The mystery of Reliance subsidiaries receiving defence-manufacturing licences

30 November 2018
Reliance Group’s exploration of business opportunities in the defence sector escalated exponentially after Modi’s announcement of the Rafale deal.
Shailendra Bhojak/PTI
Reliance Group’s exploration of business opportunities in the defence sector escalated exponentially after Modi’s announcement of the Rafale deal.
Shailendra Bhojak/PTI

On 10 April 2015, during his first prime ministerial visit to France, Narendra Modi announced a government-to-government deal to purchase 36 Rafale jets that were to be manufactured by the French company Dassault Aviation, in “fly-away” condition. As per procedure, any foreign defence-manufacturer selling to India is required to reinvest part of the total cost of the deal into India—known as “offsets.” In September 2016, Manohar Parrikar, the defence minister at the time, and his French counterpart signed the Rafale deal. It was reported to be worth €7.87 billion—roughly Rs 59,000 crore—and Dassault was required to reinvest half that value in India.

In The Caravan’s September cover story, I reported how the Rafale deal ensured that Reliance Group, headed by the industrialist Anil Ambani, went from having almost no history in the defence sector to suddenly having aerospace businesses worth thousands of crores. Thirteen days before the deal was announced, the Reliance Group registered a new subsidiary named Reliance Defence Limited. Ten days after the agreement was signed, Reliance Aerostructure Limited—a subsidiary of Reliance Defence—and Dassault Aviation announced the creation of Dassault Reliance Aerospace Limited, a joint venture that is majority-owned by Reliance.

Reliance Group’s exploration of business opportunities in the defence sector escalated exponentially after Modi’s announcement of the Rafale deal. According to the 2016–17 annual return filed by Reliance Defence Limited, the company has 13 subsidiaries. All of these companies are involved in the manufacture of defence products. Nine of them were incorporated within three weeks of Modi’s announcement. Within a year of their incorporation, the Ministry of Commerce and Industry issued licences to seven of these nine companies, for the manufacture of defence products. But as of March this year, none of these companies had commenced any business.

According to Reliance Infrastructure’s annual report, 12 of the 13 subsidiaries of Reliance Defence Limited had not commenced business as of March 2018. Despite this, right-to-information documents reveal that on 22 February 2016, the department of industrial policy and promotion (DIPP), under the Ministry of Commerce and Infrastructure, issued defence-manufacturing licences to eight of these subsidiaries—seven of these were formed soon after Modi’s announcement.

Sagar is a staff writer at The Caravan.

Keywords: Reliance Group Reliance Defence subsidiary companies Defence Procurement Policy defence department of industrial policy and promotion Ministry of Commerce and Industry defence-manufacturing license Rafale Industries (Development and Regulation) Act Arms Act
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