36 Rafale jets purchase instead of 126 pushed price of each by 41.42 pc

Reason behind increase was NDA government's acceptance of the cost of - 1.3 billion for the 'design and development' of 13 India Specific Enhancements

An article published in The Hindu, reveals that Prime Minister Narendra Modi's decision to buy 36 Rafale fighter jets from France instead of the 126 that the Indian Air Force had asked for, pushed the price of each fully fitted, combat-ready aircraft up by 41.42 per cent. The major reason behind the increase in price was the National Democratic Alliance government's acceptance of the cost of €1.3 billion for the 'design and development' of 13 India Specific Enhancements (ISE), and the distribution of this 'non-recurring cost' over 36 instead of the actual number of 126 bare-bones aircraft.

The NDA government refuses to disclose information on the pricing of each of the aircraft, contending that its agreement with France on the 'Exchange and Reciprocal Protection of Classified or Protected Information' stands in the way of such disclosure. The French government, however, has made it clear that this inter-governmental agreement is there only "to protect the classified information provided by the partner, which could, in particular, impact the security and operational capabilities of the defence equipment." However, the restriction does not apply to disclosure of pricing details. Even media coverage reveals that there has been selective background briefing by military and civilian defence officials on sensitive details of the deal. These have helped answer some, but not all the questions that have been asked about the Rafale deal.

This article mainly focuses on how and why the price of each Rafale fighter jet of the F3-R standard, with the same configuration and capabilities, changed substantially over three points, in 2007, 2011, and 2016. In 2007, five years before M/s Dassault Aviation was declared the L1 vendor, that is, the lowest bidder of the tender floated by the UPA government for the supply of 126 Rafales (18 flyaway plus 108 to be manufactured, under licence, in India by Hindustan Aeronautics Limited), the price quoted by the vendor for one flyaway bare-bones aircraft was €79.3 million. By 2011, this price had shot to €100.85 million. In 2016, the 9 per cent discount on the 2011 price obtained by the government for the 36 jets brought the per-aircraft price down to €91.75 million.

However, Dassault claimed a €1.4 billion cost for the 'design and development' of 13 India Specific Enhancements, that is, additional capabilities in the form of hardware as well as software that had been specified by the Indian Air Force all along. This cost was negotiated down to €1.3 billion. Hence, the design and development cost, distributed over 36 Rafale fighter jets, shot up from €11.11 million per aircraft in 2007 to €36.11 million when the deal was struck in 2016.

CAG has access to all files: Ministry
As the firestorm over Rafale deal raged further, the Defence Ministry on Friday said it has given the CAG access to all the files relating to the contract and it would be best
to await the report of the national auditor on the issue.

Catch up on all the latest Crime, National, International and Hatke news here. Also download the new mid-day Android and iOS apps to get latest updates

This story has been sourced from a third party syndicated feed, agencies. Mid-day accepts no responsibility or liability for its dependability, trustworthiness, reliability and data of the text. Mid-day management/mid-day.com reserves the sole right to alter, delete or remove (without notice) the content in its absolute discretion for any reason whatsoever

"Exciting news! Mid-day is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest news!" Click here!