The Comptroller and Auditor General (CAG) on Wednesday told the parliament that French aerospace major Dassault Aviation and European missile maker MBDA have 'till date' not confirmed the transfer of technology to the Defence Research and Development Organization (DRDO), reported The Hindu.
In a statement issued Wednesday, after its latest reports were tabled in Parliament, the CAG said: "It was found that the foreign vendors made various offset commitments to qualify for the main supply contract but later, were not earnest about fulfilling these commitments."
"For instance, in the offset contract relating to 36 Medium Multi-Role Combat Aircraft (MMRCA), the vendors M/s Dassault Aviation and M/s MBDA initially proposed (September 2015) to discharge 30 per cent of their offset obligation by offering high technology to DRDO," The CAG said referring to the Rafale deal.
The transfer of technology was as part of the ₹60,000 crore Rafale deal and is crucial for indigenous development of the engine (Kaveri) for the Light Combat Aircraft (LAC) developed by DRDO .
"It is not clear if this technology transfer will take place, and there is a need for 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 CAG report said.
The Dassault Aviation is the manufacturer of Rafale jets, while the MBDA supplied the missile systems for the aircraft. India's inter-governmental agreement with France was signed in September 2016 for the purchase of 36 Rafale jets, and the offset obligations were part of the contract.
According to India's offset policy, for defence capital purchases above ₹300 crore, the foreign vendor is required to invest at least 30 per cent of the value of the contract, in order to boost indigenous technology.
In the case of the Rafale deal, this offset clause was fixed at 50 per cent. This was to be discharged by the four French partners – Dassault Aviation, MBDA, Safran and Thales.
Further in its statement, the CAG said that from 2005 till March 2018, 46 offset contracts under which by December 2018, ₹19,223 crore worth of offsets should have been discharged by the vendors. However, only 59% of offsets (₹11,396 crore) are claimed to have been discharged by the companies.
The auditor said that though the vendors failed to keep up their offset commitments, there was no effective means of penalising them. "Non-fulfilment of offset obligations by the vendor, especially when the contract period of the main procurement is over, is a direct benefit to the vendor," it said.