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Rafale deal: CAG report along expected lines on price, but raises other questions

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7 years ago

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Rafale deal

[vc_row][vc_column][vc_column_text]The report of the Comptroller and Auditor General (CAG) on Rafale deal tabled on the last day of the Budget Session in the Parliament today (Wednesday Feb 13), while contradicting Modi government’s claim of the reworked contract price being 9% lower than the previous deal negotiated by the UPA government, said it was 2.8% cheaper.

The audit does not go into the unanswered question of what was the need for cancelling the old deal envisaging transfer of technology and working out a new deal. If the UPA government had been slow in finalising the deal, as Modi government alleges, it could have speeded up the negotiations and sealed it in a matter of months instead of taking another over year-and-a-half after Prime Minister Narendra Modi’s surprise announcement in Paris.

There is also a question about the claim of faster delivery of the fighter aircraft in the renegotiated deal. A report in The Times of India (TOI) said the CAG report says that in the 2007 offer, 18 aircraft were to be delivered by 50th month of signing the contract. The next 18 were to be licensed produced in HAL and to be delivered from 49 to 72 months of the contract signing.

However, in the 2016 contract, the first 18 aircraft would be delivered between 36 to 53 months after signing of IGA and the remaining 18 to be delivered by 67 months, the CAG says, according to the TOI report.

The first Rafale jet is reportedly expected to arrive only later this year – by September 2019 and the rest of the first batch by 2022. If the negotiation of the previous deal, that was nearly complete, had been expedited and completed in 2015 – when the fresh process was started – the first  batch of 18 Rafale aircraft would have arrived by next year.

Even without these, the report, “Capital Acquisition in Indian Air Force”, tabled in the Rajya Sabha by Union Minister of State for finance, Pon Radhakrishnan, is a mixed bag from which both the Modi government as well as the Opposition, particularly the Congress party, can choose points to suit their respective narratives on the Rafale deal.

The CAG report, while predictably redacting the controversial details of the final purchase price for the 36 Rafale fighter jets that the Modi government negotiated with the French government and Dassault Aviation in 2016, says that the government did save on the renegotiated deal: it was 2.8% cheaper than the 2007 deal.

It is pertinent to note here that the 2007 negotiations were being carried out for purchase of 126 Rafale jets, also involving transfer of technology to India’s Hindustan Aeronautics Limited (HAL). The deal negotiated by the Modi government in 2016 was for only 36 jets with no transfer of technology involved.

The CAG report also says that officials of the Indian Air Force had, indeed, objected to certain proposed enhancements to the jet, that were sought by the Indian government 2016 from Dassault Aviation, as unnecessary. This was from those who have to fly the fighter and go to battle.

The report states that at least four “unnecessary India specific enhancements” were made to the Rafale jet as part of the deal though senior officials from the Indian Air Force had categorically informed the Ministry of Defence (MoD) that these were not needed. The MoD ministry, the report states, overruled the view of experts from the Indian Air Force.

Aspects of the deal that are more expensive include engineering support package and performance-based logistics.

The Modi government can take heart from the report also saying that India managed to save 17.08 percent money for the India Specific Enhancements in the 36 Rafale aircraft contract as compared to the 126 aircraft deal proposed by the UPA regime. The cost of the basic aircraft is the same in both cases.

The contract for Rafale consisted of six different packages with a total of 14 items. The contracted price of seven items was higher than the aligned price, the price at which the contract should have been signed.

Three items, including basic aircraft, were procured at the same price. Four items were purchased at lower than the aligned price.

The auditor also endorses claims made in a recent report published by The Hindu newspaper earlier this week which the Opposition has since used to slam the Modi government for a “sell out” to Dassault Aviation. The report in The Hindu had said that the deal renegotiated by the Modi regime had excluded sovereign guarantee clauses for Dassault Aviation, thereby ensuring that the French defence giant gets undue benefits in exchange.

CAG said in the previous offer of 2007, Dassault Aviation had provided performance and financial guarantees which was about 25 per cent of the total value of the contract. The vendor had embedded the cost in its bid price. But in the 2016 contract there are no such guarantees or warranty. This led to saving for Dassault Aviation which was not passed on to India.

The CAG, however, does not factor this aspect in its estimate that says the NDA-II’s deal was 2.86% cheaper. If these costs were considered – 25 per cent of the total value of the contract – the Modi government’s deal would be more expensive than the UPA’s.

