BJP Government got Rafale fighter jets at a cost 9% cheaper than UPA deal

On Tuesday, September 18, 2018, Defence Minister Nirmala Sitharaman said that BJP led NDA government got the Rafale fighter jet at 9% cheaper rate than the UPA government’s deal. UPA government started process of procurement of 136 Rafale fighter jets in 2007, that was supposed to be finalized in 2012.

In response to a question  on allegation by congress on BJP government about aircraft deal, Sitharaman said, “We have responded saying your basic price and the basic price that I am getting at, when compared with all the escalation and other things, is 9% cheaper”.

This was not the first time that a minister of BJP led NDA government clarified about the aircraft deal. Before this, Union minister Ravishankar Prasad, on Monday July 24, said, “UPA invited quotes for 126 aircraft in 2007. The price quoted for each was 79.3 million euro which also had in-built escalation formula. When the bid was opened in 2011, the proposed cost in the bid document was 100.85 million euros per aircraft. However, this could not be finalized. After NDA came to power, under the inter-government agreement in 2016, the cost per aircraft finalized was 91.75 million euros. Therefore, the price determined during NDA government is 9% lower than what was negotiated during UPA. The corresponding cost in Rs 670.32 crore per aircraft has been conveyed to parliament”.

Later on Wednesday, August 29, 2018, Finance minister Arun Jaitley gave more details on aircraft deal, he said, “Can you compare a basic aircraft’s pricing with a loaded aircraft? Can you compare a simple aircraft with a weaponized aircraft?… If in 2012 they had come to an agreement, the first would have been delivered in 2017. From 2007 to 2017 the escalations would have gone up, along with a foreign exchange variation. So there is India specific add-ons and the foreign exchange variants. Is the congress party aware that if you take the 2007 L1 offer and the escalation clause without the add-ons, the price negotiated in 2015-16 is cheaper?”

Jaitley said, “Let us first come to the pricing. My question therefore is, if you are fully aware — Mr Anthony fully read the file and abandoned the contract — he would tell his party that the L1 offer of 2007 had a basic 2007 price + escalation +  currency variation. In 2015 or 16, this would have been 9% costlier than what the basic aircraft price of 2016 negotiated was. Loaded to unloaded, you compare the price again. The 2016 price is 20% cheaper than the 2007 offer. So we got it cheaper”.

He added, “What was negotiated from 2015 to 2016 and finally executed in 2016, with the escalations and the currency variations, the basic aircraft price turns out to be 9% cheaper. Is the congress party aware of this?”

For long time now, the opposition has been raising questions on Rafale fighter jet deal and alleged the BJP led government for costlier deal while sometimes calling it a scam too. But,  the government has cleared that the deal is 9% cheaper than what the UPA government was supposed to finalize at.