By Vaibhav Agrawal
In yet another significant development surrounding India’s defence offset policy, it has been reported that vendors have defaulted/non-performed offset obligations on at least 21 offset contracts in the past five years that have amounted to around $2.24 billion till 31 December 2021. In 16 cases, the penalties amounting to $43.14 million have been imposed against defaulters/non-performing vendors.
Open sources indicate penalties imposed on significant defence giants, which include defence & aerospace giants like Thales (France) during a Mirage upgrade project and rocket-related efforts with Hindustan Aeronautics Limited (HAL), European consortium MBDA during the Rafael acquisition and for the Mirage-2000H, Safran (France) during a Mirage aircraft upgrade project and the acquisition of Rafale aircraft, Rosoboronexport (Russia) for contracts related to MiG-29 fighter jet upgrades, Mi-17 helicopters and Kamov Ka-28 helicopter upgrades and Dassault Aviation (France) during a Mirage upgrade project. Even Israel Aerospace Industries (IAI) have reportedly faced penalties for contracts involving Harop and Heron drones.
What Was The Heron TP Deal?
As a part of a deal signed in the previous year, India received the Israeli drone Heron TP’s delivery. The country opted for these Unmanned Aerial Vehicles to be deployed in long surveillance missions along the disputed border between India and China. However, the deal was initially for leasing four of these drones for three years under the New Defence acquisition procedure 2020. Still, it was later decided to purchase the drones instead and proceed further with ‘Project Cheetah’ and get them equipped with lethal air-to-ground guided munitions.
The Heron TP drones can perform intelligence gathering, target acquisition, and surveillance and with some modifications, even strike capabilities can be an addition. These drones are capable of accommodating a variety of payloads and sensors as permission requirements.
The length of the Heron TP drone stands the same as the Rafale fighter, i.e. 14 metres, while its wingspan is nearly double that of the French aircraft. Developed for all-weather strategic missions, the UAV is a Medium-Altitude Long-Endurance (MALE) drone that can be armed in need.
A proposal to upgrade approximately 80-90 Heron drones used by the Indian Army, Air Force and the Navy was also finalised by the Ministry of Defence earlier. Media reports also claimed that in addition, vaguely 30 multi-mission armed MQ-9 Predator-B drones would be purchased by New Delhi from the US with regards to the tri-services at the cost of around $3 billion.
Can IAI Afford To Violate Offset Obligations?
Defence and security analyst Lieutenant Colonel JS Sodhi (Retd) shared his views on the offset status of this deal: “the purchase of four Heron TP drones from Israel will give a fillip to India’s defence as it will greatly bolster the Indian surveillance and reconnaissance capabilities as these drones have a loitering time of 24 hours and communication range of 1000 kilometres.”
“However, the Israel Aerospace Industries (IAI) failure to fulfil the offset clause conditions involving the Harop and Heron drones can jeopardise future defence deals between the two nations as non-fulfilling of contractual conditions of a government contract has legal and contractual implications on the future governmental contracts,” added Lt Col. Sodhi.
“Since Israel is India’s second-biggest arms importer after Russia, this can severely affect future arms purchases from IAI unless Israel speedily and swiftly addresses this issue. India is the biggest customer of Israeli arms, and in 2017 it purchased US$ 715 million worth of arms from Israel; hence Israel can ill afford to ignore India’s legitimate contractual concerns,” the analyst explained before signing off.
“In regards to UAS, IAI maintains Offset obligations in accordance with local procurement procedures and in accordance with the required regulations,” the company responded to IA&D’s request for comment
