CAG report in Parliament raises questions on offset policy in Rafale deal

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French company Dassault Aviation has not yet given DRDO engine technology.

Offset policy not implemented in defense deals with foreign companies in last 15 years.

Only 59 percent of offset policies were followed in defence deals in 2005-2018.

New Delhi, September 24: The Comptroller and Auditor General (CAG) in its report tabled in Parliament on the Defense Offset Policy during the monsoon session have estimated India to lose Rs 8000 crore in defence deals with foreign companies in the last 15 years.

Also, the company making fighter aircraft Rafale has been questioned for not transferring the technology of the Kaveri engine as per the agreement.

The report tabled in Parliament said that while dealing 36 Rafale aircraft with French company Dassault Aviation, 30 percent by giving Kaveri engine technology to DRDO in offset contracts, it was decided to complete the offset but this promise has not been fulfilled yet.

The Research and Development Organization (DRDO) was to acquire the technology of the engine (Kaveri) and develop it for the indigenous Tejas Light Combat Aircraft. 36 aircraft deal with France was done for 59 thousand crores rupees.

According to the offset policy of India, foreign companies have to spend 30 percent of the contract on research or equipment in India.

Not only this, the CAG in its report while reviewing defense agreements with foreign companies between 2005 and 2018 has said that the offset policy has not yielded the desired results. Therefore, the Ministry of Defence reviewed this policy It has been suggested to identify and resolve the problems in implementation.

In the report tabled in Parliament, the CAG said that any defence agreements between 2005 and 2018, no foreign company has transferred its technology to India as per the offset policy.

The CAG has said that the foreign companies will get offset claims of about 55 thousand crore rupees in the next six years. At present, only offsetting commitments of Rs. 1300 crores are being fulfilled every year. Therefore, the CAG has made offset commitments of Rs 55 thousand crores to be completed is considered a big challenge.

The CAG has stated in its report that between 2005 and 20 18 India had signed 48 agreements with foreign defence companies for a total of Rs 66,427 crore.

According to the Ministry of Defense’s offset policy, as of December 2018, there were 19,223 crore offset transfers to India but only 11,396 crore were transferred. Of these, only commitments worth Rs 5457 crore have been accepted. That is, only 59 percent offset policy has been followed. Thus, the last 15 years India is estimated to have lost Rs 8000 crore in defence deals with foreign companies.

 The CAG, presenting its report on Rafale in Parliament in February 2019, claimed that the Rafale deal in the NDA government was 2.86 percent cheaper than the deal of the previous UPA government. At that time, the CAG report was criticized by other opposition parties, including the Congress.