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

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[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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Supreme Court flags risk of lawlessness, pauses FIRs against ED officers in Bengal case

The Supreme Court paused FIRs against ED officers in the Bengal I-PAC raid case, warning that obstruction of central probes could lead to lawlessness and seeking responses from the Centre and state.

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The Supreme Court on Wednesday delivered a sharp rebuke to the Mamata Banerjee-led West Bengal government, pausing FIRs lodged against officers of the Enforcement Directorate over searches linked to political consultancy I-PAC. The court said the case raises serious questions about interference in investigations and warned that failure to address them could lead to “lawlessness”.

A bench of Justice Prashant Mishra and Justice Vipul Pancholi sought replies from the Ministry of Home Affairs, the Department of Personnel and Training, Chief Minister Mamata Banerjee and the Trinamool Congress government on the ED’s plea. The central agency has also sought the suspension of Bengal Director General of Police Rajeev Kumar and Kolkata Police Commissioner Manoj Kumar Verma, and a probe by the CBI. The matter will be heard next on February 3.

The ruling follows a standoff between the ED and the Bengal government after the agency conducted searches at premises linked to I-PAC, which manages election campaigns for the Trinamool Congress, in connection with a corruption case.

Court questions obstruction of central probes

Recording its prima facie view, the Supreme Court said the petition raised a “serious issue” concerning investigations by central agencies and possible obstruction by state authorities.

“There are larger questions which emerge and if not answered shall lead to lawlessness. If central agencies are working bona fide to probe a serious offence, a question arises: Can they be obstructed by party activities?” the bench observed.

Earlier in the day, the court also expressed disturbance over scenes of chaos in the Calcutta High Court during a hearing related to the same dispute.

ED alleges interference, seeks action against top cops

The Enforcement Directorate accused the West Bengal administration of interfering with its searches and investigation. Appearing for the agency, Solicitor General Tushar Mehta alleged that evidence was removed from the residence of an I-PAC co-founder and argued that such actions could encourage state police officers to aid and abet obstruction. He sought suspension of senior police officials.

Describing the disruption in the Calcutta High Court on January 9, Mehta called it “mobocracy”, saying a group of lawyers unconnected to the case disrupted proceedings, forcing an adjournment. The bench asked whether the high court had been turned into a protest site, to which Mehta responded that messages had circulated calling lawyers to gather at a specific time.

Banerjee’s counsel defends move, cites election confidentiality

Senior advocate Kapil Sibal, appearing for Mamata Banerjee, questioned the timing of the ED’s presence in Bengal ahead of Assembly elections. He said the last development in the coal scam case dated back to February 2024 and argued that I-PAC handled election-related work under a formal contract with the Trinamool Congress.

According to Sibal, election data stored at the premises was confidential and critical to campaign strategy. He said the party leadership had a right to protect such information.

Representing the Bengal government and the DGP, senior advocate Abhishek Singhvi referred to the January 9 disruption but argued it could not justify parallel proceedings in different courts. The bench responded that emotions “cannot go out of hand repeatedly”.

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Shashi Tharoor warns US tariffs on Iran could make Indian exports unviable

Shashi Tharoor has warned that cumulative US tariffs linked to Iran trade could rise to 75%, making most Indian exports to America commercially unviable.

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Shashi Tharoor

Congress MP and chairman of the Standing Committee on Foreign Affairs Shashi Tharoor has expressed serious concern over the United States’ latest tariff announcement targeting countries that continue to trade with Iran, warning that such measures could severely impact Indian exporters.

Reacting to the decision by US President Donald Trump to impose a 25% tariff on countries doing business with Iran, Tharoor said Indian companies would struggle to remain competitive if cumulative tariffs rise to 75%. He noted that India was already at a disadvantage compared to several regional competitors.

Tharoor said he had been troubled by the US tariff regime from the outset, pointing out that India was initially subjected to a 25% tariff while rival exporting nations in Southeast Asia were charged significantly lower rates. According to him, countries such as Vietnam, Thailand, Indonesia, Pakistan and Bangladesh faced tariffs ranging between 15% and 19% on labour-intensive goods exported to the US.

He explained that the situation had worsened with additional sanctions-linked duties. With the existing 25% tariff, another 25% related to Russia-linked sanctions, and a further 25% tied to Iran-related measures, the total burden could rise to 75%. At that level, Tharoor said, most Indian exports would no longer be commercially viable in the American market.

While noting that certain sectors such as pharmaceuticals may continue to export as they are not heavily impacted by sanctions, he warned that other key export categories would be hit hard. Tharoor described the situation as very serious and said it required urgent attention.

The Congress MP also expressed hope that the newly appointed US Ambassador could help facilitate progress on a bilateral trade agreement. He stressed that India could not afford to wait through the entire year for a deal and said an agreement should ideally be concluded in the first quarter of 2026.

Commenting on recent diplomatic engagements between India and the US, Tharoor underlined the need for faster consensus on trade issues. He said that at tariff levels as high as 75%, the idea of a meaningful trade deal loses relevance. According to him, a rate closer to what the UK enjoys with the US, around 15%, would reflect the respect due to a strategic partner.

Tharoor’s remarks come after President Trump announced that any country continuing business with Iran would face a 25% tariff on all trade with the United States, a move that has raised concerns among several trading partners.

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Indian Army symbolizes selfless service and duty, says PM Modi on Army Day

PM Narendra Modi on Army Day praised the Indian Army as a symbol of selfless service and unwavering duty, saluting the courage and sacrifice of its soldiers.

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On the occasion of Army Day, Prime Minister Narendra Modi on Thursday paid tribute to the Indian Army, describing its soldiers as a symbol of selfless service who protect the nation with unwavering resolve, even in the most challenging circumstances.

In a message shared on social media platform X, the prime minister said the country salutes the courage and steadfast commitment of Indian Army personnel. He noted that their dedication to duty inspires confidence and gratitude among citizens across the country.

“Our soldiers stand as a symbol of selfless service, safeguarding the nation with steadfast resolve, at times under the most challenging conditions,” PM Modi said. He added that the nation remembers with deep respect those who have laid down their lives while serving the country.

Army Day is observed every year on January 15 to commemorate a historic moment in India’s military history. The day marks the appointment of Field Marshal K M Cariappa as the first Indian Commander-in-Chief of the Indian Army in 1949, when he took over from British officer General Sir F R R Bucher.

The occasion serves as a reminder of the Indian Army’s role in defending the country’s sovereignty and honour, as well as the sacrifices made by its personnel in the line of duty.

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