New Delhi: The CAG said on Wednesday that the $8.7 billion deal signed by the BJP government with France to buy 36 Rafale fighter jets from Dassault Aviation was 2.86 per cent chea-per than what had been negotiated by the UPA government in 2007.
Without disclosing the pricing details in absolute terms, the CAG found overall that the price of seven items were higher than the UPA one, three were the same and four were lower.
It did not agree with the defence ministry’s argument that the basic aircraft cost was nine per cent cheaper than the price offered for the aircraft in 2007.
The areas where the price overshot than that negotiated under the UPA was the engineering support package and the performance-based logistics for the IAF, where the price was higher by 6.54 per cent. The training costs also shot up by 2.68 per cent over the 2007 offer.
The CAG found removal of financial and performance guarantees in the 2015 agreements resulted in savings to Dassault, which should have been passed on to the Indian government. In the 2007 offer, Dassault provided financial and performance guarantees, the cost of which was embedded in the offer price, the CAG said. But these were removed in the agreement signed by the NDA.
The CAG underlined that the NDA government agreed with the refusal of the French side to provide a “sovereign guarantee” and instead accepted a “Letter of Comfort”. The French also did not agree to the Indian government’s request for opening of an escrow account to manage payments to Dassault as a safeguard measure.
The CAG said the only concession which the Indian government got was “that the advance payments were to be made directly to the bank accounts of Dassault that were opened in a French government-controlled bank, over which the French party was to exercise control and monitoring for effective implementation of the inter-government agreement and the supply protocols”.
In case of any breach of agreement, the Indian government would have to first settle it through arbitration directly with Dassault.
If the arbitration award were in favour of the Indian party and Dassault failed to honour the award, the Indian party should exhaust all available legal remedies.
