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Friday, May 24, 2024

India slaps heavy fine on French missile firm for delays in Rafale deal

India imposed a penalty on MBDA. According to Indian media, the heavy fine comes under India's new policy of tightening control on defaulting armament majors. MBDA deposited the fine, however, it also lodged a protest with the Ministry of Defence.

India imposed a heavy penalty on MBDA, a missile firm in France, for delaying offset commitments for Rafale fighter jets. According to media, India’s defense ministry fined MBDA 1 million euros.

The heavy fine comes under India’s new policy of tightening control on defaulting armament majors, reported The Times of India. To clarify, in 2015, India signed a defense deal with French aviation company Dassault to buy 36 Rafale fighter jets for a cost of Rs 59,000 crore. Meanwhile, MBDA supplies the missile systems for the aircraft.

Read more: India receives more French Rafale jets amid China tensions

According to Indian media, India also signed a major offsets contract with Dassault and a smaller one with MBDA. Under the agreement, half the contract value has to be ploughed back to India as offsets or re-investments. However, MBDA failed to meet its obligations. As a result, India imposed a penalty on MBDA.

“The fine has been imposed on MBDA after it slipped in discharging its offsets obligations for the first applicable year from September 2019-September 2020,” said the media report quoting a source. MBDA deposited the fine, however, it also lodged a protest with the Ministry of Defence.

Important to note, France will deliver a total of 35 Omni-role Rafale fighters by the end of 2021. The deal came as Indian Air Force (IAF) reported facing an acute shortage of aircraft, as most of the in-service fighters will retire soon. Moreover, the existing MiG-21s have been prone to accidents; 482 out of 872 MiG-21s procured crashed between 1971 and April 2012 — a loss of 12 jets each year.

Read more: France’s Macron gears up for UAE Rafale fighter jet deal

Controversies surrounding the Rafale jet deal 

Earlier this year, French media portal Mediapart reported that Dassault Aviation paid €1 million to an Indian company owned by a “middleman” in connection with the deal.

According to the report, the company said it used the money to pay for the manufacture of 50 large replica models of Rafale jets. However, inspectors found no proof of these models.

Prior to this, the Congress Party accused Modi of making the purchase at a price that is three times higher than what was negotiated in 2014, when Congress was in power. The deal, finalized in 2016, became a major topic in the 2019 general elections.

However, the Indian Supreme Court in November 2019 rejected all petitions related to the Rafale jet deals. In 2018, the apex court gave a clean slate to the Modi government on allegations of irregularities in the procurement of the jets from France.

Read more: India’s Rafale jet deal faces new controversy