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Dassault Aviation, MBDA yet to fulfil offset obligation under Rafale deal

Windjammer

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Dassault Aviation, MBDA yet to fulfil offset obligations under Rafale deal: CAG | India News – Times of India

PTI | Sep 23, 2020, 20:45 IST

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NEW DELHI: French aerospace main Dassault Aviation and European missile maker MBDA are but to fulfil their offset obligations of providing excessive know-how to India as a part of the deal referring to procurement of 36 Rafale jets, the Comptroller and Auditor General stated in a report launched on Wednesday.
The Dassault Aviation is the producer of the Rafale jets whereas the MBDA equipped the missile methods for the plane.
In its report tabled in Parliament, the CAG additionally painted a grim image of efficacy of India’s offset coverage saying it didn’t discover a single case of international distributors transferring excessive know-how to the Indian business, including defence sector ranked 62nd out of 63 sectors receiving FDI.
“Within the offset contract referring to 36 Medium Multi Position Fight Plane (MMRCA), the distributors M/s Dassault Aviation and M/s MBDA initially proposed to discharge 30 per cent of their offset obligation by providing excessive know-how to DRDO,” the CAG stated.
“DRDO wished to acquire technical help for the indigenous improvement of engine (Kaveri) for the Mild Fight Plane. Until date the seller has not confirmed the switch of this know-how,” in response to a press launch issued by CAG.
The primary batch of 5 Rafale jets arrived in India on July 29, almost 4 years after India signed an inter-governmental settlement with France to obtain 36 plane at a price of Rs 59,000 crore.
Below India’s offset coverage, international defence entities are mandated to spend a minimum of 30 per cent of the full contract worth in India by means of procurement of elements or organising of analysis and improvement amenities.
The offset norms are relevant to all capital purchases above Rs 300 crore made by means of imports. The offset obligations will be made by means of Foreign Direct Investment, free switch of know-how to Indian companies and buy of merchandise manufactured by Indian companies.
The auditor stated although the distributors did not sustain their offset commitments, there was no efficient technique of penalise them.
“Non success of offset obligations by the seller particularly when the contract interval of the primary procurement is over, is a direct profit to the seller,” it stated.
The CAG stated because the offset coverage has not yielded the specified end result, the defence ministry must assessment the coverage and its implementation.
It must determine the constraints confronted by the international suppliers in addition to the Indian business in leveraging the offsets, and discover options to beat these constraints,” it stated.
The CAG stated 48 offset contracts had been signed with international distributors from 2005 to March 2018 with a complete worth of Rs 66,427 crore, and Rs 19,223 crore price of offsets ought to have been discharged by the distributors by December 2018.
However the quantity discharged by them was solely Rs 11,396 crore, which was solely 59 per cent of the dedication.
“Additional, solely 48 per cent (Rs 5,457 crore) of those offset claims submitted by the distributors had been accepted by the ministry. The remainder had been largely rejected as they weren’t compliant to the contractual situations and the Defence Procurement Process.”
It stated the remaining offset commitments of about Rs 55,000 crore could be as a result of be accomplished by 2024.
“The speed at which the international distributors have been fulfilling their offset commitments was about Rs 1,300 crore per 12 months. Given this example, fulfilling the dedication of Rs 55,000 crore by the distributors within the subsequent six years stays a serious problem,” the CAG stated.
The auditor discovered that of the full worth of offsets, solely 3.5 per cent was contracted to be discharged by means of FDI with Indian Offsets Partners or IOPs, including it didn’t discover a single case the place the international vendor had transferred excessive know-how to the Indian business.
“The defence sector is ranked 62nd out of the 63 sectors in India by way of FDI. Equally, there was hardly any tools equipped ‘in sort’ to the Indian business by the international vendor. Thus, the targets of the offset coverage stay largely unachieved,” the report stated.
The CAG stated it undertook the efficiency audit of the offset coverage after a decade of its roll out to evaluate the extent to which its targets had been met.

