French multinational Safran, the manufacturer of the M88 state-of-the-art engines fitted in the Rafale fighter jets acquired by India, says it asked the Centre not to “penalise” the company on tax and customs matters.
During Defence Minister Rajnath Singh’s tour of the engine assembly plant near Paris on Wednesday, company CEO Olivier Andries spoke of Safran’s major investment plans for India but expressed a wish for the Indian tax system not to be “terrorising”.
However, in what appears to be a case of lost in translation, the company later stressed that there had been a “misunderstanding” as the CEO was speaking out against a penalising tax and customs regime which was allegedly misheard as terrorising.
“For us, it is obvious that we should have a maintenance repair and overhaul shop in India to serve our Indian airlines customers. But for that, we need to make sure that the tax system and customs system is not penalising us,” noted the company statement, quoting the CEO.
“We would like to discuss this point with the government to make sure that it makes sense for us, versus an MRO (maintenance, repair and overhaul) shop that would be outside of India. Frankly speaking, we would like to develop this shop in India,” the statement added.
At the conclusion of his three-day visit to France on Wednesday, Rajnath Singh had taken specific note of any tax concerns that foreign investors may have and told a gathering of top CEOs of defence manufacturing industries that the Indian government was open to any further rationalisation that may be required to facilitate the Make in India programme.
“For Make in India in defence if there is a need for further tax rationalisation, it may be considered suitably,” he said, as he extended an invitation for French companies to participate in the DefExpo 2020 being held in Lucknow next year.
Singh on Thursday left France at the end of a three-day visit, which he said had been extremely productive and would further strengthen bilateral defence ties.
The minister, who took formal charge and flew a sortie of the first of 36 Rafale combat jets to be inducted into the Indian Air Force (IAF) during the tour, left with a message for French companies to make India their base for the production of defence equipment.
“Thank you France! Merci! This visit has been extremely productive,” he said in a farewell message on Twitter.
“The outcomes of this visit will further strengthen the defence cooperation between India and France. My gratitude to President Emmanuel Macron, (Armed Forces) Minister Florence Parly and the government of France for their hospitality,” he said.