Rafale fighter jet deal deferred, no money left, shocks A K Antony

Written by PTI | New Delhi | Updated: Feb 7 2014, 04:02am hrs
AntonyAntony also said Government is looking into complaints about the procedure to determine the winner.
In a surprise move, India deferred until the next financial year its plan to finalise a deal for purchase of 126 Rafale combat aircraft from France since there is "no money left" for this now, Defence Minister A K Antony said today.

Antony also said Government is looking into complaints about the procedure to determine the winner of the combat aircraft deal, which is touted as the "mother of all deals" and is expected to cost India more than Rs 60,000 crore.

Antony hoped that deal will be finalised in 2014-15.

Though there was no deadline it was speculated that the deal could be finalised during the current financial year.

Asserting that the negotiations in the deal were still progressing, the Defence Minister told a press conference that the financial condition of the government was not good and "there is no money left for this."

"Almost all the budget has been spent. Many other projects are also in the pipeline," he said.

The Defence Minister said his department has already spent 92 per cent of its funds allocated for modernisation and the remaining is also expected to be utilised soon.

He said the Government was making headway in the Rafale deal and taking all the possible care in the process to ensure that there are no loose ends.

French Dassault Aviation, which makes the Rafale fighters, has been the lowest bidder for supply of the medium-multirole combat aircraft.

After a five-year long process, India had selected the French Dassault Aviation last year for meeting its requirement for 126 combat aircraft edging out the European consortium EADS' Eurofighter Typhoon fighter jet.

Antony also said the two sides were also trying to tackle the issue of life cycle costs relating to the Rafale.

"There are complaints about the procedure of calculating the Life Cycle Cost and that issue is not yet settled. Before bringing the deal before the Cabinet Committee on Security for final approval, we would like to get clear on that aspect," he said.

As per the Indian defence procedure, the firms offering lowest prices and meeting the requirements of the respective services are given the contract and in this deal to procure 126 combat aircraft, the LCC has been taken into view to determine the lowest bidder.

Senior BJP leader and former finance minister Yashwant Sinha has written to Antony raising a number of questions over the "conceptual shift" in the defence procurement policy and expressed fears that the LCC concept may bring in corruption.