Defense, Homeland Security,Tenders and Political News
Wednesday, 15 April 2015
A Decisive Move by Modi: With Unknown Consequences
Last few days saw a wide range of speculations over a possible new development in the long drawn process started years ago to buy a Medium Multirole Combat Aircraft (MMRCA) during the maiden visit of Mr. Narendra Modi to Paris. What emerged was nothing short of a huge surprise, a pleasant one to many. Indian PM announced outright purchase (i.e. in flyaway condition) of 36 Dassault Rafale in a Government to Government contract at terms “better than those offered by Dassault”. Reports coming out suggest that this order is in addition to the original contract being negotiated but truth about fate of original contract is still unclear. So while we wait for the fog to clear and details emerge, it is important to revisit the history behind it to understand the development in the right context.
The fleet size of IAF had started dwindling after achieving its peak in 1980s but in view of financial constrains purchase of only 50 Mirage 2000 could materialise. After the 1999 Kargil War, IAF impressed by Mirage 2000’s capabilities which helped it save its face, was in favour of outright purchase. There even arose a possibility of Mirage 2000’s production line being shifted to India. However, the government of a confident country with a fast growing economy and almost every seller lining in front of it went ahead for an ambitious and unprecedented bidding process with riders of technology transfer and domestic production (all earlier purchases of platforms for IAF were purchased under constraints of option of Sellers/Suppliers).
Despite numerous statements by senior officials of Government and IAF alike of confidence in the selection process devised, the ability of “Sarkari Babus” to handle such a large and complex transaction efficiently and flawlessly was doubtful at best. This skepticism was not unfounded. After down selecting two through technical evaluation, Dassault’s offer for Rafale was declared L1(lowest bidder). Easy days for the process were over as the process moved from gloves of a thoroughly professional IAF into the slippery hands of IAS(read Indian bureaucracy). It was at this stage that the deal stalled with news reports suggesting various reasons including sudden upward price revision by Dassault and its hesitation to stand guarantee for platforms assembled by HAL (both deviation from conditions laid down in RFP ).
It is almost universally acknowledged that it is in face of difficulties/challenges that true nature/character of any person showcases itself. Same is equally true for institutions. Officials of MOD along with others involved in this process found themselves in a position nobody would like to be. On one hand was the IAF demanding an early fix to its problem of shrinking number of Squadron. On the other hand was a government’s policy attempting to fairly and transparently selecting a supplier of fighters for which it had invested almost a decade. In between all this was a Supplier/Seller which after emerging L1 through a long drawn process, was now not willing to play by the rules of game. To top it all, the process was forever present on radar of hyperactive media that we have.
In face of all the above, the MOD and its officials in my opinion emerged as heroes by sticking to their guns and found new vigour under “Raksha Mantri” Mr. Manohar Parrikar who issued statements clearly stating that Dassault will have to play by the rules and even went to the extent of suggesting alternate platforms (SU 30MMKI) could be ordered. The urgency for more squadrons for IAF is unquestioned but the importance of fair system especially while dealing with Billions of dollars of taxpayer’s money cannot be lost sight of. While it was a do or die situation for IAF, Dassault’s own viability of Rafale production line was in serious doubt in face of dried out French demand and not much international orders to bank upon. All seemed to be heading in the right direction especially in last few weeks with some reports suggesting Dassault’s willingness to fall in line.
But on the night of 10-11th April, announcement of outright purchase of 36 Rafale was made. This decision has been welcomed by almost all. While there may exist numerous possible justifications for such a move with strategic interest of the country being one, it still leaves any curious mind with several questions.
A conscious decision was made by the government years ago to adopt a transparent process instead of outright purchase despite being against IAF’s expressed preference in favour of more Mirage 2000s. Intentions were noble and had some logic behind it. In furtherance of this policy, endless number of man hours were put in through almost a decade by hardworking officials to prepare and execute a transparent and fair procedure. Certain representations in form of quantity of platforms in flyaway condition and those to be assembled were made and it was on basis of these representations that all bids including those of Typhoon(L2) were submitted. 36 in flyaway condition significantly changes the dynamics of finance among other things. Since these were never offered to L2, the whole process can now easily be termed unfair.
It further has the potential of harming the whole country’s image as a responsible player in the international market (not just defence market). Further as rightly pointed out by sections of media, it will unfavourably effect the negotiating process of original contract (if any) along with other possible consequences which the “Decisive Government” seems to have paid less heed than warranted.
If at all it had become necessary to sweeten the deal, this additional outright purchase should have been made subject to Dassault agreeing to sign MMRCA deal (126) on terms laid down in RFP instead of jumping the gun and going all in with a separate contract. Further the government also may find it difficult to justify this arbitrary number of 36.
Being decisive is a virtue but decisions especially w.r.t war fighting assets have very long term consequences and therefore being short sighted can have grave consequences for a nations security. The IAF already faces a logistical nightmare and is on road to another by accumulating an absurd proportion of heavy fighters which in all probability will constitute majority of its fleet over the years.
The government under PM Narendra Modi, true to his image of man who gets things done is claiming it to be another example of its efficiency. The leadership being decisive especially in comparison to previous government is widely acknowledged but in trying to live up to its image, it may have in this instance gone too far.