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Rafale deal: Modi govt waived anti-corruption clauses; and curious case of MoD financial advisor

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Rafale deal: Modi govt waived anti-corruption clauses; and curious case of MoD financial advisor

[vc_row][vc_column][vc_column_text]The Rafale deal affair got muddier with reports raising further questions about Narendra Modi government’s actions.

A report by The Hindu said the Indian government made major and unprecedented concessions, waiving critical provisions for anti-corruption penalties and making payments through an escrow account dropped days before the signing of the inter-governmental agreement (IGA).

Modi has been claiming to be waging a relentless war against corruption and justifying cases against political rivals on this basis.

Also significant is the fact that this and other important information on the “parallel negotiations” conducted by the Prime Minister’s Office and the National Security Adviser seems to have found been withheld from the material submitted by the government to the Supreme Court of India, The Hindu reported.

Another report in India Legal mentioned the curious case of Modi government appointing an officer from the Indian Audit and Account Services (IA&AS) as financial advisor to the Ministry of Defence (MoD). The post is traditionally reserved for Indian Defence Accounts Service (IDAS) cadres.

The IA&AS officer in question, 1984 batch’s Gargi Kaul, is sister-in-law of Supreme Court judge, Justice Sanjay Kishan Kaul who was part of the three judge bench of the apex court, also comprising Chief Justice Ranjan Gogoi and Justice KM Joseph, which had, on December 14, dismissed a bunch of petitions demanding a court-monitored investigation into alleged irregularities committed by Prime Minister Narendra Modi’s government in finalising the Rafale deal.

A day after the Supreme Court verdict, on December 15, Gargi Kaul was empanelled by the Centre at the rank of Secretary, Government of India. Ten days later, on December 24, she was transferred to MoD. Prior to her transfer, Kaul was serving as Additional Secretary and Financial Advisor to the Ministry of Civil Aviation.

While this report has not yet drawn much attention or ruffled any feathers outside IDAS, The Hindu’s report had the Congress launch a fresh attack on Modi government.

Congress chief Rahul Gandhi Monday launched a fresh salvo at Prime Minister Narendra Modi. Quoting The Hindu report, the Congress chief said, “Every defence deal has an anti-corruption clause. Reports suggest that the PM removed the anti-corruption clause. It is clear that the PM facilitated loot.” Taking to Twitter, he wrote, “NoMo anti-corruption clause. The Chowkidar himself opened the door to allow Anil Ambani to steal 30,000 Cr. from the IAF.”

The Congress said the Rafale deal is “unravelling” faster than the government thought, with issues such as “parallel negotiations” by the PMO and changes in the standard defence procurement procedure coming to the fore.

Senior Congress leader and former finance minister P Chidambaram said in a series of tweets, “First, it was the loading of the India Specific Enhancement costs on 36 aircraft instead of 126 aircraft giving a bonanza to Dassault. Then it was the revelation that ‘parallel negotiations’ were being carried on by PMO undermining the efforts of the Indian Negotiating Team.”

Now it is revealed that crucial changes were made to the clauses in the standard Defence Procurement Procedure, he said. “No sovereign guarantee, no bank guarantee, no escrow account, yet a huge amount was paid as advance,” Chidambaram alleged.

Lashing out at the Modi government, he said, “No penalty clause for undue influence, no clause against agency commission, no clause for access to suppliers’ accounts, and Dassault goes laughing all the way to the bank.”

Citing the media report, Congress’ chief spokesperson Randeep Surjewala said, “Modiji, after waiving off sovereign guarantee in Rafale deal, you also waived off the ‘anti-corruption measure’ of a ‘safeguard Escrow A/c’! What is the corruption you wanted to hide?”

The whole country is abuzz that “chowkidar chor hai”, he said.

The Congress on its official Twitter handle, asked: “Throwing all good sense to the wind, the PMO also discarded the advice to create an escrow account under the control of the French Govt to release payments from India. Instead it chose to pay Dassault upfront in advance. Who was the PMO trying to benefit?”

“After the PMO forced the waiver of a sovereign guarantee, it now turns out the PMO asked for the WAIVER of standard ANTI-CORRUPTION clauses. Who was the PMO trying to shield? There is no doubt that #ChowkidarChorHai”

The Hindu report states that the government gave “major and unprecedented concessions” to the French side when the Rafale deal was signed between the two countries. This included dropping of “critical provisions for anti-corruption penalties and making payments through an escrow account”.

According to the media report, the high-level political intervention meant that standard Defence Procurement Procedure (DPP) clauses on “Penalty for use of Undue Influence, Agents/Agency Commission, and Access to Company accounts” of Dassault Aviation and MBDA France were dropped by the Modi government.

