Offset Agreement In Rafale

In addition, only 48 per cent (5,457 kronor) of these compensation claims submitted by the respective suppliers were accepted by the MoD. The remaining applications were rejected to a large extent because they did not comply with the contractual terms and the defence procurement procedure. In response to the relentless attacks from Congress, Arun Jaitley said Congress had indicated several different awards of 520 to 700 kronor. He questioned whether Congress was aware of the escalation formula in Dassault`s 2007 offer, which would have significantly increased the price until 2015. He said Congress` price comparison was misleading because the price of basic aircraft could not be compared to the price of “full-loaded” armed aircraft. He said that the basic aircraft was 9% cheaper and that the overall agreement within the IGA was 20% cheaper when you take into account currency fluctuations and escalating costs. He stated that the Indian government had not participated in the selection of private companies as offset partners and that it was up to the seller to make that decision. He said the agreement was signed after obtaining the necessary approvals after negotiations that lasted more than a year. [85] [86] Mr. J. Akbar, the Secretary of State for Foreign Affairs, wrote in an article published by the Times of India that a $45,000 bribe in a $58,000 contract was not plausible.

He said Dassault`s offer had been accepted at 538 euros, as well as a pricing formula that would have raised the price to 737 kronor in 2015. He added that the IGA price of 670 euros for each base aircraft represents a decrease of 9%. He wrote that the additional elements needed to make the aircraft operational in the previous agreement would bring the total amount to 2,023 Crore and as a result of the IGA price was 20% lower. He said the $30,000 compensation was to be awarded to 70 companies, including a few Crown corporations, which meant Reliance could not benefit from $45,000 in offsets. [87] Using the example of the Rafale agreement, the CAG stated that, in many cases, foreign suppliers or companies had made various promises of compensation under the contract, but were not “serious about the implementation of these commitments”. The role of Reliance Defence Limited, other Indian companies or the Defence Research and Development Organization (DRDO) in meeting the compensation obligations of the Rafale agreement will not be known until the months and years to come. In the Rafale agreement, DRDO`s share in the offset clause was highlighted at 30%, while 20% was allocated to the private sector, including Dassault Reliance Aerospace, according to the Hindustan Times. Dassault Reliance Aerospace is a joint venture with Dassault Aviation, established in Nagpur to manufacture components for their civilian jets. Despite the Supreme Court ruling, the main opposition party, Congress, reiterated its accusations of corruption against the government and continued to call for the creation of a Joint Parliamentary Commission (JPC) to review the agreement and stated that the Supreme Court “was not the forum to decide the issue of such a sensitive defence treaty.” [125] The Indian government immediately rejected this request. [126] Congress questioned the court`s justification for granting Anil Ambani the defence of reliance as a clearing partner of the agreement. [127] Rahul Gandhi, the President of the Congress, reiterated at a press conference the request for a JPC investigation and claimed that the government had misled the court by stating that the comptroller and Auditor General (CAG) report had not yet been shared with the Public Accounts Committee (PAC) and, in fact, no such report was public, contrary to what the court ordered.

[127] Mallikarjun Kharge, a senior congressional official and CAP president, who was present with Gandhi at the press conference, citing personal communication with the Deputy CAG, said that neither the CAP nor the CAG were in possession of the report in question. [127] The agreement provided for a 50% “offset” clause that required the parties to the agreement – primarily Dassault, Thales, Safran and MBDA – to reinvest 50% of the market value (approximately 3.9 billion d