CAG pulls up Dassault, MBDA for not fulfilling offset obligations in Rafale deal
.Updated: 23 Sep 2020, 07:57 PM IST
ANI
NEW DELHI : 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.
 

Bilal Khan (Quwa)

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So, in a nutshell - they got shafted...
Not necessarily. To India's credit, it has an institution to give visibility to this stuff and hold the responsible parties accountable (CAG). In Pakistan, we have an offset policy, yet no one at the helm of our affairs pushes for it, nor do they answer to the public why not.

It'll be worth seeing how India deals with the situation. Will it issue penalties to MBDA and to Dassault? Will it force them to change their offset partners? Will it decide to pivot to Boeing et. al for its future needs? These issues can affect Indo-French defence ties and, in turn, alter our relations with Paris. If we had a foreign affairs department worth its salt, they'd be watching and (if we're really in on next-gen hybrid warfare), try to steer the parties involved towards a particular direction.
 

CrazyZ

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Whole contract was thrown into question when India reneged on the original order. French were also screwed. Both parties settled on 36 AC. That's it.
 

Windjammer

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Basically, when the French made it clear to the Indians that they can only guarantee the aircraft that would be manufactured in France and not those that were to be assembled in India.....the writing was pretty much clear on the wall.
 

Bilal Khan (Quwa)

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Interesting. Why are the French not fulfilling their part of the deal?
Not clear, but the CAG has asked the Indian MoD to figure it out.

I guess the MoD will ask Dassault and MBDA. Of course, the latter two can stick the finger but India will then cut them out of their next fighter purchase.

In any case, the CAG put some butts on the hot seat.
 

nahtanbob

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assuming the report is true why would any respectable firm get blacklisted at the risk of losing future contracts ? the amount is pocket change for a large entity like Dassault Aviation
 

type93

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It’s India’s fault for believing that they would get the keys to the candy shop. Nobody would be that generous with engine technology. At most, anybody would give to the Indians is monkey work. Indians are too easy to fool
 

Figaro

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It’s India’s fault for believing that they would get the keys to the candy shop. Nobody would be that generous with engine technology. At most, anybody would give to the Indians is monkey work. Indians are too easy to fool
The Indians are the type of people to feel special when they get robbed in broad daylight. Why are you surprised? Some people take pleasure in the weirdest things :rofl: :rofl: :rofl:
 

Marker

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After the Indian Supreme Court verdict in favor of Rafale deal in Dec 2018, and 27 Feb IAF humiliation, the Indian government asked Dassault to rush the delivery of 36 Rafale aircraft, in March 2019.

The manufacturers delivered 8 aircraft in October 2019, just in six months!!!!

There is a possibility that this rush delivery might have "subsidized" the offset deal.

India finally signs deal with France for 36 Rafale fighters
Rahul Bedi, New Delhi - IHS Jane's Defence Weekly
23 September 2016

India signed an inter-governmental agreement (IGA) with France on 23 September in New Delhi for the purchase of 36 Dassault Rafale fighters in flyaway condition for EUR7.9 billion (USD8.82 billion).

Indian defence minister Manohar Parrikar and his visiting French counterpart, Jean-Yves Le Drian, signed the aircraft deal for the Indian Air Force (IAF) 17 months after the procurement was announced in Paris in April 2015. The IGA includes the option for 18 supplementary fighters at the same price, taking a flat 3.5% inflation rate into account.

Officials said India's Ministry of Defence (MoD) would pay 15% of the sum in advance to French aircraft manufacturer Dassault, which will begin deliveries of the fighters in 36 months and complete them in 66 months.

The MoD, however, has yet to sign the final contract with Dassault, which is responsible for offsetting 50% of the overall contract value in India through co-operation with the country's military-industrial sector.

The offsets under negotiation are expected to be split 30:20 between domestic aeronautics programmes and the licenced manufacture of Rafale-related components.


