Rafale deal value of 2016 is 2.86% lower, says CAG

The Centre has made repeated assertions that under the IGA, better terms had been achieved in terms of “better pricing, better maintenance terms and better delivery schedule.” The CAG also observed that in respect of bank guarantees, the French government had not agreed to an escrow account and had contended that the “guarantees already provided by the government of France were far reaching and unprecedented.” The finally approved Article 5 of IGA by the Defence Acquisition Council (DAC), provided that the advance payments were to be made directly to the bank accounts of the French vendor that were opened in a French government controlled bank, over which the French government was to exercise control and monitoring for effective implementation of IGA and the supply protocols, the auditor noted in the report. Underscoring the importance of a sovereign guarantee to this deal, the CAG observed that in case of a breach of agreement, the Indian party (Ministry) would have to first settle it through arbitration directly with the French vendors. “If the arbitration award were in favour of Indian party and the French party fails to honour the award, Indian party should exhaust all available legal remedies. Only then the French Government would make these payments on behalf of the vendors,” the CAG noted.

Source  : https://www.thehindu.com/todays-paper/tp-national/rafale-deal-value-of-2016-is-286-lower-says-cag/article26263501.ece

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