The Hindustan Aeronautics Limited (HAL) had major “unresolved” differences with Dassault Aviation including issues over work share and taking responsibility for the local production of the 126 Rafales in India. The PSU had also informed the Defence Ministry twice about the same following which the Congress-negotiated deal had to be cancelled. 

Senior defence ministry officials have shot down reports quoting ex-HAL chief, Suvarna Raju, claiming that HAL could have built the Rafale fighters in India and that the PSU had signed a work share with the French Dassault Aviation. They said,  "Since the workshare between Dassault Aviation and HAL was never agreed upon, the statement claiming lower life-cycle cost is completely presumptive. Due to all the above reasons, the proposal for 126 MMRCA could not be progressed further."

The officials also said the news item has quoted the ex-CMD claiming that an agreed workshare with Dassault Aviation was submitted to the government and also referred to the cost of the aircraft, Life Cycle Cost issues etc.,

“The statement attributed to ex-CMD, HAL is factually incorrect. Ex-CMD, HAL was a member of the Contract Negotiations Committee of Defence Ministry. There were many major areas of disagreement between HAL and Dassault. HAL in its letter dated 11.10.2012 addressed to Defence Ministry had brought out these disagreements pertaining to the workshare between them. Subsequently, in July 2014 HAL in its letter to Defence Ministry has also highlighted one major unresolved issue regarding responsibility sharing between for licence manufacture of aircraft,” the officials said.  

The Defence Ministry officials added that the issues between the two firms were also about the man-hours required for the manufacture of various components of the aircraft in HAL signifying "a contradiction in the claims of attributed to Ex-CMD HAL."