Millennium Post

Will IAF get to fly Rafale

The much talked-about – in the normally cloistered defence sector circles – stall in the contract negotiations between the defence ministry and the high value, 126 Medium, Multirole Combat Aircraft (MMRCA) deal contender, the French firm Dassault has ended, and the talks have begun again. This brings back Rafale on the table as the chosen fighter aircraft of the IAF in this gigantic
$ 20 billion contract.

The Indian Air Force (IAF) chief, Air Chief Marshal NAK Browne had told journalists on Monday that the problems in the negotiations have been ‘resolved,’ and he expects the negotiations to be over by September this year, and the contract is to be signed by March 2014. This will happen after the Cabinet Committee on Security (CCS) agree to the initial agreement and gives a go-ahead for the contract.

But some insiders are less optimistic. They say that the Contract Negotiations Committee (CNC) is virtually running against time because the deal needs to be signed by September-October in the Congress-led UPA II regime. Otherwise, it could spill over the general elections and a possible new political equation.

At the centre of the problem that stalled negotiations was the issue of the public sector Hindustan Aeronautics Ltd (HAL) being up to speed in terms of ‘licenced production’ of the aircraft – a condition for eventual transfer of technology that is at the front and centre of the Request for Proposal (RFP) issued about five years ago.

The French giant, Dassault, was of the opinion that the fiduciary clause, which made it mandatory for them to pay penalties in case of problems of quality with the kits they are supposed to supply to the HAL, resulting in any time delays, should be removed. The Indian team was adamant that it cannot be as it was in the RFP also, and if Dassault had problems with that clause they could have avoided any response to the tender.

While there are reports that the negotiations have now begun with this contentious part of the contract set aside for the time being and moving forward with the other parts. But Browne was quite categorical Monday that even this has been ‘resolved’ to the satisfaction of both parties. Yet, even on this there are ‘nay-sayers.’

These contradictions had earlier given rise to a speculation that whether Dassault was objecting to the ‘HAL clause’ because it wanted its preferred Indian peer, Reliance Industries, to be given the task of setting up an aerospace production company and undertake the task of making Rafale.

However, Millennium Post  could not elicit any response on this question either from Dassault or from Reliance Industries. The RIL respresentative in the newly formed aerospace business, Dr Vivek Lall, who was earlier with Boeing when the Indian Navy bought P8I reconnaissance aircraft from the company, was unavailable for comment on the questionnaire of this correspondent. The questions were:
  1. Is Reliance Industries advising Dassault on the ongoing contract negotiations?

  2. If it is, what is the nature of this advice? If no, why is it not lending its obvious expertise in dealing with the Indian government to Dassault?

  3. In the recent reports about how the negotiations have got bogged down on the issue of who was liable for HAL's probable mistakes during the licence production of the 108 Rafales under the contract, there were speculations that Dassault had taken a hard line because it wanted its partner, Reliance, to produce the aircrafts. Is this a correct supposition?
Top sources say that the Dassault’s relationship with Reliance Industries is not even a joint-venture contract but a memorandum of understanding concluded two years ago.

Dassault too did not respond to a query on the issue. Meanwhile, the world watches.
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