The Comptroller and Auditor General (CAG) of India in a report tabled in parliament criticised the Defence Ministry’s policy for offsets and said that the French firm Dassault aviation has so far not made good on its offset obligation to the Defence Research and Development Organisation (DRDO).
As per the offset policy, a certain percentage of the deal value with foreign firms should flow into India as foreign direct investment. This in-flow of funds would include technology transfer, local manufacturing of advanced components and creating jobs.
“In the offset of four contracts relating to 36 Medium Multi Role Combat Aircraft (MMRCA), the vendors Dassault Aviation and MBDA initially proposed (September 2015) to discharge 30 per cent of their offset obligation by offering high technology to DRDO,” the Comptroller and Auditor General or CAG said in the report tabled in parliament, referring to the Defence Research and Development Organisation.
“DRDO wanted to obtain technical assistance for indigenous development of engine (Kaveri) for the Light Combat Aircraft. Till date the vendor has not confirmed the transfer of this technology,” the CAG said. The policy of offsets has “not yielded the desired result,” the top auditor said.
“The (Defence) Ministry needs to review the policy and its implementation. It needs to identify the constraints faced by the foreign suppliers as well as the Indian industry in leveraging the offsets, and find solutions to overcome these constraints,” the report said.
The Indian Air Force has inducted the Rafale aircraft on 10 September at Air Force Station, Ambala. The aircraft will be part of 17 Squadron, the “Golden Arrows”.
The DRDO has been involved since the project began over three decades ago.
During the Rafale negotiations, France agreed to help India work on an upgraded Kaveri engine. It promised to achieve with better thrust that can potentially replace the American engine.