Rafale deal - important highlights
HAL needs to be shaken out of its complacency.
HAL straddles the Indian aerospace sector as a giant. It enjoys an unbridled monopoly. Past performance of HAL has been a saga of false claims, tall promises, protracted delays, huge cost overruns, sub-optimal products and poor quality control.
Every move to induct the private sector in defence production is opposed tooth and nail by the public sector.
Exclusion of HAL from Rafale
Exclusion of HAL from the deal was a well-analysed and thought-through policy decision. There were two major reasons for this. One, HAL was already overloaded with orders and was not in a position to accept additional work. Two, a need had been felt for a long time to develop alternate facilities for aerospace manufacture. Lack of competition had made HAL complacent. Threatened by the entry of the private sector into its monopolistic domain, HAL cleverly converted the proposal into a public sector versus private sector duel.
Overplaying fears of likely closure of factories, the trade unions were urged to put pressure on the political leadership to rescind all decisions that promote the private sector.
G to G is the best route
In the case of large value deals, the government-to-government route is by far the best way of doing business. Such deals carry an assured cost advantage with a certain degree of sovereign guarantee for quality-cum-performance features. In addition, the seller government provides logistic, training and exploitation support. Most importantly, there are no middlemen and no slush money. The Rafale deal is no exception.
Losers create controversies
As has been seen in the past, controversies are deliberately generated by losing competitors and other stake holders to stall or abort contracts by alleging irregularities.
At times, stories are planted by them to raise suspicions regarding the earnestness of the entire evaluation process. It is a highly widespread ploy in the world arms market.
Indian media should remain wary and not let itself be used by vendors to settle scores. It owes it to the nation to encourage private sector companies to make India self-reliant in defence production.
HAL straddles the Indian aerospace sector as a giant. It enjoys an unbridled monopoly. Past performance of HAL has been a saga of false claims, tall promises, protracted delays, huge cost overruns, sub-optimal products and poor quality control.
Every move to induct the private sector in defence production is opposed tooth and nail by the public sector.
Exclusion of HAL from Rafale
Exclusion of HAL from the deal was a well-analysed and thought-through policy decision. There were two major reasons for this. One, HAL was already overloaded with orders and was not in a position to accept additional work. Two, a need had been felt for a long time to develop alternate facilities for aerospace manufacture. Lack of competition had made HAL complacent. Threatened by the entry of the private sector into its monopolistic domain, HAL cleverly converted the proposal into a public sector versus private sector duel.
Overplaying fears of likely closure of factories, the trade unions were urged to put pressure on the political leadership to rescind all decisions that promote the private sector.
G to G is the best route
In the case of large value deals, the government-to-government route is by far the best way of doing business. Such deals carry an assured cost advantage with a certain degree of sovereign guarantee for quality-cum-performance features. In addition, the seller government provides logistic, training and exploitation support. Most importantly, there are no middlemen and no slush money. The Rafale deal is no exception.
Losers create controversies
As has been seen in the past, controversies are deliberately generated by losing competitors and other stake holders to stall or abort contracts by alleging irregularities.
At times, stories are planted by them to raise suspicions regarding the earnestness of the entire evaluation process. It is a highly widespread ploy in the world arms market.
Indian media should remain wary and not let itself be used by vendors to settle scores. It owes it to the nation to encourage private sector companies to make India self-reliant in defence production.
Allegation : The Anil Ambani Group is ill-equipped for the aero-defence sector as it possesses no experience.
It was in early 2015 that Anil Ambani’s Reliance Infrastructure made its foray into the defence sector by purchasing a controlling stake in Pipavav shipyard, which was struggling under a debt of Rs 7,000 crore.
In a short period of two years, it has established itself as a serious player in the defence sector with 11 subsidiaries. It has already won contracts for five naval craft and 14 fast patrol vessels and training ships through competitive bidding. It has also been approved for the manufacture of hull and turret of Arjun tanks.
In a short period of two years, it has established itself as a serious player in the defence sector with 11 subsidiaries. It has already won contracts for five naval craft and 14 fast patrol vessels and training ships through competitive bidding. It has also been approved for the manufacture of hull and turret of Arjun tanks.
Reliance Infrastructure and Russian arms maker Almaz-Antey (manufacturer of S-400 air defense missile systems) are negotiating to have a manufacturing and maintenance partnership.
Reliance and Abu Dhabi Ship Building plan to build frigates at Pipavav. Reliance is also trying to manufacture, maintain and refit Russian submarines and frigates in collaboration with Rosoboronexport of Russia. It has also signed strategic partnership agreements with state-owned Ukroboronprom of Ukraine, Spetstechno Export and Antonov.
Reliance and Abu Dhabi Ship Building plan to build frigates at Pipavav. Reliance is also trying to manufacture, maintain and refit Russian submarines and frigates in collaboration with Rosoboronexport of Russia. It has also signed strategic partnership agreements with state-owned Ukroboronprom of Ukraine, Spetstechno Export and Antonov.
It must be remembered that it is not the first case in which a private sector company has been able to bag a major contract.
In 2017, India signed a deal with the US for 145 M777 ultra-light howitzers for Rs 5,000 crore. Whereas 25 guns would be delivered in a fully manufactured state, the balance will be assembled in India by Mahindra Defence.
Rafale Contract
In 2017, India signed a deal with the US for 145 M777 ultra-light howitzers for Rs 5,000 crore. Whereas 25 guns would be delivered in a fully manufactured state, the balance will be assembled in India by Mahindra Defence.
Rafale Contract
The contract signed with the Ministry of Defence states that the original equipment manager (OEM) will have to source 30-50% of the value of a defence contract from the Indian market.
For the Rafale deal, it would come up to Rs 30,000 crore worth of components which would be from the Indian partner. The Dassault-Reliance JV partnership is one of the 72 partnerships Dassault has forged. Others on the list include Godrej, L&T and Tata Advanced Systems. This is not the government of India's call.
Also, the defence ministry’s policy gives agency to the OEM to choose their own partner. So far, the OEM hasn’t told the Indian government about its partners, and 'they are permitted to provide details either at time of seeking offset credits or one year because of discharge of obligations'.
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