India Penalises European Missile Maker For Late Delivery

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A penalty of one million euros has been imposed on European Missile Maker MBDA for offset delays in the Rafale aircraft deal. The penalty has been imposed on European missile maker for delays in fulfilling its commitments in the deal signed between India and France to procure 36 aircraft at a cost of Rs 59,000 crore.

As per the sources, the main cause for imposing and collection of the penalty has been initiated to tighten screws on defaulting armament majors. MBDA is a weapon’s package supplier for the Rafale jets manufactured by Dassault Aviation in the inter-governmental agreement inked by India in September 2016.

On one hand, India has signed the inter-governmental agreement with France and supply protocols for the fighters and weapons; and on the other, a major offsets contract with Dassault and a smaller one with MBDA. As agreed, half of the contract value (around Rs 30,000 crore) has to be ploughed back to India as offsets or re-investments, spread over seven years from the date of signing the contract with payments starting by the end of third year.

As MBDA has missed paying the offset for the first applicable year, a penalty has been imposed from September 2019-September 2020.

The fine of 1 million Euro is 5 percent of the shortfall in the discharge of offsets in the first year. In case the shortfall is experienced in the following year as well, the case will be examined again,” as shared by sources.

Although MBDA paid the penalty but also lodged a protest with the Ministry of Defence. Five Rafale jets arrived in India on July 29, 2020, manufactured by manufactured by French aerospace major Dassault Aviation, The Rafale jets are India’s first major acquisition of fighter planes in 23 years after the Sukhoi jets were imported from Russia.

Rafale jets are known for air superiority and precision strikes, with a capacity of carrying a range of potent weapons. The primary weapons offered by MBDA is the Meteor beyond visual range air-to-air missile and Scalp cruise missiles. Meteor is a next-generation beyond visual range air-to-air missile (BVRAAM) designed to revolutionize air-to-air combat.

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