Business International Legal Nation

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

New Delhi: 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.

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 state-run 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 percent 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 New Delhi 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 percent of the contract value to benefit the local economy and for that purpose had entered into a joint venture with the private Indian firm.