Rafale cost is 2.86% lower, but Dassault benefited without bank guarantee: CAG

Improvement in delivery schedule was only one month over UPA deal, the government auditor says The contract signed in 2016 to acquire 36 Rafale fighter jets from France through the Inter-Governmental Agreement (IGA) was 2.86% lower in value than “Audit’s aligned price” of the bid received in 2007 when the then UPA government had sought to purchase 126 Medium Multi-Role Combat Aircraft (MMRCA), the Comptroller and Auditor General (CAG) of India said in its report, tabled in Parliament on Wednesday. The CAG also observed that the price could have been reduced further had the benefits of waiving of the bank guarantees for the vendor (Dassault Aviation) been passed on to India. Varying claims There have been varying claims from government officials on how much cheaper the 2016 deal was, with estimates ranging from 9% to 20%. On the delivery schedule, the national auditor found that the 2016 deal’s terms would ensure only a month’s advantage over the timeline offered in the 2007 bid. The report, which had been widely awaited in the wake of a string of revelations on procedural deviations in the negotiations to acquire the French Rafale jets and political allegations of financial irregularities in the deal, was tabled in the Rajya Sabha on the last day of the 16th Lok Sabha. In its performance audit report on ‘Capital Acquisition of the Indian Air Force’, the CAG reviewed 11 contracts signed between 2012-13 and 2017-18 with an approximate value of Rs. 95,000 crore. India-specific additions On the Rafale’s India Specific Enhancements (ISE), which cost more than €1.3 billion of the €7.87 billion deal, the CAG stated that there was a saving of 17.08%. However, the audit noted that four enhancements were “stated not to be required in the technical and staff evaluations” and that the cost of these four items constituted about 14% of the ISE estimated cost. “The Ministry has stated that scaling down the requirement to limit cash outgo cannot be considered as saving,” the CAG said. The auditor redacted all price figures from the report — done, it said, at the insistence of the Ministry of Defence which had cited the Indo-French Agreement of 2008 and the provisions of the IGA. On the overall delivery schedule of the 36 jets as per the 2016 deal, compared with the delivery of 18 jets in flyaway condition plus another 18 produced in India under licence under the terms of the MMRCA proposal, CAG noted that there was an improvement of only one month in the 2016 contract.

Source  : https://www.thehindu.com/todays-paper/rafale-cost-is-286-lower-but-dassault-benefited-without-bank-guarantee-cag/article26263603.ece

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