InvestorQ : What is the Bank guarantee with respect to Rafale deal?
Aishwarya Nimbalkar made post

What is the Bank guarantee with respect to Rafale deal?

Answer
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1 year ago


According to the contract for 36 Rafale fighter jets the deal that was approximately €7.8 billion, India secured a €185 million bank guarantee from Dassault which will safeguard against any violations of the offset policy. A special clause has been put in the deal, which mandated that 5% of the total offset value should be kept as a buffer in case of non-performance. This off-set value will safeguard the interests, in the event when uncertainty hits the project. For example, in the past few months, US companies Lockheed Martin and Textron have been slapped with penalties for failing to meet offsets. In such time, the penalties were recovered from the 5% bank guarantees provided that had been secured at the time of the contracts.