The Rafale controversy - what happened?

What happened, in a nutshell

The Rafale deal had triggered a political controversy in India over the purchase of 36 twin-engine fighter jets from France. The deal is estimated to cost India Rs 58,000 crore, however, the Opposition in India had falsely alleged that the deal had cost India thrice the amount it was supposed to, and that an Indian partner favoured by the government was unfairly chosen as a partner in the deal.

Who were the key players?

Prime Minister Narendra Modi who initiated the deal back in 2015, and whose government has since handled most of the negotiations.

Dassault Aviation, the French aircraft manufacturer at the center of the controversy.

Congress President Rahul Gandhi, who had led the Opposition’s allegations of a lack of transparency in the deal and had called for the details of the deal to be made public, until the Courts asked him to apologise and dismissed all the allegations.

Anil Ambani’s Reliance Defence Limited, the Indian partner in the deal, which Congress says was chosen unfairly.

The Supreme Court, which called for the pricing of the deal to be made public.   

Here’s what has happened so far:

1) In April 2015, Prime Minister Narendra Modi announced that India will buy French-manufactured Rafale fighter jets from Dassault Aviation, a French aircraft manufacturer which had won the bid to manufacture the 126 aircraft.

2) The Rafale jets were chosen in 2012 during the UPA II tenure over aircraft offers from United States, Russia and Europe. The original plan was to buy 18 off-the-shelf jets from Dassault and 108 others would be put together by India’s Hindustan Aeronautics Limited (HAL), located in Bengaluru, to boost the Make-In-India initiative.

3) However, in 2016, after initial hiccups over the cost of the deal, the BJP-led government decided to buy 36 ‘ready-to-fly’ aircraft from France.

4) In September 2016, India signed an intergovernmental agreement (IGA) with France where India would pay Rs 58,000 crore (7.87 billion euros) for the 36 twin-engine fighters. Around 15 per cent of this cost is being paid in advance. Including the 36 aircraft, India would also get some latest weaponry like the Meteor and Scalp missiles.

5) The agreement included an offset clause, which stated that of the total 7.8 billion euros, France would invest 20 per cent into local production of the Rafale components to further the Make-in-India initiative and 30 per cent will go into various aeronautical and military research programmes in India.

6) Out of around 75 firms listed under the offset clause, the makers of Rafale, Dassault Aviation, was allowed to choose any company it wants for France to invest the said amount, the deal stated.

7) In November 2017, the Congress alleged the government was not being transparent about the price of the deal. The party alleged that the NDA government was paying thrice the amount for each aircraft than what the UPA had agreed upon

8) The Congress has also alleged that the Anil Ambani-led Reliance Defence Limited had been unfairly chosen as the Indian partner under the offset clause, claiming that this was done to ‘favour’ Anil Ambani’s company since the private firm has no prior experience in aerospace manufacturing. Congress President Rahul Gandhi demanded that the government put on public record the details of the deal.

9) French President Francois Hollande's recent remark that the Indian government suggested Reliance Defence for the Rafale deal and the French government had no say in the matter triggered more controversy. Petitions had been filed in the Supreme Court demanding a CBI inquiry into the deal. The Defence Ministry put out a statement that Dassault had the freedom to choose the Indian company and neither the Indian government nor the French government influenced that decision.

10) The government maintained that the deal made was completely transparent but it was not possible to put on record the details of the deal since this information was termed as classified under the inter-governmental agreement between France and India. According to officials, the agreement has a confidentiality clause in the deal which was added due to national security concerns, which forbids the buyer and the seller from revealing any details of the pricing of the deal.

The origin of the deal lies in the Indian MRCA competition, a multi-billion dollar contract to supply 126 multi-role combat aircraft to the Indian Air Force (IAF). The final legal judgement on the controversy was delivered by the Supreme Court on 14 November 2019.