News of the Day : Rafale contract | Limiting Indian Specific Enhancements to cut outgo not a saving: CAG report

The Comptroller and Auditor General’s audit report on the Rafale contract of 2016 has observed that an issue raised by the auditor with regard to four Indian Specific Enhancements (ISEs) that were found to be inessential as per technical and staff evaluations was dismissed by the Ministry of Defence (MoD) as being “a temporary deferment only for cost reduction measure”.

“Scaling down the requirement to limit cash outgo cannot be considered as saving,” the MoD contended after the CAG raised the issue of the four enhancements — whose cost constituted about 14% of the contracted ISE transaction value — by asking whether paring those items would have helped to reduce the cost of the 36 Rafale deal with France through an Inter-Governmental Agreement (IGA).

 The final terms of the 2016 deal had resulted in a 17.08% saving on account of the ISEs when compared with the equivalent value as per the bid received in 2007, when the 126 MMRCA proposal had been opened, the CAG observed in its report tabled in Parliament on Wednesday.

‘Jammer pod’

There were 13 ISEs sought by the Indian Air Force (IAF) in the Rafale, which cost more than €1.3 billion. These include radar enhancements for long range capability, ‘helmet mounted display,’ ability to start and operate from high altitude airfields, advanced infrared search and track sensors and a very potent electronic jammer pod, besides other items pertaining to avionics.

However, during the contract negotiations in 2015, in view of the huge cost and the reduced number of aircraft to be purchased, the Indian Negotiation Team (INT) headed by the Deputy Chief of Air Staff (DCAS) proposed to reduce the number of ISEs.

But Dassault Aviation stated that since its price was a total package MoD would have to take up the matter with the French government.

 Postponing 6 ISEs

 “In August 2016, before submission of the note to the approval of the Cabinet Committee on Security (CCS), DCAS (with the approval of CAS) intimated MoD that ISE scope could be reduced by postponing six enhancements, which could be included if more Rafale aircraft were procured in future,” the CAG noted.

However, MoD did not accept this proposal contending that it would have been tantamount to dilution of the Air Staff Quality Requirements (ASQR), which would have gone against the basic framework of the joint statement of April 10, 2015, by the Defence Acquisition Council (DAC) stressing that the combat aircraft ought to have the same configuration.

Well oiled — on Saudi Crown Prince’s India visit

Saudi Crown Prince Mohammed bin Salman visits India next week at a time when both countries are seeking to deepen bilateral cooperation. For MBS, as he is widely known, the visit to India, Pakistan, China, Malaysia and Indonesia is an opportunity to re-assert Saudi Arabia’s role as a major foreign policy player in Asia amid growing criticism over the Yemen war and the brutal assassination of journalist Jamal Khashoggi in Istanbul. For the government of Prime Minister Narendra Modi, the visit, with general elections approaching, is an opportunity to cap its pursuit of stronger ties with West Asian nations on a high note. High-level visits between India and Saudi Arabia have become the new normal since King Abdullah came to India in 2006, the first Saudi monarch to do so in five decades. Four years later, Prime Minister Manmohan Singh travelled to Riyadh. Mr. Modi visited Riyadh in 2016; last year, he met MBS in Argentina on the sidelines of the G-20 summit at a time when the Crown Prince had already come under sharp criticism in many Western countries. A number of factors have influenced the turnaround in ties between the two countries, which had been underwhelming during the Cold War. When India’s economy started growing at a faster clip post-liberalisation, its dependence on energy-rich nations grew. And Saudi Arabia was a stable, trusted supplier of oil. Post-9/11, the two have expanded the scope of their partnership to economic issues and fighting terrorism.

MBS is expected to announce Saudi investments in both India and Pakistan. Saudi Arabia, which has traditionally exercised great influence over Pakistan, had recently offered a $6 billion loan to Islamabad to stabilise the economy. In India, Saudi Arabia and the UAE have acquired a 50% stake in a refinery complex in Maharashtra. The project remains stalled amid protests against land acquisition, but it shows Saudi Arabia’s interest to make long-term investments in India’s energy sector. Another subject that that will come up in bilateral talks is Iran. MBS has made containment of Iran his top foreign policy priority, and has U.S. support in this pursuit. India is certain to come under U.S. pressure to cut oil imports from Iran: it has so far walked the tightrope between Saudi Arabia and Iran. Even as its ties with the Kingdom improved over the past decade, India deepened its engagement with Iran, be it on oil trade or the Chabahar port. This is driven by the conviction that while Saudi Arabia is vital for India’s energy security, Iran is a gateway to Central Asia. New Delhi is sure to continue this balancing act even as it seeks to strengthen the Saudi pillar of India’s West Asia policy.

(Source – The Hindu)

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