On a Wing and a Prayer

India gambles its defence interests on Reliance Group

05 September, 2018


NARENDRA MODI'S FIRST PRIME MINISTERIAL visit to France, in April 2015, came amid long-drawn negotiations over India’s purchase of Rafale warplanes, manufactured by the French company Dassault Aviation. In 2012, a Congress-led government had declared Dassault the lowest bidder in a contest to supply 126 fighter jets for the Indian Air Force. After nearly ten years of cautious planning, field trials and rigorous evaluations, the country was, by most accounts, on the brink of finally acquiring its long-awaited seven squadrons, when Modi’s government took over. Modi now had a chance to make his mark on the negotiations.

The Indian prime minister’s schedule for the first full day of his visit included, among much else, round-table discussions with French CEOs from the infrastructure and defence industries, as well as talks with the French president. Afterwards, Modi announced to the media that he had discussed a government-to-government deal—foreign military sales negotiated directly between two countries, instead of a global tendering process—to purchase 36 Rafale jets in “fly-away condition” as soon as possible.

This completely bypassed the prior acquisition process. Dassault, like any foreign defence manufacturer selling to India, has to reinvest part of the total cost of any large deal back into the country—through some combination of local manufacturing, investment and transfers of technology. Earlier, the Indian government had stipulated that, to meet this obligation, whichever firm won the competition would have to work with the state-owned Hindustan Aeronautics Limited as its main partner. Now, suddenly, HAL was no longer in the picture.