CAG pulls up Dassault, MBDA for not fulfilling offset obligations in Rafale deal

In a significant development, the Comptroller and Auditor General (CAG) pulled up French firms, Dassault Aviation and MBDA, for not fulfilling their offset obligations in the ₹60,000 crore Rafale aircraft deal to transfer high-end technology to Defence Research and Development Organisation (DRDO) for building indigenous Kaveri jet engine.

In a press release issued for its report on defence offsets tabled in Parliament on Wednesday, the government auditor cited an example of Dassault and MBDA as foreign vendors which make various offset commitments to qualify for the supply contract but were not earnest in fulfilling their obligations.

"In many cases, it was found that the foreign vendors made various offset commitments to qualify for the main supply contract but later, were not earnest about fulfilling these commitments. For instance, in the offset contract relating to 36 Medium Multi Role Combat Aircraft (MMRCA), the vendors, Dassault Aviation and MBDA, initially proposed (September 2015) to discharge 30% of their offset obligation by offering high technology to DRDO. 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," the CAG remarked.

The Rafale deal is India's biggest ever defence deal and involves 50% of the worth of the deal to be invested back in India as offset obligations.

Under the deal, French firms were supposed to do offsets worth around ₹30,000 crores for which a large number of Indian companies were chosen.