The government’s lies and procedural amendments to obscure Reliance Group’s part in the Rafale deal

30 October 2018
In September 2018, François Hollande stated that the Indian side insisted on Reliance Group as the main Indian partner right at the inception of the Rafale deal, first announced by Narendra Modi on a visit to Paris in April 2015, during Hollande’s tenure as the president of France.
Ajay Verma / Barcroft India / Getty Images
In September 2018, François Hollande stated that the Indian side insisted on Reliance Group as the main Indian partner right at the inception of the Rafale deal, first announced by Narendra Modi on a visit to Paris in April 2015, during Hollande’s tenure as the president of France.
Ajay Verma / Barcroft India / Getty Images

Anil Ambani’s Reliance Group and the French company Dassault Aviation announced the creation of a joint venture, Dassault Reliance Aerospace Limited, on 3 October 2016. This came ten days after India and France signed an intergovernmental agreement for the purchase of 36 of Dassault’s Rafale fighter aircraft for the Indian Air Force, at a total price of €7.87 billion—approximately Rs 59,000 crore. India’s defence-procurement guidelines call for foreign arms vendors to reinvest much of the value of major sales back in the country, and Dassault was bound to reinvest half the value of the Rafale purchase to meet this “offset” requirement. The joint venture with Reliance Group was a clear and public sign that Ambani’s corporation was to receive a large part of Dassault’s offset spending.

By June 2017, Reliance Group was reported to have secured offset contracts worth Rs 21,000 crore. A few months later, Dassault and Reliance Group laid the foundation stone for a facility in Nagpur meant to manufacture parts for the French company’s line of Falcon private jets. The event was widely publicised, and attended by two senior leaders of the ruling Bharatiya Janata Party—the cabinet minister Nitin Gadkari, and Devendra Fadnavis, the chief minister of Maharashtra. Dassault simultaneously announced that it would be investing €100 million in the two companies’ joint venture. Reliance Infrastrature, whose subsidiaries are involved in the aerospace business, boasted in its 2016-2017 annual report that it would be a “key player” in Dassault’s offset plans.

Even so, the government claimed that it was ignorant of Reliance Group’s involvement. Nirmala Sitharaman, the defence minister, told reporters in November 2017 that “no offset contract has been signed so far.” In February this year, the defence ministry was still insisting that “no Indian Offset Partner for the 2016 deal for 36 Rafale Aircraft has been so far selected by the vendor.”

In September 2018, François Hollande stated that the Indian side insisted on Reliance Group as the main Indian partner right at the inception of the Rafale deal, first announced by Narendra Modi on a visit to Paris in April 2015, during Hollande’s tenure as the president of France. French media reported in October on an internal document from Dassault that stated the joint venture had been an “imperative and mandatory” component of the deal. This bolstered the Indian opposition’s accusation that the Modi government unduly favoured Anil Ambani’s corporation in the Rafale purchase.

Dassault, Reliance Group and the Indian government have disputed this. The government has maintained that Dassault was given free choice of partners, and that it has had no official notice of where the French company is directing the offset money. “The inter-governmental agreement does not name anybody,” Sitharaman said at a press conference soon after Hollande’s statement that the intergovernmental agreement that formalised the Rafale deal “does not name anybody,” and that she did not know “with whom any kind of offset-related agreement or understanding exists.”

Keywords: Reliance Defence Rafale Reliance Group Dassault Reliance Aerospace Limited Narendra Modi Nirmala Sitharaman François Hollande Arun Jaitley Defence Procurement Policy offset partner defence ministry
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