This clause is expected to boost indigenous defence production with transfer of technology and joint ventures with local partner firms
A decade after then defence minister AK Antony approved the Request for Proposal to buy 126 Medium Multi-Role Combat Aircraft, the Indian Air Force will get its first Rafale fighter jets in the next 33 months from French company Dassault Aviation. The 36 aircraft that the IAF will get will replace the ailing MiGs. The first plane will be delivered within three and half years, and the entire lot in five years.
The 7.87 billion Euro agreement between India and France for the 36 Rafale fighter jets comes with a 50% offset clause which means that Indian companies will get business worth over 3 billion euros and generating thousands of jobs in India through offsets. This is reportedly the largest ever offset contract in India’s history. This clause is expected to boost indigenous defence production with transfer of technology, joint ventures with local partner firms, licensed production and even perhaps relocation of production lines in the long run.
“The offset clause of 50% in the Rafale deal will provide a great opportunity for indigenous manufacturers such as us who have put in years of effort to develop world-class technology within the country,” says Puneet Kaura, MD and CEO, Samtel Avionics. “It further outlines the commitment made by the Indian government to promote the Indian manufacturing industry and support indigenisation of defence needs of the country. There is also a possibility for India to become a global manufacturing hub for these fighter planes in case there is successful transfer of technology.”
Since Dassault Aviation Company was not keen on transfer of technology, under the 50% offset clause, it has agreed to help India with the Light Combat Aircraft MK 2 and AMCA.
French company Snecma (Safran)( a Dassault partner along with Thales) has proposed to invest Euro one billion in the Kaveri Gas Turbine Engine to be fitted in the LCA MK1A. Safran has developed the M88 engine that powers the Rafale as well as the Shakti engine for Indian advanced light helicopters (ALH) ‘Dhruv’.
MBDA will work with Defence Research and Development Organisation (DRDO) to transfer Thrust Vectoring technologies that are expected to be used in Astra and other missiles putting them at the level of Meteor—making the missiles more lethal.
Under the deal, the French company has agreed to transfer the special spray paint and coating technology which is of immense benefit to Indian programmes, including LCA, AMCA, SU-30 MKI and FGFA.
Also, it is expected that 36 combat machines could get the final layer of the stealth paint here in India as part of Make in India initiative.
The radar technology on Rafale can easily be adapted to other aircrafts in IAF. As part of the deal, the multimode AESA radar technology will be transferred to DRDO for application on UTTAM AESA radar.
The high-end twin engine aircraft with a state-of-the-art electronic scanning radar will certainly add to the IAF’s capabilities. The MBDA’s new-age Meteor Beyond Visual Range missile, can hit targets over 150 km away, without entering the enemy airspace before launching an attack. The aircraft is also capable of firing nuclear missiles.