Defence & Security

Union Defence Ministry fines Dassault Aviation over offset delays

Dassault Aviation

The Union Ministry of Defence imposed and collected a hefty fine of less than 1 million Euros from the MBDA for offset delays for the September 2019-September 2020 period.

According to top sources in the Union Defence Ministry, the Indian government has imposed a hefty fine on the French Aircraft manufacturing company- Dassault Aviation over the delay in delivering the 36 Rafale Fighter Aircrafts as per the 2016 deal. Dassault Aviation is the manufactures of fighter aircraft (Rafale) while MBDA is the supplier of the advanced missile system that would be installed in the aircraft.

Earlier, India had signed an inter-governmental agreement with France in September 2016. As per the deal, India would be procuring 36 Rafale Fighter Aircraft at a cost of ₹59,000 crores, and the offset obligations were part of the contract. The agreement made it mandatory for the manufacturers to reinvest 50% of the total value of the deal in India each year between September 2019 and September 2022.

As per a few media reports, the fine will come from the €185 million bank guarantee that is funded by Dassault Aviation as a safeguard against contractual violations. Further, it is also believed that the MBDA has deposited the fine for the offset delay but they have also lodged their complaint with the Union Ministry of Defence. The Comptroller and Auditor General of India (CAG), last September, has stated that both Dassault Aviation and MBDA are yet to fulfill their offset obligations of offering high technology to India under the Rafale Fighter Aircraft Deal according to the Comptroller and Auditor General’s report released on Wednesday.

It is also reported that the manufacturers are facing difficulties in discharging their offset obligations. Further, defense experts are also suggesting that the officials from the Defence Ministry should meet OEMs and try to figure the difficulties that the manufacturers are facing and accordingly take the required measures. 

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By TIS Staffer
the authorBy TIS Staffer

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