The offset policy was not fulfilled in the Raphael deal, the CAG questioned and the government canceled the policy.

- The offset clause was previously 30 percent

New delhi date. Tuesday 29 September 2020

The CAG reported that the deal to buy Raphael aircraft from France did not meet the offset policy. The government canceled offset policies in defense deals after receiving the report. Now, if the government of one country makes a purchase from the government of another country, the offset policy will not apply.

"We have made some changes in the offset," said Apoorva Chandra, special secretary at the Center. If one government buys from another government or intergovernmental buying and selling takes place, there will be no offset between the policies. The offset policy has so far hampered access to technology from foreign arms companies.

Until now, there was an offset policy, so the French company from which Raphael bought the aircraft had to invest 30 per cent of the total deal in the Indian defense sector. Of the 36 Rafale aircraft purchased at a cost of Rs 59,000 crore, the offset clause was 50 per cent capital investment.

A report in Parliament by the Comptroller and Auditor General (CAG) said that when Raphael struck a deal for the aircraft, Raphael's company was talking about giving the DRDO the Kaveri engine technique. The offset clause of 30 per cent capital investment was to be given to the DRDO under this clause. But the Raphael Company has not yet implemented that agreement.

According to India's offset policy, a foreign company has to spend 30 per cent of the contract in India on research or equipment (raw materials). This provision was made especially for defense deals. It was now replaced. The CAG noted in its report that the foreign company had not complied with the rule since 2015 when the deal for the Raphael aircraft was struck. However, there is no punitive or other punitive provision under this provision to penalize foreign companies for non-compliance with the agreement.