Thursday, 20 January 2022

India imposes a penalty of 1 million on MBDA for offsets delay in Rafale fighter deal

India imposes a penalty of 1 million on MBDA for offsets delay in Rafale fighter deal

India has levied a penalty on European missile maker MBDA for the delay in fulfilling offsets promise in the Rafale aircraft deal signed between India and France to procure 36 aircraft at Rs 59,000 crores.

The penalty has been "levied and collected" from MBDA under the overall new policy to tighten the screws on defaulting armament majors, reported by The Times of India, citing top defense sources. MBDA is a weapons package supplier for a Rafale jet manufactured by Dassault Aviation in the inter-governmental agreement inked by India in 2016 September, it said.

As per reports, besides the inter-governmental agreement with France and supply protocols for the fighters and weapons, India had signed a significant offsets contract with Dassault and a smaller one with MBDA. As part of the agreement, the report suggested that half of the contract value (around Rs 30,000 crore) has to be plowed back to India as offsets or re-investments.

Under the pact, the offsets are spread over seven years from signing the contract, with no discharge in the first three years.

India imposes a penalty of 1 million on MBDA for offsets delay in Rafale fighter deal 1pixabay image

Read More: Rafale deployed near the eastern China Border by India

The report quoting a source said 

"The fine has been levied on MBDA after it slipped in discharging its offsets obligations for first applicable year from September 2019-September 2020,"

The fine levied on MBDA is reportedly 5 percent of the shortfall in the discharge of offsets in a particular year, which means it is less than 1 million euros.

"With the shortfall being carried over on the second year, the case will be examined again," the source told the publication.

THE REPORT ADDED THAT the MBDA has paid the penalty and lodged a protest with the Ministry of Defence.

India received the first lot of five Rafale jets manufactured by French aerospace major Dassault Aviation on July 29, 2020. The Rafale jets are India's first major acquisition of fighter planes in 23 years after the Sukhoi jets were imported from Russia.

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