Decoding CAG report on Rafale

CAG demolishes government argument that price of basic aircraft was 9% cheaper, says it was the same under UPA, but savings accrued as cost of Indiaspecific enhancements reduced.

BCCL
CAG says that costs saved by Dassault Aviation because of waiver of banking and performance guarantees should have been passed over to India, would have lowered price further.

Pricing
  • Government: Their (UPA) base price per aircraft was Rs 737 cr. Ours (NDA) is Rs 670 cr. That is at least 9% less (Nirmala Sitharaman in Parliament, January 4)
  • Opposition: Price of 36 Rafale jets was 55% higher than the UPA era (Randeep Surjewala, February 13)
  • CAG: The contract was concluded at 2.86% lower cost than the earlier deal
CAG demolishes government argument that price of basic aircraft was 9% cheaper, says it was the same under UPA, but savings accrued as cost of India specific enhancements reduced.

Offsets
  • Government: The offsets have been planned in line with older policy laid down by the UPA, 50% offsets clause in the deal
  • Opposition: Govt favoured Reliance Defence for the offsets, made it a condition to signing the deal
  • CAG: The issue has not been addressed in the report
Official information on offset partners to come from French side only by October this year. Will be audited separately at a later stage.


rafale-630-bccl


Delivery Schedule
  • Government: We signed the deal in better terms and conditions, aircraft will come fi ve months in advance
  • Opposition: No benefi t to the Air Force, jets with Indian enhancements will take longer to deliver
  • CAG: Disagrees with government but says slightly better delivery schedule, one month saved. Notes apprehensions of Indian Negotiating Team on achievement of the tight schedules
French side assures the first fighter, a twin seat trainer, will be delivered in October. However, options of imposing penalty in case of late delivery unclear.

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Safeguards and Guarantees

  • Government: The deal has been signed under an inter-governmental agreement with the French govt assurance that all conditions will be met & the project overseen by Paris
  • Opposition: Govt diluted safeguards against corruption by waiving off the integrity pact and not holding the French side liable by including bank guarantees
  • CAG: Notes that in case of a breach of agreement, Indian side will have to settle arbitration directly with French vendors. If India wins the case and the French cos do not honour the award, only then French govt will make payments
CAG says that costs saved by Dassault Aviation because of waiver of banking and performance guarantees should have been passed over to India, would have lowered price further.
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