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Business News/ Companies / News/  Rafale deal from Dassault, not defence ministry: Reliance Group

Rafale deal from Dassault, not defence ministry: Reliance Group

CEO Rajesh Dhingra says Dassault chose Reliance Defence to meet its 'offset', or export obligation, in the Rafale deal and that the defence ministry has no role in the selection of Indian partners by foreign vendors

Congress president has accused the Narendra Modi government for inking the Rafale deal at a much higher price than the one UPA had negotiated. Photo: ReutersPremium
Congress president has accused the Narendra Modi government for inking the Rafale deal at a much higher price than the one UPA had negotiated. Photo: Reuters

New Delhi: Anil Ambani’s Reliance Group on Sunday said it received the Rafale jet deal from Dassault Aviation SA and not the defence ministry. “Reliance Defence or any other Reliance group company has not received any contract from the MoD till date, related to 36 Rafale aircraft. This is absolutely unfounded and incorrect," said Reliance Defence Ltd chief executive Rajesh Dhingra.

Answering questions ranging from lack of experience to state-owned Hindustan Aeronautics Ltd (HAL) being overlooked for the Rafale jet deal, the Reliance Defence CEO said the French aviation firm chose Reliance Defence to meet its “offset" or export obligation in the contract and that the defence ministry has no role in the selection of Indian partners by the foreign vendors.

According to Dhingra, the government-to-government deal requires all 36 Rafale fighter jets to be delivered in a “fly-away" condition, which means “they are to be exported from France by Dassault" and “HAL or anyone else cannot be the production agency for the simple reason that no aircraft are to be produced in India".

Dhingra said HAL was a nominated production agency for the 126 medium multi-role combat aircraft programme, which never reached the contract stage.

The opposition Congress had last week demanded setting up of a joint parliamentary committee on the Rafale jet deal, even as its president Rahul Gandhi attacked the Narendra Modi government for inking the deal at a much higher price than the one the United Progressive Alliance (UPA) had negotiated. He has accused the government of changing the deal to benefit “one businessman".

On allegations of Reliance Defence getting the contract because of Ambani’s reported proximity with Prime Minister Narendra Modi, Dhingra said: “As per the defence procurement procedure (DPP), ministry of defence has no role in the selection of Indian partners by the foreign vendors. This has been the position right from 2005 when offsets were first introduced in the country." In the more than 50 offset (export obligations) contracts signed in the country till date, the same process has been followed, he said. “Therefore, this is a deliberate attempt to mislead people and cloud the issue."

On the issue lack of experience in making fighter jets, Dhingra said no company in India, except HAL, has the experience of making fighter planes. “This would mean that we will never create any new capability beyond what exists and will continue to import more than 70% of our defence hardware," said the Reliance Defence CEO.

Dhingra added that Reliance Defence will be participating in the offset programme through Dassault Reliance Aerospace Ltd (DRAL) in which Dassault holds a 49% stake bringing in its 90 years of aerospace manufacturing experience, making it the “most qualified vendor".

He termed as “absolutely wrong" the allegations of Reliance Group benefiting with a 30,000 crore contract. “Dassault’s share of offsets is about 25%, with the remaining offset obligations being shared by Thales, Safran, MBDA and others. Therefore, the basic premise of Dassault giving 30,000 crore worth of offset contracts to Reliance is totally unfounded."

Dassault and its other Tier-I suppliers have already indicated that more than 100 Indian companies which will participate in the offset contracts, he added. This includes joint ventures with PSUs like HAL and Bharat Electronics Ltd. “We can also not lose sight of the fact that up to 30% of total offsets can be discharged through transfer of technology to DRDO, as per DPP," Dhingra said.

Asked about Reliance Defence being incorporated days before announcement of the Rafale deal, Dhingra said three companies were incorporated in December 2014 and Reliance Group’s entry into defence sector was announced at Aero India in February 2015.

“Also, there are reports in the media of as late as end-March 2015 where Dassault officials were on record to say that the MMRCA deal is 95% done. If this is correct, what is the linkage with the date of incorporation of Reliance Defence?" Dhingra asked.

When asked about Anil Ambani’s presence in France when Modi signed India’s Rafale deal with France in April 2015, Dhingra said the Reliance Group chairman is part of the CEOs’ Forum for France and also many other countries.

“He (Anil Ambani) was in Paris because there was a meeting of the CEOs’ Forum on the sidelines of the prime minister’s visit. More than 25 other CEOs from the Indian companies were also present, including the Chairman of HAL," Dhingra said.

Asked about allegations that Reliance actually got contracts worth 1.3 trillion and not 30,000 crore, the Reliance Defence CEO said the amount may be coming from projections of 30,000 crore for offsets and another 100,000 crore towards the lifecycle cost over 50 years.

“There cannot be anything further from truth.... To the best of my knowledge, the government has not signed any lifecycle contract for 50 years with Dassault. Therefore, the very question of Reliance getting a contract does not arise," he said.

On the issue of defence minister Nirmala Sitharaman denying knowledge of the contract, he said according to DPP 2016, the foreign vendor has a choice to submit the details of its offset partners at the time of claiming offset credits. “In this case, offset obligations are due only after September 2019. It is, therefore, possible that the Ministry of Defence has no formal communication from Dassault Aviation about the choice of its partners for the offsets," Dhingra said.

Asked whether it was correct that under DPP, a joint secretary-level official is required to countersign the contract, Dhingra said: “The offset contract is signed between the MoD and the foreign vendor. MoD does not sign any contract with the Indian offset partners."

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.

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Published: 12 Aug 2018, 08:16 PM IST
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