Rafale offsets deal: Anil Ambani was Indian government's choice, says Francois Hollande

NEW DELHI: In a fresh twist to the Rafale controversy, former French President Francois Hollande who was in power when the deal for 36 Rafale fighters with India was firmed up, told a French media portal Mediapart that it was the Indian government which proposed the Anil Ambani-led Reliance Defence as offsets partner for Dassault.

“We did not have a say. The Indian government proposed this service group, and Dassault negotiated with Ambani. We did not have a choice, we accepted the interlocutor that was given to us,” Hollande was quoted by Mediapart. The interview was published in French on Friday and excerpts of it were put on Twitter by a French newspaper journalist.

“On the other hand, this group did not have (any reason) to thank me for anything. I could not have imagined that this was in any way connected to a Julie Gayet film,” he said. (Anil Ambani-led Reliance Entertainment had entered into an agreement to produce a movie with actor Julie Gayet, who is also Hollande’s partner.) The defence ministry spokesperson immediately responded to the report stating that this was being verified.


“The report referring to fmr French President Mr Hollande’s statement that GOI insisted upon a particular firm as offset partner for the Dassault Aviation in Rafale is being verified. It is reiterated that neither GOI nor French Govt had any say in the commercial decision,” the ministry posted on Twitter. If corroborated, Hollande’s statement would contradict the Indian government’s stand that the pact between Dassault and Reliance was a commercial one between two private parties, and that the government had no say in it.

DECIDING FACTOR
The Rafale deal, which entails procuring 36 jets in ‘fly away’ condition worth about Rs 59,000 crore, has a 50% offset clause, amounting to Rs 30,000 crore. This is to be executed by Dassault and its partners in India. Under the offset clause of the defence procurement procedure, a foreign company has to invest back a portion of the deal in India. Dassault and Reliance Defence had announced their joint venture — Dassault Reliance Aerospace Limited (DRAL), in which Reliance Aerostructure held 51% and Dassault Aviation 49% — for implementing the offsets.

The DRAL facility located within the Dhirubhai Ambani Aerospace Park at Mihan will manufacture components, including those related to the offset obligations. Mihan is an aeropark next to the Nagpur airport. The facility will also manufacture components for the Legacy Falcon 2000 series of civil jets. DRAL will not produce the Rafale jets in India. The foundation stone of the facility was laid in October last year in the presence of French defence minister Florence Parly, Dassault chairman Eric Trappier and Anil Ambani. The offset obligations will also be carried out by Thales, Safran, MBDA and others.

There have been no reactions yet from Dassault, the French Government or Reliance Defence. However, French industry sources said they were waiting for more information on the exact statements made by the former President and that the decision on offsets partners was a commercial one. The deciding factor, they said, was suitable land needed to set up a production line for Falcon jets. The land required access to an active runway as was the case with the joint venture facility at Mihan.

The offset clause kicks in only three years after signing the contract, which in this case happened in September 2016. In a statement issued in February, the defence ministry had stated, “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.” Meanwhile, the Congress was quick to pounce on the opportunity.



“The PM personally negotiated & changed the #Rafale deal behind closed doors. Thanks to Francois Hollande, we now know he personally delivered a deal worth billions of dollars to a bankrupt Anil Ambani. The PM has betrayed India. He has dishonoured the blood of our soldiers,” Congress president Rahul Gandhi posted on Twitter. Defence minister Nirmala Sitharaman while speaking to reporters had said on Tuesday that the offset policy which gives a foreign manufacturer the freedom to choose a partner from the private or public sector was made during the UPA regime.

She was questioning why the Congress feels it was wrong. Sitharaman was countering the Congress’ allegation that staterun Hindustan Aeronautics Limited (HAL) was overlooked in favour of Reliance Defence for the offset deal with Dassault, in a case of crony capitalism.