Defence Ministry scraps offset clause in Rafale-like deals in aftermath of CAG report

www.indiatoday.in
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In its latest report, the CAG pulled up Dassault Aviation for falling short of fulfilling its offset commitment which was part of the Rs 59,000 crore Rafale deal where India purchased 36 MMRCA fighter jets from the French manufacturer.
Defence Minister Rajnath Singh and Minister of Armed Forces of France Florence Parly during 'Sarva Dharma Puja' at Rafale induction ceremony at IAF airbase in Ambala on September 10 (Photo Credits: PTI)

CAG, in its recent defence offset report tabled in Parliament, made stern observations about foreign firms such as Dassault Aviation not meeting obligations of domestic investment undertaken at the time of securing procurement contracts. The Ministry of Defence (MoD) has now decided to altogether scrap the offset clause from inter-government and single vendor deals for procurement of defence platforms.

As per inputs, the MoD has cited failure to achieve the desired objective of getting technology to India through foreign manufacturers, as the reason for its decision.

With the offset clause, like in the case of procurement of 36 Rafale jets from France, the manufacturer Dassault Aviation and MBDA were mandated to invest 30 per cent of the contract amount in the Indian defence sector.

In the Rafale deal where 36 fighter jets were purchased for Rs 59,000 crore, the offset clause was 50 per cent.

Apurva Chandra, Special Secretary and Director General (Acquisition) said on…
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