Dassault says it picked Reliance of its own will for Rafale deal

Dassault Aviation said it picked India’s Reliance Defence as a partner for a big military combat deal on its own, countering a French online media report that said the Indian government insisted on the firm as a condition of the contract. Interestingly, the French company’s statement came while Defence minister Nirmala Sitharaman is on a three-day visit to France.

Prime Minister Narendra Modi’s purchase of 36 Rafale planes in a deal estimated to be worth $8.7 billion has become a political controversy and on Thursday his rivals seized on the revelations by Mediapart as further evidence of wrongdoing. The deal has faced scrutiny both on the price and the decision to choose billionaire Anil Ambani’s Reliance as a local partner with no aeronautical expertise instead of the state-run Hindustan Aeronautics which has a long history of making planes.

The French news outlet said it had obtained a Dassault company document in which a senior executive is quoted as saying the group agreed to work with Reliance as an “imperative and obligatory” condition for securing the fighter contract.

Under India’s defence procurement rules, any company selling equipment must invest at least 30 per cent of the contract in India as part of an “offset” clause to help build a domestic manufacturing base and reduce the country’s dependence on imports.

Mediapart’s report appeared to corroborate former French President Francois Hollande’s comments last month that India had put pressure on Dassault to choose Reliance as the offset partner in a deal worth millions of dollars to Indian company. The deal was sealed when Hollande was in office. But Dassault in a statement late on Wednesday denied Delhi had a role in the choice of the partner. It said it had committed to investing 50 per cent of the contract value to benefit the local economy and for that purpose had entered into a joint venture with the private Indian firm.

The joint venture, Dassault Reliance Aerospace Ltd (DRAL), was created in February last year and the foundation stone for the plant was laid in October in Maharashtra. “Dassault Aviation has freely chosen to make a partnership with India’s Reliance Group,” it said. The plan is to produce parts for Dassault’s Falcon 2000 business jets and, in a second step, components for the Rafale combat aircraft that the Indian military is buying to upgrade.

The company said it had trained an initial team of managers and workers and the first Falcon components will be delivered by the end of the year.

India picked the Rafale plane to replace its ageing fleet of Russian aircraft from a field that included Lockheed Martin F-16, Saab’s Gripen, the Eurofighter Typhoon, Boeing ‘s F/A-18E/F Super Hornet and the Russian MiG-35.

Congress president Rahul Gandhi on Thursday demanded an investigation against PM Modi on his role in the Rafale deal, alleging that he was a “corrupt man” who helped Anil Ambani pocket Rs 30,000 crore in the purchase of 36 aircraft. “The reality is that the prime minister is corrupt, but he came to power on the promise of fighting corruption. There should be an investigation on it,” he told a press conference while the party distributed copies of the French report.

Questioning Modi’s silence on the issue, he said, “It is clear there is pressure. If he is unable to respond, he should resign.”

“Why has suddenly the defence minister rushed to France? What is the emergency? The #GreatRafaleCoverUp has begun. To try and show the deal is legitimate, Raksha Mantri will need to generate minutes of imaginary meetings held between the French and our Ministry of Defence and both sides will need to agree on a common story to be spun to the media. RM left for France last night,” he added on Twitter. He said Sitharaman's France visit was, “to put pressure on Dassault, to silence them and do a cover up.”

BJP spokesperson Sambit Patra hit out at Gandhi alleging the Congress leader comes from “a family of middlemen” and his father and former prime minister Rajiv Gandhi was “officially a middleman” in a defence deal.  The Gandhi family had made money from every defence deal till 2014, Patra alleged, claiming that Rahul Gandhi has not been able to come out of that mindset. “People of this country do not want a clown prince to play with the national security. His press conference was full of lies and deception which he is using to build his political career. This will not happen,” he said.