Dassault's Rafale aircraft Dassault's Rafale aircraft

Allegations of irregularities in the Indian Air Force's (IAF) deal for 126 fighter aircraft are likely to delay, not derail the $18 billion (Rs 90,000 crore) deal. Defence Minister A.K. Antony ordered a departmental probe into his ministry's January 31 decision to shortlist French firm Dassault to supply the aircraft. Antony's move came soon after doubts were raised about the evaluation process by an MP.

In January, India announced that Dassault had emerged as the lowest bidder for the contract to supply 126 Medium Multi Role Combat Aircraft (MMRCA). The Dassault Rafale multi-role combat jet edged out its closest competitor, the Eurofighter Typhoon, to emerge the cheapest bidder in the world's largest open tender defence contract. On February 27, Telugu Desam Party's Rajya Sabha MP M.V. Mysura Reddy wrote to Antony alleging deviations in procedure. Officials involved in negotiations say the probe will delay the deal by only a "month or two". Ministry of Defence (MoD) expects the deal to be signed before March 31, 2013.

In February, MoD-appointed Contract Negotiations Committee (CNC), comprising the defence ministry's stakeholders, opened negotiations with Dassault. The final proposal will be put before the Cabinet Committee on Security early next year. "The formula for calculating the cheapest aircraft was re-totalled three times, by MoD and IAF," an official told India Today. The controversy arose because mod used 'life cycle costs' to select its finalist. As per this formula, the cheapest aircraft would not be the one with the lowest upfront cost. It would be the aircraft that worked out to be the cheapest over the aircraft's 30-year life cycle. The formula took into account variables like maintenance and engine replacement.

Sources say the Rafale aircraft was $5 million (Rs 250 crore) cheaper than the Typhoon. Losing finalists like the European Consortium found fault with the formula even as European diplomats made fresh proposals to lower the rates of the Typhoon. MoD, however, signalled that the door was shut as it began CNC with Dassault in February. Reddy's letter to Antony has, however, added a twist to the tale.



