NEW DELHI: The Comptroller and Auditor General’s audit report on the Rafale contract of 2016 has observed that an issue raised by the auditor with regard to four India Specific Enhancements (ISEs) that were found to be inessential as per technical and staff evaluations was dismissed by the Ministry of Defence (MoD) as being “a temporary deferment only for cost reduction measure”.

“Scaling down the requirement to limit cash outgo cannot be considered as saving,” the MoD contended after the CAG raised the issue of the four enhancements — whose cost constituted about 14% of the contracted ISE transaction value — by asking whether paring those items would have helped to reduce the cost of the 36 Rafale deal with France through an Inter-Governmental Agreement (IGA).

The final terms of the 2016 deal had resulted in a 17.08% saving on account of the ISEs when compared with the equivalent value as per the bid received in 2007, when the 126 MMRCA proposal had been opened, the CAG observed in its report tabled in Parliament on Wednesday.

‘Jammer Pod’

There were 13 ISEs sought by the Indian Air Force (IAF) in the Rafale, which cost more than €1.3 billion. These include radar enhancements for long range capability, ‘helmet mounted display,’ ability to start and operate from high altitude airfields, advanced infrared search and track sensors and a very potent electronic Jammer pod, besides other items pertaining to avionics.

Defence Minister Manohar Parrikar exchanges documents with his French counterpart Jean-Yves Le Drian after signing an MoU on the purchase of 36 Rafale fighter aircraft in the presence of French President Francois Hollande and Prime Minister Narendra Modi at Hyderabad House in New Delhi on January 25, 2016.

However, during the contract negotiations in 2015, in view of the huge cost and the reduced number of aircraft to be purchased, the Indian Negotiation Team (INT) headed by the Deputy Chief of Air Staff (DCAS) proposed to reduce the number of ISEs.

But Dassault Aviation stated that since its price was a total package MoD would have to take up the matter with the French government.

Postponing 6 ISEs

“In August 2016, before submission of the note to the approval of the Cabinet Committee on Security (CCS), DCAS (with the approval of CAS) intimated MoD that ISE scope could be reduced by postponing six enhancements, which could be included if more Rafale aircraft were procured in future,” the CAG noted.

However, MoD did not accept this proposal contending that it would have been tantamount to dilution of the Air Staff Quality Requirements (ASQR), which would have gone against the basic framework of the joint statement of April 10, 2015, by the Defence Acquisition Council (DAC) stressing that the combat aircraft ought to have the same configuration.