In his previous articles, N Ram of The Hindu had stressed on how the Narendra Modi government bypassed due negotiation processes to conclude the Rafale deal. He also touched upon how in bypassing key give-aways such as requirements for bank guarantee by Dassault, the maker of Rafale, were waived.
In the article on April 9, Ram has fleshed out more waivers and deviation from standard contract requirements as laid down in the Defence Procurement Procedure. The article talks about two key waivers: “The provisions to be made in the offset contracts for arbitration (Article 9) and access to books of accounts of the industrial suppliers (Article 12).”
A controversial French law prohibits French companies from providing access to company documentation to foreign entities. Indian negotiators demanded access to the accounts of Dassault and MBDA, the missile supplier, pertaining to offset contracts whereas it was conceded that French law on blocking access would supersede.}
The article also talks about heavy backloading of when the offsets would be sourced from Indian suppliers. Offsets ensure that in any contract with a foreign company, in exchange for a large contract, the foreign company promises to procure equipment or services up to a certain percentage of the value of the contract from Indian suppliers.
The Rafale deal talks about seven-year offset contracts but much of the procurement would take place in the fifth, sixth and seventh year. Ram talks about how Anil Ambani set up his defence company only at the closing stages of the agreement. And that company was the only publicly announced offset partner at the time of signing the agreement.
He says a clause on “agents and commissions” have been dropped, which could have been used against them in case of transgression. This integrity clause was not only dropped from standard contract documents but also supply protocol that formed part of inter-governmental agreement.