Defence minister Manohar Parrikar on Friday said that he is a “tough negotiator” and wants the “best price” for Rafale fighter jets from France.
However, the minister said the budget for next fiscal takes into account the Rafale deal for which “adequate money” has been kept aside.
“I am a tough negotiator. Let me save money for the nation,” Parrikar told reporters in Delhi when asked why the deal has not been signed yet.
Stating that he was aware that the IAF needs the aircraft, the minister added “I think a good buyer does not put his weakness in front. He always keeps his cards close to his chest. Please don’t ask me to disclose my cards in national interest.”
“Many times it is better to cross the bridge when it comes”, Parrikar said on alternative available for the IAF if the Rafale deal does not go through.
The defence budget for the next fiscal takes into account the payments that will have to be made when the Rafale deal is signed, said Parrikar who had last month made it clear that the price of the aircraft was the only sticking point left in the agreement.
At least 15% of the total payment will have to be made immediately, if and when the deal is signed.
During French President Francois Hollande’s visit in January, India and France had inked an MoU for the purchase of 36 aircraft but persisting differences over the pricing came in the way of the multi-billion dollar deal being wrapped up. The deal is estimated to cost about Rs 59,000 crore.
The minister said this was the “first time” that Defence Ministry took stock of Foreign Military Sales under which defence equipment is bought from the US via a government-to-government route.
“We pay to the government in an account which is held by the US or managed by the government of US from where the payments, as per the contract, is made to private companies.
“Unluckily, because of ill management or lack of attention to the provision of this account, we had slightly less than USD 3 billion dollars (USD 2.3 bn) which had piled up in this account and was not earning any interest,” Parrikar said.
He added that somewhere around May and June last year, the ministry held a “review” and realised that “unnecessarily money is lying with the US government without appropriate contractual obligation being carried out”.
“And we are transferring the money without actually taking stock of the balance. So, it was a government of India account with the American government for FMS. I am happy to tell you that we have recalibrated the full management of the account,” he said.
Parrikar said the amount in the account has now come down to around “USD 1.7-1.8 billion”. Explaining how so much money got accumulated, he said the money is sent in stages as per the contract schedule.
“At times, for some reason the schedule gets disturbed. Sometimes, the amount is calibrated based on rough calculations and the actual expenditure is slightly less. Sometimes, it goes up but most of the time it is less.
“Suppose the issue is over and all payments have been made. Then we realise that about 2 lakh dollars are lying in that particular account.
“Secondly, is there is a disruption of staged payment…actual consumption is less. In nutshell, money got accumulated, disbursal was less. There was a delay in payment and we are now using it for clearing,” he said.
Parrikar said that last year, the ministry paid about Rs 5,000-6,000 crore from this fund for the country’s committed liability for supply against the US government’s direct military sales route.
“Money has been paid, but the government is saving from its budget Rs 5,000-6,000 crore which we paid. We have saved USD 700-800 million precious foreign exchange that has been utilised from the fund which was lying there because of lack of management. We have now started managing it,” he said.