Indo-French 36 Rafale Deal Likely To Have 30 Percent Offset Clause

India’s recently announced $6 billion deal to procure 36 Rafale jets from France in ‘fly-away’ condition is likely to have 30 percent offset clause amounting to about $2 billion, Local media reported Wednesday.

Sources said the government is likely to insist Dassault Aviation, the manufacturers of Rafale, to rope in the Indian private sector, a global chain supplier to Dassault and its associates.

Defence Minister Manohar Parrikar had yesterday insisted that the deal for 36 Rafale jets does not mean that 'Make in Indian' program has been set aside.

He said everything will depend on the quantum of the jets that India would eventually be interested in, besides the 36 and the terms and conditions agreed to once the negotiations start.

Offset policy as part of the Defence Procurement Procedure (DPP), 2013 indicates that the objective of the Defence Offset Policy is to leverage capital acquisitions to develop Indian defence industry by fostering development of internationally competitive enterprises.

It also aims to do it by augmenting capacity for research, design and development related to defence products and services besides encouraging development of synergistic sectors like civil aerospace and internal security.

During the government to government talks, the offset obligation will also be finalized, defence sources said.

"The private sector will substantially gain from the offset part of the Rafale deal," a senior executive of a leading corporate group said.