Tuesday, March 31, 2020
Home News Reports Fresh controversy erupts after French media claims deal with Reliance was mandatory for Dassault

Fresh controversy erupts after French media claims deal with Reliance was mandatory for Dassault

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Raju Das
Corporate Dropout, Freelance Translator

French publication Mediapart is reported to have found 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. According to the report, 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’.

While Congress and some journalists have latched onto this report and have started claiming that this is a ‘proof’ of Indian government favouring Anil Ambani’s Reliance, there are others who believe that Mediapart has either deliberately or inadvertently misinterpreted comment made by the Dassault official. 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. It has already been reported that Dassault has entered into offset partnerships with several companies from both private and public sector India, which includes 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..

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.

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Therefore, it is very much possible that the Dassault official was talking about offset partnerships as a whole and not specifically about the Reliance deal. Because offset partnerships are indeed mandatory as per Indian rules. It is worth mentioning that DRDO is largest offset partner in the Rafale deal, and Reliance’s total share in it will be minor, which at present stands at less than 3%, which is the investment Dassault has made in the Nagpur plant. Also important to note that currently this plant is manufacturing parts for a civilian jet Falcon, not the Rafale jet.

French sources have confirmed that the Dassault deputy CEO was talking about around 100 offset partnerships that the company has entered into as mandatory requirement for the deal.

The officer was addressing union representatives of the company, and it was necessary to explain to them why the production of some parts of the Falcon business jet was being moved out of France. As it is the first time Dassault Aviation is moving a production facility outside France, getting the union to agree on this was necessary.

The original tender issued by UPA government to buy an MMRCA was for 126 jets, and Dassault had won that bid during UPA term itself. But the deal didn’t go through as Dassault refused to take responsibility for 108 jets that was to be made by HAL in India. Now, the company won a bid to 108 jets but let it go because they didn’t want to work with a company Indian government had selected, can the same company be forced to work with another company for a smaller deal for just 36 jets?

Both Indian and French governments and Dassault aviation have repeatedly asserted that the company is free to choose its offset partners and governments have no role in it.

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.

OpIndia has reached out to Dassault for a comment about this report by Mediapart, and we are awaiting the same to know the truth of the matter.

Update: Dassault Aviation has issued a detailed clarification denying the claims of the French portal MediaPart.

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Raju Das
Corporate Dropout, Freelance Translator

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