No bank clauses in govt-to-govt deals like Rafale: IAF

NEW DELHI: The Indian Air Force on Tuesday stressed that there were no sovereign or bank guarantees and integrity clauses in government-to-government (G2G) deals such as the agreement to purchase 36 Rafale fighter jets made by French military plane-maker Dassault Aviation.

The vice-chief of air staff, Air Marshal Anil Khosla, told reporters that G2G contracts were unique in nature and India ’s procurement procedure allowed flexibility in terms of pursuing such deals. India had streamlined its procurement processes when it came to dealing with countries like Russia and the United States.

The deputy chief of air staff, Air Marshal VR Chaudhari, said there was no bank guarantee or “no sovereign guarantee from the Russians in the recently concluded S-400 deal”.

The US, a key partner supplying critical equipment to India, does not give either a “letter of comfort” or a bank guarantee to back up purchases. A “letter of comfort” provided by the Russian finance ministry backs purchases of military hardware.

In contrast, the inter-gvernmental agreement (IGA) between India and France – the guiding document for the purchase of the Rafale fighter jets – says India will receive compensation from the French government in case the fighters are not delivered or delayed. Importantly, the “letter of comfort” provided by the French has been found to be more robust than the letter provided by the Russians, as per the legal and treaties division of the ministry of external affairs, a senior ministry official who did not want to be named said.