Further, the auditor suggests that a Defence Ministry team in March 2015 had recommended scrapping of the 126 jet deal saying that Dassault Aviation was not the lowest bidder and EADS (European Aeronautic Defence & Space Company) was not fully compliant with the tender requirements. This has been among the major claims of the Opposition while attacking the Modi government on the Rafale deal.

The report has examined 11 defence deals (five from the UPA era and six from the NDA era) which were signed between 2012 and 2017. Prices have been redacted only for the part of the report that deals with the Rafale purchase agreements.

The Congress and other opposition parties have dismissed the report as biased because auditor Rajiv Mehrishi was Finance Secretary when the deal for 36 Rafale fighter jets was inked in 2016. The Congress alleges that Mehrishi was “complicit in the irregularities” in the Rafale deal and alleged that “the bungling was happening at the highest level with his direct or indirect complicity and consent”.

Union minister Arun Jaitley lashed out at the Opposition: “The lies of the Mahajhootbandhan stand exposed by the CAG report. It cannot be that the Supreme Court is wrong, the CAG is wrong and only the dynast is right,” he said, taking a swipe at Congress president Rahul Gandhi.

The CAG report came even as a report in The Hindu newspaper on Wednesday said at least three senior Defence Ministry officials among the seven-member Indian Negotiating Team were of the view that the final price offered by the French Government cannot be considered as ‘better terms’ compared to the deal under the UPA.[/vc_column_text][/vc_column][/vc_row]

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India and Russia vow to walk together against terrorism, reaffirm strategic partnership

PM Modi and President Putin reaffirm India-Russia unity against terrorism, deepen energy and trade cooperation, and discuss peace efforts amid the Ukraine conflict.

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3 hours ago

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December 5, 2025

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Prime Minister Narendra Modi and Russian President Vladimir Putin on Friday underlined that India and Russia “walk together in the fight against terrorism,” reinforcing a decades-old strategic partnership that remains steady amid global geopolitical churn. The leaders issued the joint statement following talks at Hyderabad House in Delhi, where they also announced steps to boost trade, economic cooperation, and energy collaboration.

India-Russia stand firm on counter-terror cooperation

PM Modi described President Putin as a “dear friend” and highlighted Moscow’s consistent support to India on counter-terror efforts. Russia had earlier strongly condemned the terror attack in Jammu and Kashmir’s Pahalgam, allegedly linked to Pakistan-based Jaish-e-Mohammed, and reiterated solidarity with India’s fight against terrorism in all forms.

The joint remarks emphasized that the bilateral friendship, rooted in trust and mutual respect, has remained resilient for decades despite global challenges.

Focus on energy, trade and use of national currencies

A key highlight of the engagement was Russia reaffirming “uninterrupted shipments” of fuel to India. PM Modi expressed gratitude for Russia’s commitment, noting energy cooperation as a crucial pillar of the relationship. While he did not specifically mention oil purchases, given ongoing Western pressure, he emphasised cooperation in civil nuclear and clean energy.

The two countries also discussed expanding economic ties, including a possible free trade agreement. President Putin said bilateral trade was being targeted to reach USD 100 billion, and acknowledged progress toward using national currencies for payments — a remark expected to draw global attention.

Putin shares peace plan insights on Ukraine conflict

Putin briefed the Prime Minister on Russia’s perspective for a peaceful resolution to the ongoing Ukraine war and appreciated India’s continued role as a “champion of peace.” PM Modi reiterated India’s consistent position on dialogue and diplomacy.

Agreements across jobs, health, shipping and minerals

Officials exchanged multiple agreements covering employment mobility, health, shipping, chemicals and cooperation in critical minerals — further broadening the strategic footprint of the partnership.

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RBI cuts repo rate to 5.25%, paving the way for cheaper loans

The RBI has cut the repo rate to 5.25%, aiming to support growth as inflation softens. The central bank also raised GDP projections and announced liquidity-boosting measures.

Published

8 hours ago

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December 5, 2025

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Reserve Bank of India

The Reserve Bank of India (RBI) reduced the key repo rate by 25 basis points to 5.25% on Thursday, signalling relief for borrowers as banks are expected to offer lower EMIs on home and vehicle loans. Governor Sanjay Malhotra announced the move after the conclusion of the three-day Monetary Policy Committee (MPC) meeting.

