Rafale Compensation: The CAG has filed a report on Dassault Aviation’s obligation to DRDO.
New Delhi:
India’s Comptroller and Auditor General has harshly criticized the Defense Ministry’s policy for offsets, which also governs the deal with France for 36 Rafale jets made by Dassault Aviation. So far, the French firm has not fulfilled its compensation obligation with the Defense Research and Development Organization, the national auditor said in a report.
Under the offset policy, a certain percentage of the value of the transaction with foreign companies should flow to India as foreign direct investment or FDI, which would eventually include technology transfer, local manufacturing of advanced components, and job creation.
“In offsetting four contracts related to 36 Multi-Function Medium Combat Aircraft (MMRCA), suppliers Dassault Aviation and MBDA initially proposed (September 2015) to meet 30% of their offset obligation by offering high-tech to DRDO,” it said the Comptroller and Auditor General or CAG, said in the report presented in parliament, referring to the Defense Research and Development Organization.
“DRDO wanted to obtain technical assistance for the indigenous development of the engine (Kaveri) for the light combat aircraft. To date, the supplier has not confirmed the transfer of this technology,” said the CAG. The compensation policy “has not produced the desired result,” said the chief auditor.
“The (Defense) Ministry needs to review the policy and its implementation. It needs to identify the constraints faced by foreign suppliers as well as the Indian industry to take advantage of offsets, and find solutions to overcome these constraints,” the report said.
Dassault Aviation has said it will eventually meet its compensation obligation, which has slowed in recent months due to the coronavirus crisis. India’s deal with France for 36 Rafale jets is worth 58 billion rupees. Five of the multi-role aircraft have been incorporated into the Indian Air Force.
The DRDO has been involved in the Light Combat Aircraft (LCA) program since the project began more than three decades ago. The homemade Kaveri engine had been developed to power the small delta wing fighter plane, but the engine could not deliver the kind of performance and thrust that was planned for the LCA. Eventually, the Kaveri engine project was shelved and India chose an engine manufactured by the American company GE.
During the Rafale negotiations, France agreed to help India work on an improved Kaveri engine with better thrust that can potentially replace the American engine.
The defense compensation issue was also criticized by Congress, whose leader Rahul Gandhi had made the Rafale deal an issue in his party’s campaign for the 2019 general election.
The BJP-led government signed the Rs 58,000 crore deal in 2016 to purchase 36 Rafale jets from France after a nearly seven-year exercise to purchase 126 MMRCAs for the Indian Air Force failed under the congressional regime.
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