Rafale deal: France says no to offset, yes to Make in India

August 16, 2015 14:21

The French government has rejected Indian negotiators' demand for a 50 per cent offset clause citing sharp cost escalation but offered to participate in Make in India projects to carry forward the talks for 36 Rafale fighter jets that have hit turbulence.

Defence sources said Indias insistence on the offset clause, tweaking of weaponary technology and plans to set up two bases for Rafale fighter jets would lead to cost escalation.

Offset policy was first introduced as part of the Defence Procurement Procedure (DPP), 2005, under which a foreign company has to invest back a portion of the deal into India.

"The 50 per cent offset clause was part of the original tender that was floated for 126 fighter jets. The French President and Indian Prime Minister have now decided to go in for a direct purchase of 36 Rafale jets. So, how can 50 per cent offset clause be asked when the French are offering the fighters at the same rate at which its Air Force is buying,"

defence sources said.

They added the French have instead offered to undertake Make in India initiatives. "The French can look at the option for making Falcon business jets in India or even the Rafales for future besides other projects," the sources said, adding the French government has made it clear that their

companies would like to be part of 'Make in India' initiative.

The sources said the offset clause will simply drive up the cost of each aircraft.

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