Officials said the Rafale deal includes EUR3.4 billion for the platforms and EUR710 million for the weapons package, which comprises MBDA's MICA and Meteor air-to-air missiles with strike ranges of 70 km and 150 km, respectively, and the Storm Shadow/SCALP stand-off attack missile, which has a 250-300 km range.

India is to pay EUR1.7 billion for customising the 36 Rafales to meet 14 IAF requirements, including the integration of Israeli helmet-mounted displays, as well as indigenously designed missiles and electronic warfare, datalink, and identification friend-or-foe systems.

The fighters will also be customised for SPICE bomb-guidance and range-extension kits, which the IAF plans to acquire from Israel's Rafael, IAF sources told IHS Jane's .

Aircraft spares, hangars, and two maintenance, repair, and overhaul facilities in eastern and northern India are set to cost EUR1.8 billion, while the performance-based logistics (PBL) deal for the fighters is priced at EUR353 million.
https://web.archive.org/web/2016092...signs-deal-with-france-for-36-rafale-fighters


Just after this deal INC stalled the deal due to price difference (Government stated price and Dassault Aviation quoted price) and an issue over Dassault partnering with Anil Ambani's Reliance Defence, a private company with no aviation experience. A petition was filed in Indian Supreme Court.

So if they are referring Sep 2016 deal than there is no offset deal included in the sale deal according Jane's report.

Again a Bollywood sensational drama!!!!!
 

mike2000 is back

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. 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 th
To be fair to my French brothers, there is no country who will sell it's engine technology to another ,, NO MATTER HOW MUCH YOU PAY . Jet engine technology is the cherry of the crop when it comes to technology and forms the heart of any military and even some large civil programs. This can't be valued by cash since its value is limitless. So India will have to rely on itself when it comes to building a viable jet engine indigenously. It will be painful and will take them decades to come anywhere close to building a viable/reliable one but they will get there if they invest massively in this endeavour and persist while learning with time and adjusting and learning from mistakes/issues they encounter along the way.

So I believe France might be more inclined to cooperate in other areas of technology transfer to some extent but core engine tech is a NO-NO.
 

Marker

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To be fair to my French brothers, there is no country who will sell it's engine technology to another ,, NO MATTER HOW MUCH YOU PAY . Jet engine technology is the cherry of the crop when it comes to technology and forms the heart of any military and even some large civil programs. This can't be valued by cash since its value is limitless. So India will have to rely on itself when it comes to building a viable jet engine indigenously. It will be painful and will take them decades to come anywhere close to building a viable/reliable one but they will get there if they invest massively in this endeavour and persist while learning with time and adjusting and learning from mistakes/issues they encounter along the way.

So I believe France might be more inclined to cooperate in other areas of technology transfer to some extent but core engine tech is a NO-NO.
Engine designing and engine manufacturing are two completely different phases to attain jet engine technology.

If India or Pakistan wanted to enter in this field it is better to acquire technology for manufacturing of various engine parts and accessories.

I have seen few pictures of "failed" Kaveri project and I am really impressed. Though it can be considered as failure but after some iterations, this could prove to be a good engine. Take the example RD-33, a highly unreliable engine in early 80s now turned into a very durable and one of the better engines of its class.

I will suggest PAF and Pakistan armed forces must create opportunities for local investors with engineering back ground to start local manufacturing of various jet engine parts with collaboration with Turkey, Ukraine, China and even Russia. Start from very basic technology eg engine bearings manufacturing plant or engine fuel pumps or engine gear box. In future these plants will not only manufacturing selective products but will be able to produce similar parts for other foreign jet engines and can become global suppliers of such products.

There is another suggestion in this regard. The companies created for such projects must be registered in stock exchange and should be given semi autonomous status, means more than 50% shares should belong to GoP and power of authority should lie with the Armed Forces and the President of Pakistan. (Some what similar structure as followed in China).
 

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