More to it than meets the eye

Defence procurement has been bedevilled by controversy for decades, despite quality not being an issue

In the mid-1980s the Army evaluated four 155 mm guns, of which it preferred two — French and Swedish (Bofors). In January 1986, the new Army Chief expressed his preference for Bofors on the basis that it could “shoot and scoot”, meaning it could move away easily. Both parties were asked to quote final costs, and when their bids were opened, the Swedish one was lower; the French then reduced their prices.

This offer should have been rejected out of hand, but the then minister of state for defence asked the defence secretary to negotiate with Bofors, which then offered to supply 10 guns free, which again brought them below the French. A contract was duly concluded and the guns supplied as stipulated; they were to prove invaluable in the Kargil War of 1999. The agreement provided for indigenous production of more guns with transfer of

technology.

Also, in the 1980s, the then government approved the purchase of two German submarines (HDW) followed by the indigenous production of two more at Mazagon Docks Ltd under licence, envisaging the setting up of a continuous production line. In the event, the two plans to set up Make in India capacities were turned on their heads; the contracts were terminated and no gun or submarine could be manufactured over the next two decades. In both cases, the chosen equipment was among the best available globally.

This brings us to the Rafale. The Air Force, after evaluating several offers a la Bofors, found the Rafale best suited to their requirements. In keeping with government policy it was decided to buy 18 aircraft as fly-away from France’s Dassault, and build the remaining 108 at  Hindustan Aeronautics Limited (HAL) in India with transfer of technology. This plan could not be finalised for various technical reasons before the government changed in

May 2014.

People gather around a Rafale multirole fighter jet manufactured by Dassault Aviation of France, on display during the 2015 edition of Aero India at Yelahanka Air Force Station in Bengaluru. Photo: Bloomberg

Discussions between HAL and Dassault continued well into the summer of 2015, when it was suddenly decided to abandon the project and procure only 36 aircraft through direct purchase. A MoU to this effect was signed in April 2015 by the two heads of government and a contract was concluded a year later with Dassault; HAL was bowled out. Once again, there was never any doubt of the suitability of the platform.

This is not the only similarity between these purchases separated by three decades and two opposing governments. In the first two, there were obviously middlemen in play, as was the norm in those days. What is more, soon after two guns were shortlisted and it appeared that Bofors could be the front-runner, that company entered into collaboration with a newly-formed entity called AE Services, positioned abroad. An Italian friend of India’s then prime minister was a director in this company. Later investigations showed that some money was, indeed, paid to this entity by Bofors.

In the case of Reliance Defence, within a fortnight of being present at HAL to negotiate issues connected with the original deal, and just 10 days before signing of the new MoU, the chairman of Dassault concluded an agreement with an Indian private company (Reliance Defence) to help it progress offset provisions in India, which apparently could exceed Rs 300 billion over a couple of years. So, just before finalisation, new private entities came into play. Finally, in all cases, it was and is the media which played the role of first informant.

So, what is different is a question that may well be asked. For one thing, in the case of Bofors and HDW the prices were made known by the government of the day despite confidential clauses not dissimilar to those in the Rafale deal. For another, in the former, money was allegedly paid to AE Services and to unknown persons by the Swedish and German companies. For Rafale, the price has not been disclosed and the linkage is indirect, though Reliance Defence apparently stands to make some good money through offsets.

Second, the Rafale story has only just begun and there is no knowing what remains untold while all that was to be known about the other two is known. The then French president has reportedly said that the Indian party was thrust upon Dassault at the highest level. More recently, a written document of 2017 has come to light which quotes a Dassault executive telling his colleagues that it was “obligatory” for them to choose Reliance Defence as the partner. 

So, here is the bottom line. Bofors guns and HDW Submarines in the 1980s and Rafale multi-role fighter aircraft in 2015 were and are the best weapons systems available, as per the professional evaluation of our armed forces. It is not their quality that is at issue. What was alleged then and what is being repeated now is that the way in which the procurements were and are being processed smells of mala fide through political manipulation.

AE Services was engaged by Bofors only because the Swedish company felt that its principals could wield sufficient influence in our highest decision-making circles. In the latest contract, it is uncertain if Dassault would have established linkages with Reliance Defence and with quite so much speed if it was not persuaded of that company’s influencing capabilities with those who matter. 

In all these three cases, ambitious plans to make major military systems in India through transfer of technology have run aground. It is almost as if the foreign suppliers (read countries) are happy if we manufacture their products under licence (Russia and France are examples), but averse to our becoming producers in our own right through transfer of technology, even as they ostensibly profess to be amenable to it. They then adopt “other means” to thwart our ambitions in which we, inadvertently or otherwise, contribute.

There is something strange in this repetitive pattern. To paraphrase a French saying, “the more things appear to change, the more they remain the same”. 

The writer is a former member of the National Security Advisory Board