Chidambaram questions Centre over Rafale as CAG pulls up Dassault for offset obligations

Lashing out at the Modi government over the CAG audit report tabled on Defence Offset Performance, former Finance minister P Chidambaram, on Thursday, asked if the report opened a can of worms about the Rafale deal. Pointing out at the non-transfer of technology by French manufacturer Dassault as per the CAG report, he asked if the government could verify if the transfer was done. The Modi government tabled 29 key audit reports of the Comptroller and Auditor General (CAG) on Wednesday, as the Opposition boycotted the parliament due to suspension of 8 MPs. 

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CAG report on Defence Offset Performance tabled

As per the audit report tabled in the parliament, French aerospace major Dassault Aviation and European missile maker MBDA are yet to fulfil their offset obligations of offering high technology to India as part of the deal relating to procurement of 36 Rafale jets. CAG also added that it did not find a single case of foreign vendors transferring high technology to the Indian industry, pegging defence sector as 62nd out of 63 sectors receiving FDI. ​The first batch of five Rafale jets arrived in India on July 29, nearly four years after India signed an inter-governmental agreement with France.

Under India's offset policy, foreign defence entities are mandated to spend at least 30 per cent of the total contract value in India through procurement of components or setting up of research and development facilities. These norms are applicable to all capital purchases above Rs 300 crore made through imports and can be made through FDI, free transfer of technology to Indian firms and purchase of products manufactured by Indian firms. CAG also summed that though the vendors failed to keep up their offset commitments, there was no effective means of penalise them - especially when the contract period of the main procurement is over.

The CAG said 48 offset contracts were signed with foreign vendors from 2005 to March 2018 with a total value of Rs 66,427 crore, and Rs 19,223 crore worth of offsets should have been discharged by the vendors by December 2018. But the amount discharged by them was only Rs 11,396 crore, which was only 59 per cent of the commitment. Moreover, only 48 per cent (Rs.5,457 crore) of these offset claims submitted by the vendors were accepted by the Ministry with the remaining offset commitments of about Rs 55,000 crore would be due to be completed by 2024. 

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(With PTI Inputs)