India’s prime minister faces charges of bypassing procedures, causing loss in public funds, compromising national security and using the arms deal to offer a lucrative contract to an ally

by N Ram

Corruption in India is pervasive, omnipresent and multifarious, especially in the nexus between politics and business. As India heads toward its general election, expected to be held in April and May, Prime Minister Narendra Modi finds himself embroiled in controversy around one of the country’s largest arms purchase contracts: a murky 7.8 billion euro weapons deal to purchase 36 Rafale fighter planes from France.

Indian opposition led by Rahul Gandhi, the president of the Congress Party, is on a vigorous offensive, charging Mr. Modi with bypassing institutions and procedures for defence acquisitions, causing a huge loss of public funds, compromising national security, using the multi-billion arms deal to offer a lucrative contract to a billionaire ally and covering up corruption by refusing to disclose the pricing details.

In 2014, Mr. Modi came to power after pillorising Mr. Gandhi’s dynastic Congress party, painting it as corrupt and offering himself and his Bharatiya Janata Party as the clean, corruption-free alternative. Now Mr. Gandhi is returning the favour, and his efforts to frame the arms deal as the grand corruption scandal of Mr. Modi’s tenure are gaining traction. Mr. Modi’s party has been on the defensive, and independent journalistic investigations are resulting in damaging revelations.

The controversy originated after the Indian prime minister during a 2015 visit to Paris announced a surprise decision to purchase 36 supersonic Rafale fighter planes, manufactured by Dassault Aviation, from the French.

India had been negotiating the sale of the Rafale fighter planes since 2007. Mr. Modi undercut the old acquisitions process and made a new deal. India’s defence procurement rules involve an offset clause, according to which a foreign company, in return for selling India weapons, would invest 30 percent of the deal’s value back in India to promote domestic defence production.

Dassault Aviation agreed to invest 50 percent of the 7.8 billion euro Rafale contract in India to manufacture aeroplane components with offset partners, chief among whom would be the Indian billionaire Anil Ambani’s Reliance Defence. The deal is expected to help generate up to 1.9 billion euros in new revenues for Mr. Ambani — the younger and much less successful brother of Mukesh Ambani, India’s richest man — who has no experience in manufacturing fighter jets.

For almost two decades, the Indian Air Force has been concerned about its declining fleet strength with the retirement of obsolete combat aircraft. In 2007, the Indian government led by the Congress party invited bids from six aircraft manufacturers for the supply of 126 fighter planes. Dassault’s Rafale and the Eurofighter Typhoon, made by a consortium of European companies, were found to be fully compliant with the Indian Air Force’s requirements.

In 2012, after Dassault Aviation was determined to be the lowest bidder, the Indian government started negotiations with the company to buy 126 Rafale fighter planes: 18 fighter planes were to be supplied in flyaway condition and 108 aircraft were to be made in India under a technology transfer agreement, by Hindustan Aeronautics Limited, a public sector company experienced in manufacturing military aircraft. But the deal stalled for three years on account of differences between Indian government and Dassault.

Mr. Modi’s government renewed the negotiations for the Rafale fighters with the French government instead of Dassault Aviation. The purchase order was reduced from 126 fighters to a mere 36 planes, and it has invited the political charge of letting down the Indian Air Force and compromising national security.