Rafale Deal: CAG Pulls Up Dassault, MBDA For Not Fulfilling Offset Obligations of Contract

Dassault is the manufacturer of the Rafale jets while MBDA supplied the missile systems for the aircraft.

Dassault Aviation and MBDA are yet to fulfil their offset obligations of offering high technology to India as part of the deal relating to the procurement of 36 Rafale jets, the Comptroller and Auditor General said in a report released on Wednesday.

Dassault is the manufacturer of the Rafale jets while MBDA supplied the missile systems for the aircraft.

In its report tabled in Parliament, the CAG also painted a grim picture of the efficacy of India’s offset policy saying it did not find a single case of foreign vendors transferring high technology to the Indian industry, adding defence sector ranked 62nd out of 63 sectors receiving FDI.

“In the offset contract relating to 36 Medium Multi-Role Combat Aircraft (MMRCA), the vendors M/s Dassault Aviation and M/s MBDA initially proposed to discharge 30 per cent of their offset obligation by offering high technology to the DRDO,” the CAG said.

“The DRDO wanted to obtain technical assistance for the indigenous development of engine (Kaveri) for the Light Combat Aircraft. Till date, the vendor has not confirmed the transfer of this technology,” according to a press release issued by the CAG.

The first batch of five Rafale jets arrived in India on July 29, nearly 4 years after India signed an inter-governmental agreement with France to procure 36 aircraft for a sum of Rs 59,000 crore.

Under India’s offset policy, foreign defence entities are mandated to spend at least 30 per cent of the total contract value in India through procurement of components or setting up of research and development facilities.

The offset norms are applicable to all capital purchases above Rs 300 crore made through imports. The offset obligations can be made through FDI, free transfer of technology to Indian firms, and purchase of products made by Indian firms.

The CAG said as the offset policy has not yielded the desired result, the defence ministry needs to review the policy and its implementation.