The newspaper further cites official documents that reveal that the Defence Acquisition Council (DAC) chaired by the then Defence Minister, Manohar Parrikar, met in September 2016, and “ratified and approved” eight changes in the IGA, supply protocols, offset contracts and offset schedules. The agreement and the documents had been approved by the Cabinet Committee on Security chaired by Prime Minister Narendra Modi before that on August 24, the report adds.

The most significant among these eight changes, recorded in a note signed by Vice Admiral Ajit Kumar, DCIDS (PP&FD) who was the member-secretary of the DAC, is at sub-para (c). This states: “Non-inclusion of the Standard DPP Clauses related to ‘Penalty for Undue Influence,’ ‘Agents/Agency Commission’ and ‘Access to Company Accounts’ in the Supply Protocols.”

The Hindu further quotes a dissent note by signed by three members of the Indian Negotiating Team that said: “…it is not advisable to sacrifice the basic requirement of financial prudence.”

The Rafale deal was signed between India and France under the terms of DPP-2013. Despite the procedure stating explicitly that the Standard Contract Document “would be the guideline for all acquisitions”, the Indian government chose to remove these clauses from the supply protocols with the two private defence suppliers, the report says.

The Hindu in its report says this was significant because the government also chose to do away with a sovereign or bank guarantee from France and settled for a letter of comfort, which is not legally binding, from the French Prime Minister.

After the introduction of a letter of comfort, another proposal that was turned down was one proposed by former defence bureaucrat Sudhanshu Mohanty

This came on the back of another turned-down proposal to have an escrow account operated by the French government. The Indian government would then release money to the account and France would make further payments to the firm as per terms agreed to by both governments as per the IGA.

“This would make French Govt. morally and materially responsible for the procurement so proposed,” Mohanty is quoted as saying in a separate note reported by The Hindu.

The newspaper had earlier reported on the defence ministry’s reservations to “parallel negotiations” conducted by the PMO in the deal.

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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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Supreme Court

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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Maharashtra civic body polls today with focus on Mumbai and Pune

Maharashtra is voting today in civic body elections across 29 municipal corporations, with the BMC and Pune polls seen as crucial political tests.

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Voting is underway today for civic body elections across Maharashtra, covering 29 municipal corporations, with Mumbai and Pune emerging as the main political battlegrounds. The polls, being held after a long delay, are widely seen as a crucial test of political strength and identity ahead of larger state and national contests.

Polling began at 7.30 am for a total of 2,869 seats across 893 wards in the 29 civic bodies. The elections are taking place years after the scheduled term of most municipal corporations ended between 2020 and 2023. Voting will continue until 5.30 pm, while counting of votes is scheduled to begin at 10 am on January 16.

BMC election draws maximum attention

The Brihanmumbai Municipal Corporation (BMC), India’s richest civic body, remains the centre of attention. Unlike other corporations, the BMC follows a single-member ward system, meaning each voter casts only one vote. In the remaining 28 civic bodies, wards have three to five seats, requiring voters to cast multiple votes.

The BMC poll is particularly significant for the Thackeray brothers, Uddhav and Raj, who have come together in its backdrop after two decades. The election is seen as an opportunity for them to reassert their claim as political heirs of Bal Thackeray and revive their influence in Mumbai, a city long governed by the undivided Shiv Sena.

Test of Marathi identity politics

The elections are also being closely watched as a test of the “Marathi Manoos” plank. Rooted in the Samyukta Maharashtra movement of the 1950s and shaped politically by Bal Thackeray, the Marathi identity has remained a defining feature of Mumbai’s politics and a core theme for the Thackeray-led parties, particularly the Maharashtra Navnirman Sena.

BJP-Shinde alliance and NCP in fray

For Chief Minister Eknath Shinde, who split the Shiv Sena in 2022, the civic polls offer a chance to regain lost ground and reinforce his claim as Bal Thackeray’s political successor. His alliance partner, the BJP, is contesting 137 of the BMC’s 227 seats, while the Shinde-led Sena is contesting the remaining 90. The BJP, which won 82 seats in the last BMC election in 2019, is aiming to significantly improve its tally.

Meanwhile, Ajit Pawar’s faction of the Nationalist Congress Party is contesting the polls independently after differences with the BJP over leadership issues. The party is hoping to regain influence, especially in Pune, where the undivided NCP had controlled the civic body for a decade between 2007 and 2017.

With high political stakes, delayed polls and shifting alliances, today’s civic elections are expected to offer clear signals about Maharashtra’s evolving political landscape.

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