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Rafale deal unlikely to be signed in UPA 2 tenure

Even if things are speeded up, a formal contract cannot be signed before the general elections.

Aditya Kaul  New Delhi | 23rd Nov 2013

Rafale jet

ndia's biggest defence acquisition till date, the $20 billion deal to buy 126 medium multi-role combat aircraft from France's Dassault Aviation is unlikely to be signed in the tenure of the present government. Sources said that contract negotiations with Dassault to buy its Rafale jets are not near completion. Sources also said that as the general elections inch closer, the current regime, which is finding it difficult to battle a combative opposition over charges of corruption and nepotism, is not willing to allow itself to be put under scrutiny over a big ticket foreign deal.

A contract settlement with the French aviation major has been almost two years in the making. Rafale was selected by the Ministry of Defence in January 2012 over Eurofighter Typhoon because it was the cheapest off-the-shelf and also in terms of life cycle costs.

The ongoing financial crunch is aggravating matters, with defence spending already reduced to 1.79% of the GDP for this fiscal, one of the lowest in decades.

Perhaps the clearest indication, so far, of the acquisition project spilling over to the next regime came from Prime Minister Manmohan Singh on Friday when he advised "prudence" in "defence acquisition plans". "I have no doubt that we will overcome our current economic slowdown, but we will have to exercise prudence in our defence acquisition plans and cut our coat according to our cloth," the Prime Minister said while addressing the Combined Commander's Conference in New Delhi.

The deal is currently at the Contract Negotiation Committee (CNC) stage. An MoD official told The Sunday Guardian, "These are very technical and complex processes and can take time. There have been issues that we are trying to iron out...We are trying our best to wrap up negotiations as early as possible."

Sources said, even if matters were speeded up it was unlikely that a formal contract could be signed before the start of next fiscal, just when the general elections are scheduled to take place.

The little window of opportunity currently open is likely to close early next year after the Election Commission's model code of conduct for the general elections sets in, which will forbid the government from signing a deal of this size.

Last month, Defence Minister A.K. Antony hinted at the possibility of a delay, when he said, "The issue is under CNC negotiations. The government cannot interfere. After CNC there are four-five mechanisms...It will come to the Defence ministry, the Finance ministry and then the Cabinet Committee on Security. We are proceeding as per the defence procurement procedure."

The contract negotiations suffered a major setback early last month after Ministry of Defence's point person on acquisitions, Joint Secretary Arun Kumar Bal died after suffering a massive heart attack near his residence in Delhi.

Air chief N.A.K. Browne has said that the early signing of the deal is "critical for the force to maintain its desired levels".

"In case the MMRCA does not come to us at the end of the 12th Five-year plan (2017), then our force levels will go down rapidly," the Air chief said in October. Rafale's fighter jets are expected to replace India's ageing, and accident prone fleet of MiG-21s.

Even as India staggers toward acquiring the fourth generation Rafale, China is quietly working on its Fifth Generation Fighter Aircraft (FGFA), which is estimated to be operationally ready by 2018. India's joint development of the FGFA with Russia, meanwhile, has been facing delays. The final design contract for FGFA is not expected to be signed before 2014 and the first inductions are not scheduled to begin before 2022.

Under the MMRCA deal, Dassault is expected to provide 18 of the 126 fighter jets in flyaway condition to the Indian Air Force. The rest would be manufactured in India, under French license, by Indian defence PSU Hindustan Aeronautics Limited. The final deal could stretch to 200 fighter jets.

A major reason for the delay in negotiations has been Dassault's quality concerns over HAL's involvement in the project. Dassault has even sought clarity from the MoD on HAL's role in the deal.

Dassult had asked the MoD to bifurcate the proposal into two separate contracts, one for the 18 aircraft to be supplied by them, and the second for the 108 aircraft to be integrated by HAL. The MoD, however, refused to take this into consideration conveying to Dassault that it would be solely responsible for the entire fleet of jets.

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