Former French President Who Negotiated the Rafale Deal Says Indian Government Suggested Reliance As Partner

Thirteen days before Modi made the announcement in Paris, Anil Ambani’s Reliance Group had registered a new subsidiary named Reliance Defence Limited. AMIT DAVE
21 September, 2018

On Friday, 21 September, French news organisation Mediapartpublished an investigative report in which the former French president Francois Hollande spoke out for the first time about the circumstances leading up to the 2016 Rafale deal. Hollande put the responsibility of bringing in Reliance as an offset partner—the bureaucratic jargon for obligatory reinvestments into India as a part of any large defence deal—squarely on the Indian government.

“We did not have a say in this,” Hollande told journalists Karl Laske and Antton Rouget. “The Indian government proposed this service group [Reliance], and Dassault negotiated with Ambani,” he added. “We did not have a choice, we took the interlocutor who was given to us.”

Hollande negotiated the Rafale deal with two different Indian prime ministers. The first deal, with Manmohan Singh, involved procuring 126 aircrafts, of which 108 were to be manufactured by the public-sector company Hindustan Aeronautics Limited in India. The second deal that Narendra Modi negotiated, and finally signed, involved buying 36 aircraft, all to be manufactured in France, but with a 50 percent offset partnership with Reliance.

“I was involved in the negotiations,” Hollande told Mediapart. “Initially the sale was for 126 planes but due to the change of the government the Indians reformulated their proposal, which seemed less attractive for us because they were buying only 36 planes. But the fabrication was to be done in France unlike what was said in the earlier proposal. So while we lost on one front, we gained on the other.”

The 11,000-word-long cover story that The Caravan published earlier in the month highlighted many discrepancies in the Rafale deal. One such discrepancy was the surprise sprung by Modi's announcement of the deal itself, in 2015, and the way in which Reliance replaced HAL as Dassault's partner organisation at the last minute. Neither the defence minister Manohar Parrikar nor the HAL officials, who were also in France during Modi’s Paris visit, seemed to know that there was going to be a new deal. In fact, two days before Modi’s announcement, things seemed to be on track. The then foreign secretary S Jaishankar had stated that discussions between HAL, the defence ministry and Dassault were going well, and a fortnight before that, Dassault CEO Eric Trappier had expressed satisfaction that the agreement was nearing finalisation. With the unexpected new deal between Modi and Hollande’s governments, HAL was suddenly sidelined and Dassault no longer had to help manufacture the fighter jets on Indian soil. This is what Hollande likely means when he says “we gained on the other.”

Thirteen days before Modi made the announcement in Paris, Anil Ambani’s Reliance Group had registered a new subsidiary named Reliance Defence Limited. Besides being a trillion rupees in debt, the Group had no history in the defence sector (apart from buying a stake in a major shipyard handling military contracts) or in manufacturing.

Top officials in the Modi administration have consistently maintained that India had not signed any offset contracts. The Modi government made an amendment, in August 2015, to the offset guidelines to allow foreign vendors to give details of its Indian offset partner to the defence ministry at a later date. This enabled the government to deny knowledge of offset partners related to the Rafale deal. However, The Caravan received an official confirmation from the Air Force, in response to an RTI, that the intergovernmental deal and the offset contract between Dassault and the government of India were signed on the same day—23 September 2016.

The full story is now online.