HAL's Poor Health Led to Collapse of Rafale Deal Under UPA, Says Nirmala Sitharaman

New Delhi: The negotiations for procurement of 126 Rafale jets under the UPA government fell through as state-run HAL did not have the required capability to produce the jets in India in collaboration with

French company Dassault Aviation, defence minister Nirmala Sitharaman said on Thursday.

Sitharaman also said an unprecedented intervention in 2013 by then defence minister AK Antony when the cost negotiation committee was giving final touches to the deal put the final nail in the coffin.

After rounds of negotiations with Hindustan Aeronautics Ltd (HAL), Dassault Aviation felt that the cost of the Rafale jets will escalate significantly if they were to be produced in India, she said.

“Dassault could not progress in the negotiations with HAL because if the aircraft were to be produced in India, a guarantee for the product to be produced was to be given. It is a big ticket item and the IAF would want the guarantee for the jets. HAL was in no position to give the guarantee," she said.

Sitharaman said the weapon systems, avionics and other key add-ons to the Rafale aircraft, expected to be delivered beginning September 2019, will be "much superior" than that negotiated by the UPA, and her government is getting the planes at 9 per cent cheaper than what was earlier agreed upon.

The previous UPA government started negotiating in 2012 with French Dassault Aviation to buy 126 Medium Multi-Role Combat Aircraft (MMRCA).

The plan was for Dassault Aviation to supply 18 Rafale jets in fly-away condition while 108 aircraft were to be manufactured in India by the company along with HAL. However the deal could not be sealed.

The Congress has demanded answers from the government on why HAL was not involved in the new deal. Sitharaman said the UPA deal collapsed as HAL did not have the capability to produce 108 aircraft in India. "Even during negotiation with HAL, Dassault felt that the cost with which the HAL will produce will be far higher than the aircraft produced in France. That was the reality," she said.

The defence minister said the then government could have come forward and pumped in resources into HAL, but they did not.

She said she has no intention of undermining HAL, but "why could not the then defence minister say that we will pump in all the required resources into the HAL. He could have done it. That was not done". The minister added that the current government was initiating steps to strengthen the state-run aerospace company.

In 2016, the Modi government signed a government-to-government deal with France for purchase of 36 Rafale jets at a cost of Rs 58,000 crore. The Congress has been alleging irregularities in the deal.

Rebutting charges of corruption in the deal, the defence minister also asserted that people of the country have put a closure on the issue as they have trust in Prime Minister Narendra Modi. "There is a trust in the Prime Minister. He is not going to be corrupt. So with all this, I think mentally, people of India have reached a closure on it, saying there is no corruption here," she said.

Sitharaman ruled out calling the opposition parties for a meeting to allay their concerns over the Rafale deal, saying they are "throwing an allegation" without any basis as well as showing no concern for operational preparedness of the air force.

In a hard-hitting attack on Congress, she said the party was running short of issues and corruption was a plank on which it utterly failed. "It is one of the cleanest governments India has ever seen. On corruption, the Congress is very frustrated. The party will have to learn from this government.

“I am saying this with a certain sense of confidence and not arrogance. The defence ministry is being run without any middleman and in a transparent way. We have proved that defence procurement can happen without middlemen," she said.

On Antony's intervention, she said he held back the file at a stage where he did not have any role to play. However, she did not elaborate on reasons for Antony's action.

The Congress has repeatedly criticised the deal for the 36 Rafale jets, alleging that the government was procuring each aircraft at a cost of over Rs 1,670 crore as against Rs 526 crore finalised by the UPA government.

Sitharaman said the Rs 526 crore figure refers to the bare aircraft, capable of just flying and landing, and does not take into account the avionics, arsenal and other associated technologies that make it a complete fighting machine.