Dassault clarifies again, it freely chose Reliance, there was no pressure or mandatory requirement

Controversy erupted last night after French publication Mediapart reported to have obtained an internal document pertaining to Dassault Aviation which purportedly claims that the offset deal with Reliance was mandatory for the company to get the contract to supply the 36 Rafale fighter planes to India. In this regard, the French Aviation company issued a clarification reiterating their stand that as per the agreement, Dassault Aviation had committed to offsets worth 50% of the total value of the purchase in India.

For this, the company, Dassault Aviation got into a joint venture with India’s Anil Ambani led Reliance Defence, Dassault Reliance Aerospace Limited (DRAL) on 27th February 2017. Dassault clarifies that other partnerships have also been signed with other companies like BTSL, DEFSYS, Kinetic, Mahindra, Maini, SAMTEL and negotiations are on for other companies. The DRAL manufacturing plant in Nagpur, the foundation of which was laid in October 2017, will manufacture parts for Falcon 2000 business jets and, in a second step, parts for Rafale aircraft and the first Falcon 2000 parts are to be delivered by end of 2018.

Rafale deal is a government to government deal between India and France, and this deal has an offset clause as per India’s offset policy. According to this policy, the foreign vendor has offset 50% of the deal value in India. The offset may in the form of investment in India, purchase from India, and technology transfer. The Mediapart report mentions that while inaugurating the Dassault Reliance Aerospace facility in Nagpur, the Deputy Chief Executive Officer of Dassault Aviation Loik Segalen is reported to have said that ‘It was imperative and mandatory for Dassault Aviation to accept this counterpart (offset partnership), in order to seal the deal to sell Rafale jet to India’. Mediapart seems to have either deliberately or inadvertently misinterpreted the comment.

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OpIndia has already reported that Dassault has entered into offset partnerships with several companies from both private and public sector India, including BEL, DRDO, HAL, BTCL, Samtel, Reliance Defence, L&T, Mahindra Group etc. The French company has signed MoUs with 72 companies for various offset agreements and talking with more. All this because of Dassault’s commitment to offsets worth 50% of the total purchase value in India.

Other than Dassault, engine maker Safran, radar and aviation electronics supplier Thales, and missile provider MBDA also will have to fulfil offset obligations and they are also in the process of entering into such partnerships.

Hence it is clear that the Dassault official meant offsets partnerships as a whole, which was essential for the company to get the deal of 36 fighter jets and not just Reliance.

French journalist Julien Bouissou clarified that what the Dassault Aviation officer said was more for the French trade unions, explaining why Dassault is opening a manufacturing plant in Nagpur and not in France.

He said that as per French labour laws, the top management of the company needs to inform the Central Works Council (trade unions) about strategic and important decisions.

He added that in this case, it was important to convey the decision of shifting the plant to Nagpur, India out of France, leading to no job creation for French workers.

Earlier, this same publication had claimed that former France President Hollande had said that India had selected Reliance for the deal, but this claim was denied by both the governments and the company. Later when Hollande asked to comment on it, he had said that only Dassault can comment.

The Mediapart seem to be extensively using arguments made by the opposition in India in its report. The report quotes Arun Shourie, Prashant Bhushan, Yashwant Sinha, persons who are among the biggest critics of the government at present. The report claims that Modi government cancelled the deal to buy 126 jets, ignoring the fact that the deal was stalled for over two years due to disagreement over HAL between Dassault and the Indian government.

The report by Mediapart also repeats the lie spread by Congress that Reliance Defence was formed twelve days before PM Modi’s France visit. Fact is Pipavav Shipyard was established in 1997 which was acquired by Reliance in 2015 and was renamed as Reliance Defence and Engineering in 2016. The report also claims Anil Ambani is unknown in the defence industry. Fact is Reliance Defence is a known name in the industry and they have just won a deal worth ₹ 15,000 crore billion to maintain the warships of the seventh fleet of US Navy, among many other deals. 7th fleet is the largest fleet of the US Navy and its fleet size and firepower is actually more than entire Indian navy.

The report by the French journal actually reads more like a Rahul Gandhi speech than an investigative report, going by how many times they mention Anil Ambani’s name, not forgetting to inform that he is ‘close friend’ of Narendra Modi.

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