India fines French firm for offsets delay in Rafale fighter deal

The penalty amounted to less than €1 million

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Reuters file for illustrative purposes
Reuters file for illustrative purposes

Published: Wed 22 Dec 2021, 10:57 AM

The Indian government has imposed and collected a penalty from European missile manufacturer MBDA for the delay in fulfilling offsets commitments in the €7.8 billion deal for 36 French Rafale fighters, according to reports.

India and France had signed the contract for the fighters in September 2016. The Rafale jets are manufactured by French firm Dassault Aviation, while MBDA is the weapons package supplier.

As part of the agreement, 50 per cent of the contract value (around Rs 30,000 crore) has to be ploughed back to India as offsets or re-investments, according to Times of India. The offsets in the Rafale deal are spread over seven years from the date of signing the contract, with no discharge in the first three years.

The fine was imposed on the defence manufacturer “after it slipped in discharging its offsets obligations for the first applicable year from September 2019-September 2020,” Times of India quoted a source as saying.


The MBDA has paid the penalty, which amounted to less than €1 million, but also lodged a protest with the Ministry of Defence, the report added.

India received the first batch of five Rafale jets, manufactured by French aerospace major Dassault Aviation, on July 29, 2020.

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