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The Ministry of Defence (MoD) on Friday claimed that The Hindu ’s detailed story over the steep price escalation in the deal for 36 Rafale fighter jets did not adduce any new arguments and that all issues had been answered in detail by the government at various fora and by Defence Minister Nirmala Sitharaman in Parliament. “The cost of the India Specific Enhancements (ISE) was on a fixed basis in the 2007 bid which was negotiated down in the 2016 deal. However, to compare the cost for the Medium Multi-Role Combat Aircraft (MMRCA) contract which never materialised with the cost of the 36 aircraft procured in 2016 is fallacious. The author while indicating the price of ISE as €1.4bn in 2007 has failed to include the in-built escalation factor that would have worked between 2007 and 2015,” the MoD spokesperson said in a statement. Escalation factors In an exhaustive story in The Hindu , N. Ram, Chairman of The Hindu Publishing Group, detailed how there was a huge price escalation and bypassing of procedures, official objections and how the non-recurring cost of the ISE was spread on just 36 aircraft compared to 126 jets earlier. The spokesperson said that “the author has rightly pointed out” that the cost of the basic aircraft in the 2016 deal was better than the offer of 2007 after considering escalation but however, observed, “Surprisingly, in the headline of the article, the author has compared the un-escalated price of 2007 with the price of 2016 without considering the escalation factors inherent in the price bid.”
