India’s offset policy stipulates that in all capital purchases above Rs 300 crore, the foreign vendor has to invest at least 30% of the value of the purchase in the country to boost indigenous capabilities.(HT Photo)
India’s offset policy stipulates that in all capital purchases above Rs 300 crore, the foreign vendor has to invest at least 30% of the value of the purchase in the country to boost indigenous capabilities.(HT Photo)

‘Can of worms opened?’ Cong on CAG’s report

In its report tabled in Parliament on Wednesday, the country’s top auditor pointed out that several offset contracts built into multiple defence deals had “not yielded the desired results”. The observations were part of CAG’s scrutiny of a raft of offset contracts — including the Rs 59,000 crore Rafale deal — between 2005 and 2018.
Hindustan Times, New Delhi | By HT Correspondent
UPDATED ON SEP 24, 2020 11:39 PM IST

The Congress on Thursday attacked the central government over the Comptroller and Auditor General (CAG) report that said the maker of the Rafale jets, Dassault Aviation, and the weapons supplier MBDA did not confirm the transfer of technology to the Defence Research and Development Organisation (DRDO), which was part of the contract.

In its report tabled in Parliament on Wednesday, the country’s top auditor pointed out that several offset contracts built into multiple defence deals had “not yielded the desired results”. The observations were part of CAG’s scrutiny of a raft of offset contracts — including the Rs 59,000 crore Rafale deal — between 2005 and 2018.

“The offset obligations should have started on 23-9-2019 and the first annual commitment should have been completed by 23-9–2020, that is yesterday. Will the government say if that obligation was fulfilled? Is the CAG report the opening of a can of worms?” asked former finance minister P Chidambaram.

Congress spokesperson Abhishek Manu Singhvi said the country was facing a huge loss due to the delay in the transfer of technology.

India’s offset policy stipulates that in all capital purchases above Rs 300 crore, the foreign vendor has to invest at least 30% of the value of the purchase in the country to boost indigenous capabilities. In the case of the Rafale deal this was 50%.

“There are two important points in the report. Firstly, it is being claimed that the work will be done in the seventh year, which is 2021. That means you won’t do anything in six years. And secondly, forget 50% not even 37% has been completed in terms of technology transfer. We are not saying this. The CAG has said it. This is complete fraud. We have been raising this issue because it is in the public interest,” he added.

Congress party’s chief spokesperson Randeep Singh Surjewala said, “Chronology of biggest Defense deal continues to unfold. The new CAG report admits that ‘technology transfer’ shelved in #Rafale offsets. 1st, ‘Make in India’ became ‘Make in France’. Now, DRDO dumped for tech transfer. Modi ji will say everything is ok.”

However, former Congress president Rahul Gandhi, who repeatedly attacked the government over the Rafale deal during the 2019 general elections, did not comment on the CAG findings.

The BJP declined to comment on the Congress allegations.

According to the CAG report, the defence ministry stated as recently as October 2019, (the first Rafale was handed over in France on October 8, 2019) the vendors had not yet been able to confirm their capability for technology transfer.

To be sure, in case of the Rafale deal, the DRDO’s offset share worked out to 30%, while 20% has been allocated to the private sector, including Dassault Reliance Aerospace Ltd (DRAL) -- Dassault’s joint venture (JV) with Anil Ambani’s Reliance Group. CAG did not pick any loopholes as far as the 20% allocation to the private sector, and asked the defence ministry to get more details about its progress.

The report said the defence ministry stated in October 2019 that the vendors had not been able to “confirm their capability to carry out the requisite upgradation”.

“Thus, it is not clear if even this technology transfer (for engine) will take place, and there is need for the MoD/DRDO to identify and acquire the right technologies in order to comply with the directions of Defence Acquisition Council (DAC) given in September 2016,” the report said.

The National Democratic Alliance (NDA) government’s decision to enter a $8.7 billion government-to-government deal with France to buy 36 Rafale warplanes made by Dassault was announced in April 2015, with an agreement signed a little over a year later.

This replaced a previous United Progressive Alliance regime decision to buy 126 Rafale aircraft, 108 of which were to be made in India by the state-owned Hindustan Aeronautics Ltd.

Congress alleged that the new deal entailed buying the fighter jets at a higher price. The government denied this, and the Supreme Court said in a judgment that the deal did not require scrutiny. A February 2019 CAG report said the deal to buy the jets was kosher and cheaper than that was being negotiated by the UPA government.

SHARE THIS ARTICLE ON
Close
SHARE
Story Saved
OPEN APP