RBI prioritises growth as inflation eases

Malhotra said the decision was unanimous, with the central bank choosing to focus on supporting economic momentum despite concerns over a weak rupee. The repo rate was earlier cut in June from 6% to 5.5% amid easing inflation trends.

The RBI now projects Consumer Price Index (CPI) inflation at 2% for FY2025-26, significantly softer than earlier estimates. For the first quarter of FY2026-27, inflation is expected at 3.9%, lower than the previous projection. The governor noted that rising precious metal prices may contribute to the headline CPI, but overall risks to inflation remain balanced.

GDP outlook strengthened

In a strong upward revision, the central bank increased the GDP forecast for the current financial year to 7.3%, previously estimated at 6.8%. Growth for the October–December quarter has also been revised to 6.7%.

The last quarter registered a six-quarter high expansion of 8.2%, reflecting resilient demand and steady credit flow.

“The growth-inflation balance continues to offer policy space,” Malhotra said, reiterating that the RBI’s stance remains neutral.

Other key decisions

Alongside the repo rate cut, the RBI announced adjustments to key policy corridors:

  • Standing Deposit Facility (SDF): 5%
  • Marginal Standing Facility (MSF): 5.5%

To improve liquidity and strengthen monetary transmission, the RBI will conduct forex swaps and purchase ₹1 lakh crore worth of government bonds through Open Market Operations (OMO).

RBI reviews a challenging year

Reflecting on 2025, Malhotra said the year delivered strong growth and moderate inflation even as global trade and geopolitical uncertainties persisted. He added that bank credit and retail lending remained healthy, providing support to the economy.

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IndiGo flight chaos deepens as over 500 services cancelled, passengers stranded for hours

Over 500 IndiGo flights were cancelled nationwide, leaving passengers stranded without food, clarity or their luggage as airports struggled to manage the disruption.

Published

8 hours ago

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December 5, 2025

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IndiGo flight

India’s largest airline continued to face massive operational breakdowns, triggering frustration among travellers at major airports across the country. From piles of unattended suitcases to passengers waiting over 12 hours without food or clarity, the disruption stretched into its fourth consecutive day.

Long delays, no communication leave passengers anguished

Several travellers at Delhi airport described the situation as “mental torture”, as thousands of unclaimed suitcases lay scattered across the terminal. Many slept on the floor, while others expressed anger over the lack of communication from airline staff.

One flier said he had been waiting for over 12 hours without any explanation: “Every time they say one-hour or two-hour delays. We were going to a wedding but don’t even have our luggage.”

A passenger in Hyderabad recounted a similar ordeal, saying the flight was delayed indefinitely with no food, water, or updates from the airline. At the airport, some travellers blocked an Air India flight in protest over the lack of arrangements.

Goa and Chennai airports also witnessed tense moments. Videos from Goa showed fliers shouting at IndiGo staff as police attempted to calm the situation. At Chennai, CISF denied entry to IndiGo passengers due to heavy congestion.

Major metro airports impacted; cascading cancellations nationwide

Flight cancellations and delays were reported across multiple airports:

  • Over 200 flights were cancelled in Delhi
  • More than 100 each in Mumbai and Bengaluru
  • Around 90 in Hyderabad
  • Dozens more in Pune, Vishakhapatnam, Chennai and Bhopal

Pune airport stated that parking bay congestion worsened the situation, as several IndiGo aircraft remained grounded due to lack of crew. Other airlines continued operations without disruption.

Airport authorities said they had mobilised additional manpower for crowd control and passenger support.

IndiGo admits planning lapses, says more cancellations expected

The airline acknowledged a “misjudgment” in assessing crew requirements under revised night-duty norms, which it said created planning gaps. Winter weather and airport congestion further aggravated the crisis.

IndiGo informed the aviation ministry and DGCA that some regulatory changes—such as the shift in night-duty timings and a cap on night landings—have been rolled back temporarily to stabilise operations.

The airline warned that cancellations may continue for another two to three days, and from December 8, schedules will be trimmed to prevent further disruption.

In a message to employees, CEO Pieter Elbers said restoring punctuality would not be an “easy target”.

Airline issues apology amid nationwide frustration

In a late-night statement, IndiGo apologised to customers and industry partners, acknowledging the widespread inconvenience caused by the disruptions. The airline said all teams were working with authorities to bring operations back to normal.

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