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

Financial Chronicle - - FUNDAMENTALS, POLITICS -

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 three­day 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 staterun 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.

Nir­mala Sithara­man ar­rives for the first In­dia-France min­is­te­rial level an­nual De­fence Di­a­logue, in Paris

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