India says will not scrap Rafale deal; opposition demands inquiry

By Aditya Kalra

NEW DELHI (Reuters) - India has vowed to stand firm on a multi-billion dollar deal to buy warplanes from France's Dassault Aviation, as the opposition Congress party called on Monday for an inquiry into allegations of wrongdoing.

Former French President Francois Hollande, who approved the deal when he was in office, triggered a political storm in India after he said the Indian government influenced the choice of a local partner in the deal.

New Delhi has denied the allegations, but opposition parties are gunning for Prime Minister Narendra Modi over the 2016 purchase of 36 Rafale planes estimated to be worth $8.7 billion, saying he overpaid for the planes and had not been transparent.

Congress' national spokesman Sanjay Jha said they would call for a joint parliamentary committee to investigate the deal, and organise public protests.

"We will take it to the people's court through protests and demonstrations as what is involved in this massive fraud is the taxpayers money," he told Reuters.

Finance Minister Arun Jaitley said on Sunday that the deal would proceed as planned.

"These jets will come to India. They will enhance the combat ability of the Indian Air Force," Jaitley told television news agency ANI, a Reuters affiliate.

In recent months, the opposition has questioned the government on the choice of billionaire Indian businessman Anil Ambani's Reliance Defence as Dassault's local partner instead of a state-run manufacturer with decades of experience.

On Friday, Hollande told French news service Mediapart that New Delhi had put pressure on Dassault to choose Reliance.

"We had no choice. We took the interlocutor that was given to us," Hollande was quoted as saying.

Dassault has said it had picked Reliance as a partner for industrial reasons. Reliance has so far not commented on the matter.

Under Indian defense procurement rules, a foreign firm must invest at least 30 percent of the contract in India to help it build up its manufacturing base and wean off imports.

The French foreign ministry has said French authorities were not involved in the choice of Indian industrial partners involved in the Rafale deal.

India's air force says it needs new combat jets to face a perceived twin threat from China and Pakistan.

The Rafale planes were picked from a field that included Lockheed Martin's F-16, Saab's Gripen, the Eurofighter Typhoon, Boeing's F/A-18E/F Super Hornet and the Russian MiG-35.

(Reporting by Aditya Kalra; Editing by Sanjeev Miglani and Darren Schuettler)