So, as I mentioned in my earlier post, sticking points in negotiations between Dassault Aviation and HAL remain the chief reason why a draft contract hasn't reached finality. There have been a few reports that point to general difficulties in negotiations between HAL and Dassault on liability for the 108 aircraft that the former will license build in Bangalore. What you probably haven't heard about are the specific stumbling blocks. There are basically three:
- Responsibility for the 108 aircraft in terms of liability, damages and attendant clauses on access, inspection and post-manufacture testing. Dassault's concern is that HAL hasn't built up any of the fixed assets which the company feels would be the minimum requirement to begin discussing the modalities of the kind of liability HAL wants Dassault to take on for the jets built in India. With the last 60 aircraft to be as much as 90% 'Made in India',
- The ball is apparently in HAL's court, with Dassault telling the Cost Negotiation Committee (CNC) that it still awaits figures from HAL on the financial specifics of the liability it is seeking to transfer to Dassault. Dassault has asked HAL to clarify the specifics of any similar liability parameters in comparable deals like HAL's Su-30 MKI production line on license from Russia.
- Modalities of licensee/licensor and the manner in which the final agreement sets down their roles. Things are actually more contentious than most believe/report. Dassault has even flagged up issues with access to HAL's facilities.
Done and dusted clauses of the exhaustive contract cover pretty much all other aspects. The company's aversion for HAL manifested itself two years ago when it was revealed that Dassault wanted to built some of its aircraft with Reliance Industries' new defence business. With an irritated HAL putting its foot down and asserting itself as the principal production partner, the relationship between the two has been, well, uncertain at best. Both sides will be looking to new leadership at the MoD to get things moving.