Rafale aircraft deal: To get Rafale contract, Dassault had to choose Reliance Defence

FRENCH newsportal Mediapart has reported that a top official of Dassault Aviation explained to his staff in May 2017 that the firm’s joint venture with Anil Ambani’s Reliance group for discharging offsets in the 36-Rafale deal was a condition, “imperative and obligatory” to win the deal for 36 Rafale aircraft from India.

Mediapart said it had obtained an internal document which shows that Deputy Chief Executive Officer of Dassault Aviation Loïk Segalen said on May 11, 2017 during a presentation of the joint venture Dassault Reliance Aerospace Ltd (DRAL) from Nagpur: “It was imperative and obligatory for Dassault Aviation, to accept this condition, in order to obtain the export contract for Rafale from India”.

Dassault has maintained that “in accordance with the policy of Make in India, Dassault Aviation has decided to make a partnership with India’s Reliance Group” and that “it is Dassault Aviation’s choice, as CEO Eric Trappier had explained in an interview”.

Segalen’s remarks echo what Francois Hollande, the French President when the deal for 36 Rafale aircraft was signed between India and France, had told Mediapart. “It was the Indian government that proposed this service group (Reliance), and Dassault who negotiated with Ambani. We didn’t have a choice, we took the interlocutor who was given to us,” Hollande was quoted as having said.

Hollande was responding to The Indian Express report referred to by Mediapart that Ambani’s Reliance entertainment had co-produced a French film with his partner, Julie Gayet, when India and France were negotiating the Rafale deal. “That’s why, on the other hand, this group (Reliance) did not have to give me any thanks for anything. I couldn’t even imagine that there was any connection to a film by Julie Gayet,” Hollande had said.

Responding to this, the government had said it played “no role” and that “unnecessary controversies” were being created. Late last month, the Defence Ministry invoked “issues of conflict of interest involving persons close to the former President (Hollande)”.

The government, the statement said, “had no role in the selection of Reliance Defence as the Offset partner” and that “as per Defence Offset Guidelines, the foreign Original Equipment Manufacturer is free to select any Indian company as its offset partner”.

Ambani’s Reliance Defence became part of the offset programme of the Rs 59,000-crore Rafale deal through DRAL in which it holds a 51% stake. Dassault Aviation holds 49% stake in DRAL. In October 2017, Dassault CEO Eric Trappier had announced an investment of 100 million euros in the DRAL factory planned at Nagpur, which was scheduled to start production in 2018.

This was after Trappier and Ambani laid the foundation stone for the Nagpur factory in the presence of then French Defence Minister Florence Parly; Roads and Highways Minister Nitin Gadkari; Maharashtra CM Devendra Fadnavis and Ambassador of France to India Alexandre Ziegler.

The deal for 36 Rafale aircraft in a government-to-government agreement was announced by the PM on April 10, 2015 during his visit to Paris which led to the cancellation of the 126 aircraft deal being negotiated by the previous government. The deal was signed on September 23, 2016 in Delhi between then Defence Minister Manohar Parrikar and his French counterpart. Under the offsets clause, France is to invest 50 per cent of the total order cost in local contracts in India, worth Rs 30,000 crore. The offset obligations of the deal are to be discharged from September 2019 to September 2023, as per the contract.