Why HAL wasn't given the offset contract in the Rafale deal

Ashok Upadhyay
Ashok UpadhyayOct 12, 2018 | 15:30

Why HAL wasn't given the offset contract in the Rafale deal

One of the big charges against the government in the controversial purchase of 36 Rafael jets from French aircraft manufacturer Dassault Aviation is that a private entity — Reliance Defence — was deliberately given a ₹30,000 crore ‘offset contract’ at the cost of the Public Sector Undertaking, Hindustan Aeronautics Limited (HAL), by Prime Minister Narendra Modi and his government.

hal-690_101218025523.jpgThe government is in the dock because Reliance Defence was chosen and HAL sidelined in the Rafale deal. (Source: PTI)

The government has come out to counter this charge. Several arguments have been made in support of the deal. Let’s have a look at some of these arguments.

HAL preoccupied with orders: MoS Defence

On October 4, Minister of State for Defence Subhash Bhamre defended the choice of Reliance Defence as an offset partner of Rafale against HAL. Bhamre said, HAL was “preoccupied with orders and has more than what they wanted.”

He added, “HAL currently has work order of at least Rs 1,00,000 crore. So, HAL is not deprived of orders. That is a wrong propaganda. HAL is preoccupied and they have much more than what they wanted.”

HAL does not do many offsets - Air Chief

A day earlier, on October 3, Air Chief Marshal BS Dhanoa, while responding to questions on HAL being left out of the deal, said HAL was a licensed manufacturer and does not do many offsets.

Citing data, he said the total offsets under various deals were about $11.48 billion — of which a major share was of the IAF, which was about $9 billion. Of this, HAL had a share of $400 million. He also said that it was for the original equipment manufacturer (OEM) to choose its offset partners and the government and the IAF had nothing to do with it.

No noise to be made if HAL wasn't ‘useful enough’ for Dassault: VK Singh

On September 30, Minister of State for External Affairs General VK Singh, while addressing the Indian community at the consulate in Dubai, said no noise should be made if the French aerospace major Dassault Aviation did not find HAL "useful enough".

vk-singh-690_101218025738.jpgVK Singh said apparently Dassault did not find HAL useful enough. (Source: PTI)

He said, "The thing that gets paddled around is what happens to HAL. If I can say tongue-in-cheek, if Dassault didn't find (HAL) useful enough, we shouldn't make noise."

HAL may have lost out on the Rafale deal as it quoted 2.57 times the man-hours than Dassault: Babul Supriyo

babul-690_101218033030.jpgHe too crooned about HAL. (Source: PTI)

On September 27, Union minister Babul Supriyo indicated that HAL lost out on the deal because it quoted 2.57 times more man-hours to build fighter jets. While speaking at a conference on public sector enterprises organised by the Confederation of Indian Industries (CII), he said HAL quoted "257 man-hours" for a job Dassault said could be done in "100 man-hours". For the production of Rafael fighter jets, "when Dassault said they needed 100 man hours, HAL said they needed 257, so that is indeed a big factor," he said.

UPA had ditched HAL: Ravi Shankar Prasad

On September 22, Law Minister Ravi Shankar Prasad said that Dassault Aviation and Reliance had entered into an agreement as early as 2012, when the Congress-led United Progressive Alliance (UPA) was in power. He further said, "In fact, the UPA had ditched HAL."

Dassault and HAL could not agree on production terms — UPA dropped HAL: Nirmala Sitharaman

On September 18, 2018, Defence Minister Nirmala Sitharaman said the allegation that the Narendra Modi government favoured Reliance was misplaced. The fact was that HAL and Dassault could not agree on production terms.

nirmala-690_101218025756.jpgDefence minister Nirmala Sitharaman blamed the UPA government for the current controversy. (Source: India Today)

She said, "Dassault and HAL could not agree on production terms. As a result, HAL and Rafale could not go together. Doesn’t that say it clearly? Isn’t it obvious that the interests of HAL could’ve been taken care of even during that time? Neither HAL nor IAF’s interests were taken care of by the-then UPA government.”

Hitting out at the Congress, she further said, "They [UPA government] should’ve made sure that HAL’s offer was appealing enough for Dassault. This entire issue of HAL not being chosen happened during their [UPA] time. Every question of 'you have!' should go to them."

HAL 'did not have required capability to produce Rafale': Sitharaman

On September 13, Sitharaman had said that the PSU 'did not have the required capability to produce them'. In a interview with PTI, she said that HAL was in 'no position to give a guarantee' for the big ticket item, as a result of which Dassault, the OEM of Rafael jets, could not proceed with the negotiations with HAL.

Last updated: October 12, 2018 | 15:32
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