Letter to BS: Why HAL was not picked as offset partner in Rafale deal?

This refers to the letter “Why HAL was not picked as offset partner in Rafale deal?” by S K Khosla (December 19). It is evident that in the case of the Rafale purchase, India shifted from the earlier direct offset arrangement that envisaged co-production and transfer of technology (ToT) to the current indirect offset arrangement. Indirect offsets are side agreements that are not directly related to the product/service that is bought/sold. Thus, in the case of 36 Rafale planes, all the planes will be manufactured in France and the components or parts that the French company would be importing from India may or may not relate to Rafale planes. Reportedly, the shift was on account of the protracted deadlock in the price negotiations of the earlier arrangement.

It is an oversimplified view that ToT will magically elevate defence production capabilities to cutting-edge levels. If that had been the case, India would have become self-reliant decades ago in fighter aircrafts, helicopters and numerous other defence equipments. Defence trade and technology, being controlled by a powerful few, ToT is significantly subject to restrictive trade practices. Furthermore, there could be numerous export control arrangements and non-proliferation treaties that impose additional restrictions on export and transfers.

There is also the cost angle. Prima facie, ToTs appear to be cheaper than outright purchase of the system. Ironically, in many instances, it is the other way around. For example, it is reported that India has decided not to order any further Su-30s from Russia as its cost of maintenance is very high compared to Western aircrafts. Obviously, the indigenisation process involved cost and time escalations. During this period of indigenisation, the product is perceived to have become outdated. 

Thus it is obvious that the critical technology cannot be borrowed by resorting to offsets. China is spending 20 per cent of its defence outlay on research and development (R&D), compared to mere 5 per cent in India. The Chinese have also unified their R&D and production activities. Focus on indigenous R&D is a must if we have to achieve self-sufficiency in defence production.

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Pramod Patil, Nashik

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