Modi's Expensive Penchant for Made-In-Videsh

Modi bought himself the most expensive ticket ever sold for a cruise on the river Seine - a cool 5,000 million dollars to buy 36 Rafale aircraft in 'fly-away' condition to get the President, Prime Minister, and Defence Minister of France, plus the Mayor of Paris, to beam at the cameras as he chugged up the river. No wonder they were beaming. They had just sold a lemon to the Prime Minister of the country that has emerged as the world's largest buyer of imported arms.

Of course, we need fighter aircraft. The Indian Air Force estimates that we need 42-44 squadrons to fight a two-front war, but have only 34-35 squadrons operational at the moment, with every danger of the number of squadrons diminishing to 25 by the end of this decade. Particularly in mid-range, the shortage is acute. So what the defence procurement-wallahs call a 'Request for Proposal', which the more illiterate of us call a 'tender', was put out some years ago for Medium Multi-Role Combat Aircraft (MMRCA). Six bids were received. The UPA government determined that the French Rafale was the best because the French supplying company, Dassault, offered to supply 18 Rafale aircraft in 'fly-away' condition and then transfer the technology for us to 'Make in India' the remaining 126. Dassault baulked, however, at the suggestion that they should stand guarantee for the quality of Rafale aircraft made by Hindustan Aeronautics Ltd (HAL). Meanwhile, prices shot up to make the whole deal worth 20 to 30 thousand million dollars, up from the earlier estimate of about $12 billion, and, therefore, on reflection, not perhaps the cheapest of the bids.

In comes Modi and upsets the apple cart. Without even informing his Defence Minister (whom he had neglected to have accompany him to Paris) and without consulting the Cabinet Committee on Security, Modi, of his own sweet will, terminates years of negotiations aimed at 'Make in India' to signal that he prefers fighter aircraft which are 'Make in Videsh'. No negotiations are held - that is left to a future date - but to get himself surrounded by a beaming French political elite, he saves a foreign company, Dassault, that is teetering on the brink of bankruptcy, by unilaterally and without consulting his experts or political colleagues placing an order for $5 billion worth of aircraft.

The number of aircraft being imported from France under this sweetheart deal will form approximately two squadrons, which still leaves us hugely short of the eight to ten additional squadrons that our air force chaps believe we need. Worse, our brave lads in the sky have to deal with the complication of an eighth type of aircraft to our already hugely diverse and therefore unwieldy fleet. Our security has not been enhanced one whit. 'Make in India' has been sacrificed. And the decision has been taken without due consultation. The deal makes no sense.

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It also completely contradicts the approach to defence self-reliance outlined in Modi's own address at the Aero India Show in February, just two months before he took off for France. Then, he had said, "A nation with a strong defence industry will not only be more secure, it will reap rich economic benefits. It can boost investment, expand manufacturing, support enterprise, raise the technology level and increase economic growth in the country". That is precisely why our defence experts were negotiating a deal with Dassault under which a few sample aircraft would have been manufactured in France and the rest made in India. Modi sabotaged that effort in Paris. Why? What induced him to abandon the slogan of a lifetime - Make in India - just to curry favour with his Parisian hosts? Is India's defence a bargaining chip to be pulled out of Modi's pocket like a conjuring trick?

And what of the defence offsets that were being negotiated with Dassault? And that too after having declared at the air show that "I want our offsets policy...to acquire state-of-the art technology and skills in core areas of priority". Why were the defence offsets cast aside in so cavalier a manner when the Prime Minister bought, of his own volition and own sweet will, two entire squadrons of Rafales without getting any defence offsets - that is 'Make in India' - in return?

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Where is the investment boost? The manufacturing expansion? The support to enterprise? And raising the technology level? Modi said at the air show, "Even a 20 to 25 per cent reduction in imports could directly create an additional 100,000 to 120,000 highly skilled jobs in India". Is even one job going to be created in India by buying $5 billion worth of aircraft from France? Modi added, "There would be a clear preference for equipment manufactured in India". Oh, yeah? Is even one Rafale screw going to be manufactured in India? Modi also said, "From sellers, foreign firms must turn into strategic partners". How does giving up on the French firm's promise to 'Make in India' turn Dassault into a "strategic partner"?

And if it is a straightforward trade deal, on what basis has Modi decided that he could not get an equal or even larger number of similar or superior aircraft from other manufacturers at a much lower price? After all, apart from Egypt, no one else has bought a single Rafale. Brazil cancelled its order. It is alleged, with considerable confidence, that Rafale is not a fuel-efficient aircraft and its estimated lifetime costs make it an economic disaster: "the hidden costs of the Rafale project could bankrupt future defence budgets" is one such dire prediction. Did Modi evaluate this before his spontaneous combustion in Paris? Does he possess the professional competence to make such an evaluation on his own?

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Specifically, did not Modi recall the problems we have been having with France over the Scorpene submarine deal? As Admiral Arun Prakash (Retd), who was involved with the French Scorpene, has remarked in an article published in the aftermath of Modi's Rafale deal, "Obviously, there is need for caution when dealing with French firms." Did Modi exercise the required abundant caution? Is this the way to run Defence?

(Mani Shankar Aiyar is a Congress MP in the Rajya Sabha.)

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