Amid never-ending attacks by Rahul Gandhi on the Rafale deal, Dassault Aviation has been trying to clear the air about the deal and clarify the allegations made about the same. As part of that, Dassault Aviation CEO tried to answer some questions in an interview given to AFP (Agence France-Presse, a France based international news agency).
While answering why the company chose Reliance over HAL as their JV partner, CEO Eric Trappier says that Dassault Aviation wanted to establish a long-term presence in India through Dassault Reliance Aerospace Limited (DRAL), which will be led by an Indian CEO and a French COO. He also mentions that Dassault will maintain technical and industrial control over the operations in the plant, which will make parts for Falcon and Rafale aircraft.
Demolishing claims made by Rahul Gandhi that Reliance is getting Rs 30,000 crore from the deal, Eric informs that Dassault will be able to fulfil about 10% of its offset obligation through DRAL. It is important to note that the total offset obligation in the Rafale deal is around Rs 29,000 core, but Dassault does not have to fulfil this obligation alone. There are four major companies involved in this deal, other than Dassault they are Thales (radar and electronics), Safran (engine) and MBDA (missiles), and all of them have offset obligations. According to reports, Dassault’s share in the offset obligation is around Rs 8,400 crore. This means the share of DRAL in the deal will be around Rs 840 crore, not Rs 30,000 crore as Rahul Gandhi is claiming.
Eric also tried to clear the confusion created by the misleading report published by Mediapart. Quoting this report, Rahul Gandhi had alleged that Narendra Modi is ‘compensating’ Anil Ambani by paying him Rs 30,000 crore. He explains that the English word “offset” is generally written as “compensation” or “contrepartie”, and the mention of “compensation” in the report refers to offset only. He also clarifies that offset obligation is a mandatory requirement as per Indian law, but the choice of partner to implement that obligation is with Dassault.
We have reproduced the English translation of the interview below:
1) The Rafale India contract makes provision for offsets to be provided by yourselves in the country. Where are you with these offsets?
Eric Trappier: To clarify matters, what is called “offset” in English is usually translated into French as “compensation” or “contrepartie”. The reference is the contract we signed and which is called “Offset contract”. With regard to the staff and trades unions organizations, Dassault Aviation uses the term “obligation contractuelle d’offset” or “obligation contractuelle de compensation ”.
Signing an offset contract is a requirement of Indian law (Defence Procurement Procedure). The implementation of offsets is an obligation and, under the Indian regulation, the choice of the partners belongs to us.
In full compliance with this regulation, Dassault Aviation therefore decided to set up the DRAL joint venture with Reliance and build a plant in Nagpur, which should enable us to meet about 10% of these offset obligations. We are in negotiations with about a hundred Indian companies and partnerships have already been concluded with about thirty of them.
2) Why did you choose Reliance over HAL as your Indian partner in the JV?
Eric Trappier: Dassault Aviation decided to establish a long-term presence in India through DRAL, a joint enterprise in which governance is provided by an Indian Chief Executive Officer and a French Chief Operating Officer. Dassault Aviation therefore exercises technical and industrial control over the operations, applying its standards and its flexibility. This JV will produce parts for the Falcon 2000 and Rafale. The choice of the Nagpur site, in central India, was dictated by the availability of land with direct access to an airport runway.
3) Are you confident for the future despite the current controversies in India?
Eric Trappier: Controversies are always unfortunate but we remain calm. Things are progressing rapidly. We set up DRAL on 10 February 2017 and the plant project was officially launched on 27 October 2017.
The first phase of the project involves building a temporary hangar to house the production tool and enable staff training to begin as rapidly as possible. This temporary hangar was completed in March 2018. Activities started on 18 April in the presence of senior executives from Dassault Aviation and the local authorities. We hired an Indian CEO, Mr. Sampathkumaran S. T., who has more than 20 years’ experience in the aeronautical industry. We have hired and trained Indian managers and workers. The first Falcon 2000 parts should roll off the line at the end of the year.
A second phase started in July 2018, with the construction of a final building, completion being scheduled for July 2019. This building will allow a ramp-up in industrial activities. The cooperation between Dassault and India, which has existed for 65 years, has been given fresh impetus by Make in India and we are proud to be able to contribute to it.