Defence Ministry fines Rafale manufacturer for offset delays

The Ministry of Defence has slapped a fine of around 1 million euros on European missile manufacturers for delaying the implementation of offset obligations under the Rafale aircraft deal. Dassault Aviation, a French aerospace company, manufactures the Rafale jets, while MBDA provides the aircraft's missile systems.

In September 2016, India and France inked an inter-governmental agreement for the purchase of 36 Rafale fighter jets at a cost of Rs 59,000 crore, with offset commitments included in the contract. Each year between September 2019 and September 2022, 50% of the entire contract value must be reinvested in India as offsets as part of the agreement.

The defence ministry fined MBDA less than 1 million euros for postponing its offset duties for the September 2019-September 2020 period reported news agency PTI, quoting the sources. Although MBDA has paid its fine but has also filed a protest with the defence ministry. The first Rafale fighter jets arrived in India in July of last year.

CAG report also highlighted the issue

According to the Comptroller and Auditor General (CAG) report released on Wednesday, Dassault Aviation and MBDA have yet to fulfil their offset responsibilities of supplying the advanced tech to India under the Rafale aircraft contract, which was announced in September last year.

The national auditor stated in its report to Parliament that Dassault Aviation and MBDA offered in September 2015 to fulfil 30% of their offset requirements by providing high technology to the Defence Research and Development Organisation (DRDO), but the two companies had yet to do so.