- India insists that France should invest 50% of the $4Billion deal in the Indian defence industry in form of offset obligations.
- But France is ready to invest only 30% to cover infrastructure costs, maintenance, training and storage facilities.
- Also, the 2 year timeline of procuring the jets seems doubtful as Dassault (manufacturer of Rafale jets) has capacity of manufacturing 11 jets a year and it already has an order of 24 jets each from Qatar and Egypt.
What is an offset clause?
Countries importing military equipment often require obligations from the exporter to invest in the importer’s defense industry. This is called the ‘offset clause’.