Modi Govt Gave Waivers in Offset Contracts Under Rafale: Report

The provisions for which Dassault, MBDA were granted waivers were arbitration, access to books of accounts, etc.

In the latest in a series of investigative reports on the Rafale deal, The Hindu on Tuesday, 9 April, pointed out that the Narendra Modi government gave "exceptional and unprecedented waivers" to Dassault as well as European missile manufacturer MBDA in the offset agreements signed under the controversial deal for procuring fighter jets.

The waivers meant that the two companies did not have to comply with certain provisions of the Standard Contract Document of the Defence Procurement Procedure (DPP-2013).

The provisions for which Dassault and MBDA were granted waivers were arbitration, access to books of accounts, penalties for "use of undue influence" and “agents/agency commission".

Citing the Indian Negotiating Team's (INT) final report of July 2016, The Hindu's N Ram reported that the French negotiators at the outset were not even "ready to mention the word 'offsets in the IGA (Inter-Governmental Agreement)", but did so only after extensive discussions with the Indian side, in accordance with the DPP-2013.

A June 2016 note of dissent regarding the offset issues by three domain experts, who were part of the negotiating team (INT), said:

"The offsets are not part of the G to G (government-to-government) agreements and therefore the Offset Contract must be in line with the one prescribed in the Defence Procurement Procedure... The proposed draft Offset Contract is still not aligned with the one prescribed in the DPP. The arbitration clause proposed by the French Industrial Suppliers in the draft Offset Contract is not as per the DPP and cannot be agreed to. The French Industrial Suppliers have insisted upon reducing the maximum ceiling for penalty from 20% as prescribed in the DPP to 8.5% of the Offset value, which is not acceptable... The French Industrial Suppliers proposed to include a clause on 'Access to the Book Accounts' subject to French Law, which is not acceptable."

N Ram, in this report, also made it a point to underline that the daily's investigative stories weren't not raising questions about Rafale's quality or about the need to modernise the country's air force, as he drew a comparison in this regard with the investigation into the Bofors deal.

(With inputs from The Hindu.)