SOURCE: AFI
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India’s ambitious plan to see significant industrial benefits from the Rafale fighter jet deal with France appears to be faltering. While the government remains tight-lipped on the issue, experts warn of minimal progress on the ground despite demanding the highest ever offset clause, at 50% of the contract value.
Dassault Aviation, the Rafale manufacturer, has reportedly faced penalties for failing to meet offset obligations, similar to other defense contractors. These offsets, meant to boost India’s domestic defense industry, were factored into the final Rafale jet price in 2016. Further highlighting the issue, European missile supplier MBDA was fined in 2021 for delays in fulfilling its offset commitments.
The deal included a critical component – the transfer of high-end technology to India’s Defense Research and Development Organisation (DRDO) by Dassault and MBDA. However, the Comptroller and Auditor General’s (CAG) report in 2021 revealed that this technology transfer, intended to fulfill 30% of the offset obligations, has yet to materialize.
The Indian government’s silence on the status of these offset obligations raises concerns about transparency and accountability. With minimal public information available, it’s unclear if India is receiving the promised industrial benefits from the Rafale deal.
26 Rafale M that are to be procured from Dassault for Indian Navy might not have such offset regulations but report in idrw.org indicated that price will remain same as earlier deal that is strange since with no offsets in the new deal price should have seen drop but people will argue that Dassault will adjust for inflation from 2016 to 2024 but around 30-40% inflation in less then 10 years will make new deal as expensive as the old one where off the shelf purchases will grant Zero ToT.