Ministry of Defence factually rebuts news publication’s pricing claims on Rafale Deal. Read the reply here

The Hindu published an article on January 18 in which it dwelled on the pricing of the Rafale deal claiming that the Modi government's decision to buy 36 Rafale fighter jets from France instead of the 126 jets led to the increase in the price of each fully loaded aircraft by 41.42%.

The article has tried to create an issue on confidentiality of the deal, disagreement within the Indian Negotiating Team with respect to pricing among others. The Ministry of Defence , in a statement, has given a point to point rebuttal on the article on Friday and has called it "factually incorrect".

Below are some of the key points that the MoD has factually argued and dismantled the claims in the article.

1. The article claims that there has been selective briefing on pricing details of the Rafale aircrafts by government authorities. It says that the NDA had said that details on the pricing cannot be revealed as the ‘Exchange and Reciprocal Protection of Classified or Protected Information’ stands in the way of such disclosure. As per the article, the French government has said that the agreement was meant “to protect the classified information provided by the partner, which could, in particular, impact the security and operational capabilities of the defence equipment” and hence the restriction mentioned by the Indian government on disclosure does not apply.

The MoD has said that the pricing details are confidential and have been shared with the Supreme Court in a sealed cover. 

2. The article claims that while the NDA government had managed to get significant discounts on the price by 2016, with the 36 Rafale aircrafts being sold for €91.75 million, meaning a 9% discount on the 2011 price which was  €100.85 million. It adds that the price shot up to  €11.11 million per aircraft in 2007 to €36.11 million when the deal was struck in 2016 for the 36 aircrafts because Dassault had increased the price by  €1.4 billion ‘design and development’ of 13 India Specific Enhancement, and this cost was negotiated and brought down to €1.3 billion

The MoD statement says that the India Specific Enhancements were part of the requirements of the Indian Air Force to achieve tactical superiority over our adversaries. 

3. The MoD has said that the author of the article says in the headline that Modi government raised the price of the aircrafts by 41%, without considering escalation factors, but mentions the hike in the price taking into account the escalation factor within the article.

The increase in the price after taking into account the escalation factor is far less - 14.20%, than what is mentioned in the headline.

The headline of the article is "Modi’s decision to buy 36 Rafales shot the price of each jet up by 41%"

Within the article the author specifies:

"...the ‘non-recurring’ design and development cost claimed for the India Specific Enhancements was factored in, the per unit price negotiated by the NDA government for the 36 Rafale fighter jets worked out to €127.86 million, which was 41.42% higher than the price quoted by Dassault in 2007. When the escalation formula was applied, the price per aircraft agreed to by the NDA government turned out to be 14.20% higher than the proposed price per aircraft when the commercial bid was opened in November 2011 under the UPA government."

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4. The article says that three members of the Indian Negotiating Team objected to the pricing among other issues. Their objections were overruled by a majority decision of 4:3 voting.

MoD has said that the issue of dissent within the Indian Negotiated Team has been answered by the Raksha Mantri Nirmala Sitharaman in the Parliament.

5. The article says that Airbus (formerly EADS) had offered a deal which had a 20% discount on the price of the aircrafts and it was worth considering by the NDA government and might have given it a better position on the negotiating table while doing the deal with France.

The  MoD has said that the UPA government had also rejected the EADS' offer of 20% discount in 2012 after opening of bids and rightly done so as it was violative of the procedure. 

Read the full statement by the Ministry of Defence below:

 

 

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