Former French President Hollande’s alleged revelation regarding the Modi government suggesting Reliance’s name for partnering in the Rafale deal has initiated yet another round of political slugfest. After the revelations by a French journalist, Rahul Gandhi latched on to the news and tweeted that the PM personally negotiated and change the Rafale deal behind closed doors. He alleged that PM Modi delivered a deal worth billions of dollars to a bankrupt Anil Ambani.
https://twitter.com/RahulGandhi/status/1043151202106654720?ref_src=twsrc%5Etfw
Essentially, Rahul Gandhi, piggybacking on Hollande’s alleged assertions, said that the PM had indulged in crony capitalism by mediating and awarding the deal to Reliance.
However, the truth might be different. In 2012 under the Congress-led UPA government, Reliance Industries and France’s Dassault Aviation had signed a pact for partnering in the defence and homeland security sector. Mukesh Ambani’s RIL had formed a new company named Reliance Aerospace Technologies Ltd (RATL) for this purpose. This was during the first round of bidding for 126 Medium Multi-Role Combat Aircraft (MMRCA) that India was seeking to buy, which was eventually cancelled.
The MOU was inked 2 weeks after Dassault’s Rafale emerged as the preferred bidder in a $15 billion contest to supply 126 multi-role fighter planes to India under the Congress regime. It was a necessity as a mandatory offset clause was prescribed by the Indian government.
In 2013, news emerged that France’s Dassault Aviation and Reliance Industries are planning to set up a facility to produce wings of Rafale combat aircraft selected by IAF for meeting its requirement of 126 fighter planes. It was reported that a Rs. 1,000-crore facility for producing the wings of the Rafale combat aircraft is most likely to come up in Bangalore.
It was reported that under the agreement, Dassault would help Reliance set up a facility that was similar to Dassault’s facility in France.
The clincher, however, is that the media reported in 2013 that the Defence Ministry and other agencies concerned have given a go-ahead to the two companies for creating the unit.
A 2013 report in NDTV quotes:
Dassault wanted Reliance to be the main partner in the production of the aircraft in India but the government made it clear that it was not possible as the tender for the procurement clearly stated that aerospace PSU Hindustan Aeronautics Limited (HAL) would be the lead integrator for the project.
The differences over the issue have been resolved and Dassault and HAL have started readying their teams for implementing the project after it is signed.
Although Dassault agreed that HAL will build the planes in India, they kept a significant condition for that. As per the agreement, Dassault was to supply 18 fighters from their plants in France and rest 108 planes were to be manufactured by HAL. And Dassault flatly refused to take any responsibility for the planes made by HAL. Dassault had serious reservations about the ability of HAL to accommodate the complex manufacturing and technology transfers of the aircraft. Dassault wanted that two separate contracts should be signed for the two batches of fighters, but the Indian government said at that stage the terms of the contract can’t be altered. It also wanted Dassault to take 100% responsibility of planes made by HAL. Both sides didn’t budge from its position and the deal remained stalled till the end of UPA government.
During this period, the agreement between Dassault and Reliance was allowed to lapse as there was no clarity about the future of the deal. With this, RATL decided not to go ahead with defence business. The NDA government officially withdrew the MMRCA tender in July 2015.
The original MMRCA deal didn’t go through even after finalisation of the deal because Dassault had such low confidence on HAL that they prefered to lose a multi-billion deal instead of depending on HAL. They were insisting on the RIL group company to be their partner.