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Reliance Defence was 'freely chosen' as offset partner: Dassault Aviation

Highlights
  • Dassault Aviation has freely chosen to make a partnership with India's Reliance Group. This joint-venture, Dassault Reliance Aerospace Ltd (DRAL), was created February 10, 2017: Dassault in press release
  • "Other partnerships have been signed with other companies such as BTSL, DEFSYS, Kinetic, Mahindra, Maini, SAMTEL"

Dassault Aviation, the maker of Rafale fighter jets, said on Wednesday night that it had "freely chosen to make a partnership with India's Reliance Group". The Rafale-maker's clarification came in response to a French media website claim that Dassault Aviation was presented with no option but to tie up with Anil Ambani-led Reliance Defence as the main offsets partner in the Rs 59,000-crore contract for 36 jets.

"Within the framework of the September 2016 Inter-Government Agreement between France and India, Dassault Aviation has sold 36 Rafale aircraft to India. In compliance with the Indian regulations (Defence Procurement Procedure) and as frequent with such a contract, Dassault Aviation has committed to offsets in India worth 50% of the value of the purchase. In order to deliver some of these offsets, Dassault Aviation has decided to create a joint-venture. Dassault Aviation has freely chosen to make a partnership with India's Reliance Group. This joint-venture, Dassault Reliance Aerospace Ltd (DRAL), was created February 10, 2017," Dassault said in a press release.

"Other partnerships have been signed with other companies such as BTSL, DEFSYS, Kinetic, Mahindra, Maini, SAMTEL,… Other negotiations are ongoing with a hundred-odd other potential partners," the statement added.

French investigative website Mediapart, which last month quoted former French President François Hollande as claiming the Indian government had virtually thrust Reliance Defence as offsets partner on France, on Wednesday said it had a Dassault document proving the same. The report came even as defence minister Nirmala Sitharaman left for a three-day visit to France on Wednesday night.

Mediapart claimed the document showed the alliance with Reliance Defence was indeed presented as "a trade-off" to obtain the contract, quoting a presentation made by Dassault's deputy chief executive officer Loik Segalen to the company's staff representatives in Nagpur. The partnership with Reliance Defence was described as "imperative and mandatory", as per the report.

The French government and Dassault promptly rebutted Hollande's claim last month. The Indian defence ministry, too, dismissed the controversy as "unnecessary", maintaining it had never suggested any company's name as the offsets partner in the deal. Under the contract, the French companies involved must plough back 50% of the contract value to India as offsets or re-investments.

The MoD says, "As per offsets guidelines, the vendor (Dassault) is to provide the details of the offset partners either at the time of seeking offset credits or one year prior to discharge of offset obligations, which in this case will be due from 2020."

The French government said it was "in no manner involved" in the choice of Indian industrial partners which have been, or are being, selected by the French companies involved in the deal. "French companies have the full freedom to choose the Indian partner companies that they consider to be the most relevant, and then present for the Indian government's approval the offsets projects that they wish to execute with their local partners," it said.

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