Papers Show Reliance Joint Venture 'Mandatory' For Rafale Deal: Report

An internal document of Dassault Aviation, the makers of the Rafale fighters that India is buying from France, shows the aerospace major picking Anil Ambani's Reliance Defence as the offset partner in India was a "trade-off" for the 36 jet deal, according to a report by French investigative journal Mediapart.

The Mediapart article says the document shows a top Dassault official, Loik Segalen had explained to its staff on May 11, 2017, that the joint venture was a "trade-off", that was "imperative and mandatory" to win the Rafale deal.

Dassault Aviation, however, has denied the report and said it "has freely chosen to make a partnership with India's Reliance Group". 

"This joint-venture, Dassault Reliance Aerospace Ltd (DRAL), was created February 10, 2017. Other partnerships have been signed with other companies such as BTSL, DEFSYS, Kinetic, Mahindra, Maini, SAMTEL,... Other negotiations are ongoing with a hundred-odd other potential partners," Dassault said in a press release.

The French defence manufacturer said that on May 11, 2017, its Chief Operating Officer Loik Segalen informed the Central Works Council of the creation of the Dassault Reliance Aerospace Limited joint-venture "in order to fulfil some of the offsets commitment".

Former French president Francois Hollande had claimed in an interview to Mediapart last month that the Indian government had proposed Reliance Defence as the partner in the Rafale deal and France did not have a choice. Dassault had then clarified that the decision to partner with Reliance Defence was their own.

Allegations and counter-allegations escalated after Mr Hollande's statement. The opposition has accused the government of ignoring the state-run defence company Hindustan Aeronautics Limited (HAL) to benefit Anil Ambani. Both the government and the industrialist have rubbished the charge.

The new allegations came on a day when Defence Minister Nirmala Sitharaman was headed to France where she will visit a Dassault factory where the 36 Rafale aircraft are being manufactured for India. Ms Sitharaman will also meet her French counterpart, Florence Parly. Sources say Dassault is likely to push for more Rafale jets to be bought by India during the Defence Minister's three-day visit.

The previous Congress-led UPA government had negotiated with Dassault for 126 Rafale jets under which 18 jets were to be sent in a fly-away condition and 108 were to be assembled in India by HAL. However, the UPA could not seal the deal.

In the new deal, personally negotiated by PM Modi, Anil Ambani's firm became Dassault's key offset partner. As part of the offset clause, Dassault has to ensure that business worth at least half the money -- Rs.30,000 crore -- is generated in India.

Prime Minister Narendra Modi had announced the procurement of a batch of 36 Rafale jets after holding talks with the then French President Hollande on April 10, 2015 in Paris.