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'Reliance Violated Its Industry Licence Conditions in Executing Offsets for Rafale Deal'

A complaint sent to the CBI by Prashant Bhushan, Yashwant Sinha and Arun Shourie has alleged that Reliance Aerostructure Ltd violated the conditions of its DIPP licence in its manufacture of Falcon jet parts in Nagpur.

New Delhi: Did Anil Ambani-owned Reliance Aerostructure Ltd (RAL) run afoul of the terms of its industry licence by embarking on the joint venture with Dassault Aviation for the 36-Rafale deal?

This allegation, and more, is made out in a complaint sent to the Central Bureau of Investigation by advocate-activist Prashant Bhushan and former BJP Union ministers Yashwant Sinha and Arun Shourie.

According to the complaint, by changing the location of its industrial unit (from Gujarat to Maharashtra) and the “article that is permissible to be manufactured” (from military aircraft to civilian business jets), RAL may have violated the conditions of the licence issued to it by the Department of Industrial Policy and Promotion (DIPP).

Also read: Yashwant Sinha, Arun Shourie, Prashant Bhushan Move CBI for Rafale Deal Probe

Generally-speaking, when a company looks to set up a manufacturing unit it is required to obtain a licence from the DIPP, which authorises the location of the plant and the type of product or article that can be manufactured.

As of July 2018 – in a section titled “Industrial Licences Issued for Manufacture of Items under Defence Industries –  the DIPP’s website states that the licence given to Reliance Aerostructure Limited is for “Amreli in the state of Gujarat” and for “manufacture and upgrade of airplanes and helicopters specially designed for military application”.

The industrial licence granted to RAL. Credit: DIPP

Description of the industrial licence granted to RAL. Credit: DIPP

However, as Reliance Defence has made clear over the past few months, the joint venture between RAL and Dassault will in fact work out of a production facility located in Nagpur, Maharashtra and will be make parts for the company’s Falcon business jets, which are normally used for civilian purposes.

“This is in clear violation of the condition of the licence that R.A.L obtained from the D.I.P.P. R.A.L. cannot take a licence for “Manufacture and Upgrade of Airplanes and Helicopters Specially Designed for Military Application”, and then enter into a JV to manufacture parts for a civilian aircraft under that same licence,” the CBI complaint notes.

“To be clear, civilian aircrafts [sic] are in fact included in the list of eligible products/ services towards the discharge of offsets. But what products/services actually get allowed by the government to be used to discharge the offset obligations is controlled through the issue of the industrial license that specifies what can be manufactured,” it adds.

By violating the licence condition, the trio argue, RAL should be rendered “ineligible as an offset partner for Dassault as per the offset guidelines”.

Also read: The Moral Headwinds from Rafale and the Rajan List are Bound to Batter Modi

“R.A.L. has evidently failed to comply with the licensing requirements stipulated by the DIPP by [a] changing location of manufacturing without due amendment in license & [b] by starting process of manufacturing a ‘new article’ i.e. civilian Falcon aircrafts as opposed to “Manufacture and Upgrade of Airplanes and Helicopters Specially Designed for Military Application”,” the statement notes.

“It has violated Clause 4.2 of the Offset Guidelines. The Finance Minister’s statement, shows that government is aware of this fact. However, Mr. Modi’s influence has ensured that no action has been taken against R.A.L. thus far.”

It is unclear at the moment whether the Reliance-Dassault joint venture received a separate industrial licence that approved the Nagpur location and manufacture of Falcon business jets. The Wire has sent Reliance Infrastructure a questionnaire and will update this story if and when a response is received.