advance” of about Rs 8,700 crore today. Another 25 per cent was to be paid in 2017. The balance amount would be paid over the coming years at stipulated delivery milestones.