In September 2016, the
French and Indian governments inked a €7.8 billion contract. According to the
agreement, Dassault Aviation and its partners Safran and Thales would offset
and execute 50% of the contract value in seven years.
The three corporations
collaborated with over 70 Indian enterprises and the Defence Research and
Development Organization (DRDO). According to a senior defence scientist in
India, the DRDO is looking for stealth capabilities, radar, aerospace engines,
thrust vectoring for missiles, and electronic materials from French companies.
According to an Indian
Ministry of Defence official who spoke on the condition of anonymity, the penalty
will be covered by a €185 million bank guarantee provided by Dassault Aviation
as a precaution against contractual infractions. The official would not divulge
the monetary value of the penalty levied on Dassault Aviation, nor would he
discuss the specific issues impeding the implementation of the offset duties.
Original equipment
manufacturers can discharge offsets under MoD policy by purchasing related
goods or services from Indian suppliers, making a foreign direct investment in
India's defence industry, or transferring advanced knowledge.
When Defense News
reached out for comment, the French Armed Forces Ministry forwarded the publication
to Dassault Aviation, which did not respond.
French Defense
Minister Florence Parly and Indian Defence Minister Rajnath Singh met on
December 17 to examine measures to strengthen bilateral defence cooperation.
During the third annual dialogue, the MoD stated that several French defence
industries were refusing to cooperate to transfer technology to the DRDO.
According to an MoD source, French companies have claimed that Indian enterprises expecting technology transfers lack the essential core competencies.
"It is commonly
known that original equipment makers have had problems meeting their offset
responsibilities." According to Amit Cowshish, a former MoD finance
adviser for purchases, this could be due in part to policy.
He suggested that the
government meet with OEMs to identify problems and take corrective action.
Since the AUKUS deal
that kicks France out of the Australian submarine programme, both the U.S. and
France are in undeclared competition.
