If thats the main problem, I can fully understand Dassaults stand on this. Any company would not want to take responsibility for this.
Unfortunately that seems to be the case. Dassault is being asked to take responsibility for HAL's performance, and any delays by HAL. No company on earth would agree to such a clause. Dassault has made it clear that it can accept responsibility for the 18 aircrafts it supplies (WRT quality of manufacture, timeliness of deliveries etc), but NOT for HAL's performance.
Otherwise, it wants to be made the lead integrator, instead of HAL. In that case, they are ready to accept responsibility for the manufacture of the whole lot. That is, if they are allowed to form a joint venture with a domestic firm to set up a production line, or if they are in charge of the line at HAL, they will accept responsibility. But this would take away from GoI's aim of complete indigenization and ToT.
Frankly, I think the GoI should be flexible on this, and MAKE HAL ACCEPT RESPONSIBILITY for what it does. It is time that HAL stood up and took some responsibility anyway. This is a repeat of the liability clause regarding nuclear reactors, where the govt wanted foreign suppliers to be responsible for any mishap, even when the operations of the plant were to be conducted by Indian firms.
It's like saying "You have to teach me all the know-how, and after that if I screw up, you have to pay me money as liability." Any CEO who agrees to sign such a clause will be fired by the board.
GoI can forget about getting any planes from anybody with such ridiculous clauses. Also, I have serious issues with how the entire saga has been taken up. There should have been a delink between the needs of the IAF and the desire to set up an aerospace industry. It is commendable that they want to learn cutting edge manufacturing technologies, but the pressing need of the IAF for MRCAs is being held up.