CAG says military offset part of Rafale deal still pending

New Delhi, Sep 24: The country's top auditor said that Dassault Aviation, the makers of the Rafale have not confirmed the transfer of technology (ToT) to the Defence Research and Development Organisation (DRDO), which was part of the contract.

The Indian Air Force (IAF) had two weeks back formally inducted five of the 36 Rafale jets ordered from France under a Rs 59,000 crore deal. The Comptroller and Auditor General (CAG) in a detailed report tabled in Parliament doubted that the ToT for a key engine would even take place. It further pointed out that several offset contracts built into multiple defence deals have not yielded the desired results.

According to the report, the defence ministry stated in October 2018 that the vendor had not yet been able to confirm their capability for technology transfer. "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 (September 2015) to discharge 30% of their offset obligation by offering high technology to DRDO," the report said.

"From 2005 till March 2018, 46 offset contracts had been signed with foreign vendors, valued at Rs 66,427 crore. Under these contracts, by December 2018, Rs19,223 crore worth of offsets should have been discharged by the vendors. However, the offsets claimed to have been discharged by them was only Rs 11,396 crore, which was only 59 per cent of the commitment. Further, only 48 per cent (Rs 5,457 crore) of these offset claims submitted by the vendors were accepted by the ministry. The rest were largely rejected as they were not compliant to the contractual conditions and the Defence Procurement Procedure," the CAG said.

"The rate at which the foreign vendors have been fulfilling their offset commitments was about ₹1,300 crore per year. Given this situation, fulfilling the commitment of ₹55,000 crore by the vendors in the next six years (CAG observation is of 2018) remains a major challenge," the report also said.