21st April 2021

Confidant Classes

A Premier Judicial Service Coaching

Dassault & MBDA “not confirmed” the transfer of technology

The French leader in aeronautics Dassault Aviation and the European missile manufacturer MBDA have to date “not confirmed” the transfer of technology for the local development of engines for light combat aircraft (LCA) by the Research Organization and Defense Development. (DRDO), under the compensation contract for Rs. A 60 billion rupee deal for 36 Rafale fighter jets, the Comptroller and Auditor General (CAG) said in a report presented to parliament on September 23.

  • The report on compensation clauses in defense agreements noted that in October 2019, the Ministry of Defense (MoD) reported that the supplier had not yet been able to confirm its ability to perform the upgrade. day needed.
  • “Therefore, it is not clear whether this transfer of technology will take place, and it is necessary for the Department of Defense / DRDO to identify and acquire the appropriate technologies to comply with the Defense Acquisition Council (DAC) instructions given in September 2016. “CAG added.
  • The report spoke of the offsets in the Rafale deal. In September 2015, Dassault Aviation and MBDA initially offered to meet 30% of their offset obligation in the Rafale deal by offering high technology to DRDO and, according to contract, DRDO acquisition of technology is planned, subject to discussions between vendors and DRDO, according to the report.
  • Six new technologies In April 2016, DRDO identified six new technologies which would come from companies subject to clearing obligations, but the suppliers “did not agree to transfer five technologies, because most of them were not the competence of e supplier base “.
  • DRDO’s sixth proposal was to obtain technical assistance for the local development of a motor (Kaveri) for ACV, which has also not been confirmed so far.
  • “In many cases, it was found that the foreign suppliers had made various compensation commitments to qualify for the main supply contract, but subsequently they did not take meeting these commitments seriously.” , observed the CAG, citing the Rafale agreement.
  • To develop the Indian defense industry and integrate advanced technologies, the Defense Agreement Compensation Policy was adopted in 2005 for all imports of defense capital above Rs 300 crore, under which the foreign supplier must invest at least 30% of the contract value in India.
  • The Rafale agreement signed in September 2016 includes a 50% compensation clause which must be respected by the four French partners; Dassault Aviation, MBDA, Safran and Thales.
  • Dassault Aviation has created a joint venture with Reliance Defense of Anil Ambani, Dassault Reliance Aerospace Limited, in Nagpur to manufacture components for the old civilian aircraft.
  • The Ministry of Defense informed the CAG that the supplier’s compensation obligations will begin on September 23, 2019 and that the first annual commitment is expected to be fulfilled by September 23, 2020.
  • During the audit of the compensation policy in defense agreements, the CAG reported that from 2005 to March 2018, 46 compensation contracts were signed with foreign suppliers, worth Rs. 66,427 crore, of which as of December 2018, Suppliers are expected to have disbursed Rs 19,223 crore in compensation.
  • “However, the offsets claimed to have been uploaded by them were only rupees. 11,396 million rupees, which was only 59% of the commitment, ”the report said. In addition, only 48%, or Rs.5557 million, of these claims submitted by providers were accepted by the ministry.
  • “The rest were largely dismissed for failure to comply with contractual conditions and the defense procurement process,” CAG said.
  • Remaining compensation commitments of around Rs. 55,000 crore would be completed by 2024, but the rate at which foreign suppliers met their compensation commitments was around Rs. 1,300 crore per year.
  • “In this situation, fulfilling the commitment of Rs. 55 billion rupees from suppliers over the next six years remains a daunting challenge,” said the federal auditor.
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