The opposition and its cronies in the media had claimed that India did not have any sovereign guarantee in the Rafale deal and hence could not enforce the contractual obligations on Dassault Aviation regarding 50 percent offset investments. Rahul Gandhi tweeted a series of lies claiming that there was no sovereign guarantee of Rafale deal from French government. However, India not only has a Letter of Comfort (LoC) from French government but also secured a 185 million Euro bank guarantee from Dassault Aviation to ensure that the company complies with offset obligations. If Dassault fails to fulfill the obligations in the contract, India can seek reparations from this guarantee which will work as a safeguard against any violation of the offset policy.
“A special clause in the deal, which mandated that 5% of the total offset value be kept as a buffer in case of non-performance, was invoked after officials insisted that the safeguard was needed to protect interests,” said an official. The company has already deposited the sovereign guarantee money and this will remain valid for next seven years. The bank guarantee is same as India earlier had with American companies, Lockheed Martin and Textron in a government to government deal. As per the special clause of Defense Procurement Procedure- 2013 “the vendor shall be required to furnish a performance bond equal to 5% of the offset obligation, which is required to be fulfilled during the period of the main procurement contract”.
The clause was introduced to make sure that defense contractors comply with the offset investments which they often fail to oblige. Since the introduction of bank guarantee, two companies- the US defense Major Lockheed Martin and Textron have been penalized for failing to comply, and offset obligations and the penalty amount has been recovered from the money deposited by these companies at the time of contract. Penalty amounting half a million dollars was imposed on Lockheed Martin which was expected to ‘source of parts and services from Indian companies to the tune of $32 million annually’ in special operations aircraft deal. Textron was also imposed $300,000 penalty for not meeting offset obligations in the CBU 105 Sensor Fuzed Weapons deal for Indian Air Force.
The audit for Rafale deal is yet to take place and the CAG will decide whether it was transparent and profitable or not. The government has already submitted relevant documents to Supreme Court of India for cross-verification of the deal. The documents of the deal are in the hands of the Supreme court of the country as well as CAG, the most powerful body to check corruption in any deal. But Congress led opposition and its cronies in the media are spreading lies about the deal. Prashant Bhushan, Yashwant Sinha and Arun Shorie became defense experts overnight, all to accuse Modi government of corruption. The opposition disregards all the facts presented by the defense ministry, credible defense experts, French government and the Dassault itself. If the apex court and CAG give a clean chit to the government on the Rafale deal, they will accuse the court of being corrupt like they did when PM Modi got a clean chit in the Gujarat riot case. These activists, opposition and media will also criticize CAG if they found no ‘scam’ in the deal, just as easily as they blamed the institution when it exposed the corruption of UPA government in Coal and 2G scams.
