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On Rafale, Reliance and Offsets, Someone’s Not Telling the Truth

"Not a single component worth a single rupee is to be manufactured by Reliance for these 36 Rafale jets," Anil Ambani has said. But Dassault's Eric Trappier has said the Nagpur plant will be used for its components.

New Delhi: How much does Anil Ambani’s Reliance Defence have to do with the Rafale deal announced by the Modi government in 2016? If one goes by the recent defences mounted by Ambani and finance minister Arun Jaitley – both of which use very similar language –  it would appear not very much.

In a blog post earlier this week, Jaitley laid out two points in this regard, both of which aim at supporting a common narrative: that the Centre’s decision to go for a smaller 36-fighter-jet deal which excludes Hindustan Aeronautics Limited didn’t benefit Reliance Defence.

For instance, Jaitley notes that  the “Government of India has no contract whatsoever with any private industry in relation with the Rafale aircraft supplies”.

“In fact, 36 of the Rafale aircraft with their Indian adaptations are going to be sent to India and there is no manufacturing of these 36 aircrafts in India,” the finance minister’s note states.

Anil Ambani –  in a letter to Congress chief Rahul Gandhi, portions of which the company made public in a press release to journalists –  tries to similarly underscore that Reliance Defence has nothing to do with the making of the Rafale jet.

The letter states that not a single component worth a single rupee is to be manufactured by Reliance for these 36 Rafale jets and that allegations of Reliance benefitting by thousands of crores of rupees is a figment of imagination “promoted by vested interests”. Ambani adds that all 36 planes are 100% manufactured in France and exported from France.

While Jaitley is right that the Rafale aircraft is not going to be manufactured in India, what’s less clear is the role the Reliance-Dassault joint venture’s facility in Nagpur will play in producing components for the fighter jets.

Anil Ambani (left), Eric Trappier of Dassault (fifth from the left), with Maharastra chief minister Devendra Fadnavis and Union minister for transport and Nagpur MP Nitin Gadkari at the foundation laying ceremony for the Reliance-Dassault joint venture plant in Nagpur, 2016. Credit: Dassault

Anil Ambani (left), Eric Trappier of Dassault (fifth from the left), with Maharastra chief minister Devendra Fadnavis and Union minister for transport and Nagpur MP Nitin Gadkari at the foundation laying ceremony for the Reliance-Dassault joint venture plant in Nagpur, 2016. Credit: Dassault

For instance, in July 2018, the Economic Times reported that the Dassault-Reliance aerospace facility in Mihan, Nagpur would “manufacture important components for the 36 Rafale fighter jets which India is procuring from France”.

According to the Economic Times, during the laying of the foundation stone, Dassault chairman Eric Trappier noted that the work on the 36 Rafales had already begun.

“The plan is that initially at Mihan the critical components of the 36 jets will be manufactured and the jets will be assembled in France. In the future, the entire jet will be assembled at Mihan depending on further orders,” the report noted.

“We will start manufacturing parts of the Rafale in Mihan. The 36 aircraft will not be assembled here. If we have new orders then we will make the entire aircraft here,” the report, quoting remarks made by Trappier, added.

This isn’t the only time Dassault and Trappier made public reference to parts of the Rafale jet being manufactured in India.

In a November 2017 interview with The Hindu, Trappier, who was asked how many jets would be made in India as part of the company’s offset obligations, states that “certain parts of the Rafale… are going to be manufactured in India to start with” and if new orders are placed, the jet would then be “made totally in India”.   

Q- How many Rafale jets would be made in India as part of the offset clause?

A – It’s not a question of how many Rafale [jets] will be made in India for the first 36 order that we have got. Certain parts of Rafale and Falcon are going to be manufactured in India to start with. We will take a step-by-step approach and we will start manufacturing parts of Rafale in this facility. If there are new orders, we will look at manufacturing here. We are sure that it’s win-win situation. Manufacturing in India is going to be the next step and it depends upon the new orders. For the new orders for Rafale, the jet would be made totally in India.

Trappier’s remarks in 2017 appear to be at odds with Ambani’s more recent letter, where he claims that none of the components of the Rafale jet will be manufactured at the Reliance-Dassault JV facility in Nagpur.

There could be two explanations – the first being that Trappier misspoke or that it was initially the plan to manufacture Rafale components in India, but the facility is now going to be used solely to churn out parts for the company’s Falcon jets.

Secondly, it could be that the Rafale components being manufactured at the Mihan plant are meant for jets being sent to other countries such as Qatar and Egypt, which have ordered the aircraft from Dassault, and not India, although there is no information in the public domain to suggest this might be the case.

Either way, Trappier’s claims – which are in the public domain and run counter to the assurances both Jaitley and Ambani have given – have yet to be contradicted by either Dassault or Reliance Defence.

What offset partner?

Another puzzling defence put forth by the Modi government is that officially speaking, it has no idea who Dassault Aviation has chosen as its Indian offset partner.

Defence ministry officials have maintained, both through official press releases and through anonymously-sourced media reports, that the government will only know who the Indian offset partners are when Dassault Aviation seeks its offset credits.

“Further, no Indian Offset Partner for the 2016 deal for 36 Rafale Aircraft has been so far selected by the vendor (DA) because as per the applicable guidelines, DA is free to select the Indian Offset Partners and provide their details at the time of seeking offset credits, or one year prior to discharge of offset obligation,” the defence ministry said in a press release on February 7, 2018.

While this statement is technically accurate, the Modi government cannot pretend it doesnt know.

After all, when the foundation stone of the Dassault Reliance Aerospace manufacturing facility was laid at Mihan in Nagpur, the function was attended by transport minister Nitin Gadkari and French defence minister Florence Parly. 

At the October 27, 2017 event, Anil Ambani thanked Gadkari “for twisting my arm and making me come to Nagpur.”

Multiple media accounts of the function held in Mihan, Nagpur last month for the laying of the foundation stone of Dassault Reliance Aerospace Limited reported that it was announced that the facility would “manufacture several components of the offset obligations connected to the purchase of the 36 Rafale fighters”.