IPA Newspack
  • Home
  • now
  • politics
  • business
  • markets

IPA /

IPA Special

IPA Special

Rafale Mistery: Why Dassault Picked Up Anil Ambani’s Firm As Partner

By Nantoo Banerjee

Last week, India’s defence ministry said “the government has stated earlier and again reiterates that it had no role in the selection of Reliance Defence as the offset partner” of Dassault Aviation. Ironically, the French government too said it had no role in choice of Indian partner. If both the statements are valid, the question is: who pushed the name of highly debt-ridden Anil Ambani’s inexperienced Reliance Defence for the job? In case it was a pure commercial decision of Dassault Aviation, there is little to trust the French defence manufacturing giant is serious on its commitment to partly manufacture in India.

The Euro 7.8-billion deal signed was between the two governments in September, 2016. Commercially, such a decision would appear to be unviable since the Anil Ambani group was probably the country’s biggest debt-heavy enterprise — much bigger than the combined exposure of Vijay Mallya, Nirav Modi and Mehul Chokshi. Roughly, the Anil Ambani group carried a total debt burden of Rs.1,00,000 crore. His Reliance Infocom sank.

Earlier, his ultra-mega Reliance Power collapsed even before it was able to start. The initial public offering (IPO) of Reliance Power, some 10 years ago, was oversubscribed 73 times and garnered an astronomical $190 billion. It created many world records. It was the largest subscription of any IPO (initial public offering) anywhere in the history of global capital markets with a record five million applicants. But, that did not save the project. Did Dassault Aviation’s project consultants on India offset partners provide adequate background on the Anil Ambani group’s performance before its selection of Reliance Defence as a joint venture partner?

According to data compiled by BloombergQuint sometime ago, Anil Ambani’s disinvestment plan for telecom ventures in favour of elder brother Mukesh Ambani, India’s No.1 entrepreneur, involves the transfer of assets such as spectrum, tower and fibre worth Rs. 25,000 crore and 125-acre Navi Mumbai land valued at Rs. 10,000 crore. The Anil Ambani group’s infrastructure divestment plan in favour of the Adani group covers some Rs.18,800 crore in total deal value. Did Dassault know about these reports before selecting the heavily debt-burdened Anil Ambani group, whose shareholders in power and telecom enterprises lost billions of rupees following the failure of the concerns?

These developments suggest Dassault’s choice of Reliance Defence as its important offset partner in the Rafale deal could anything but commercial unless Dassault decided to select such an Indian partner that will help negate its outsourcing commitment from India. Yet, there remains another key question concerning the Dassault deal. Was the government of India itself satisfied with Dassault’s decision to go with Reliance Defence for making in India, an important factor in the Rafale deal? It may be noted that India’s first private facility for production of Rafale fighter jets and Falcon civilian aircraft was established at Mihan, Nagpur, under a joint venture between Dassault Aviation, and Reliance. This is expected to be the largest Foreign Direct Investment (FDI) in defence in India till date.

The foundation stone of the Dassault Reliance Aerospace Limited (DRAL) manufacturing facility has already been laid at Mihan, marking the beginning of the creation of the facility to manufacture important components for the 36 Rafale fighter jets which India is procuring from France. It is also supposed to establish the possibility of the final assembly of the entire aircraft.

Without going into the controversy over the pricing of Rafale jets, for which the government agreed in 2016, one thing needs to be appreciated that this is the country’s first major acquisition of fighter planes in two decades. The long-awaited deal was inked in Delhi between the former defence minister Manohar Parrikar and his French counterpart Jean Yves Le Drian. This came after a prolonged unfruitful dialogue between France and India under the UPA regime, when Francois Hollande was the president of France and Manmohan Singh was India’s prime minister.

The choice of Anil Ambani’s Reliance Defence as Dassault’s joint venture partner in India for equipment supplies as part of procurement procedure has naturally become a centre of controversy between the government and the opposition Congress after Hollande allegedly told the French media that Ambani had a backing of the Modi government, which the latter denied. Ambani’s involvement in the Rafale deal is at the centre of controversy. The other part of the political controversy is around the price of the fighter aircraft.

There is, however, no controversy about the need for injecting Rafale into India’s fighter air power. Both the former UPA and, now, the NDA government recognise the fact that the Indian Air Force (IAF) is grappling with a drawdown of its fighter fleet. The IAF has 33 fighter squadrons, each consisting of 18 fighter planes. It requires 45 combat units to counter a combined threat from China and Pakistan. The IAF admits it does not have sufficient number of warplanes for a two-front war. The Rafale aircraft will allow the airforce to strike targets in Pakistani soil even while flying within the Indian airspace. The Centre had initially planned to purchase 126 fighter planes but later opted for just 36 jets in fly-away condition from France with Prime Minister Narendra Modi announcing the revised deal in Paris.

The Euro 7.8-billion deal has a 50 per cent offset clause, amounting to Rs. 30,000 crore which is to be executed by Dassault and its partners in India. Thereafter, Dassault and Reliance Defence announced their joint venture facility for implementing the offsets. The joint venture represents a FDI by Dassault Aviation of over Euro100 Million, the largest Defence FDI in a single location in India. How does Anil Ambani plan to fund the project? This continues to be a big question. Interestingly, the work on manufacturing 36 Rafales has already begun in France. (IPA Service)

The picture is taken from the Internet.

The post Rafale Mistery: Why Dassault Picked Up Anil Ambani’s Firm As Partner appeared first on Newspack by India Press Agency.

IPA Newspack

IPA Special

US Govt Putting Pressure On India To Join NATO+ As A Part Of Asia-Pacific Strategy

May 31, 2023
IPA Special

Political Outcome From Communal Cauldron May Not Favour BJP

May 31, 2023
IPA Special

No Real Truce Is Ready At Ending Gehlot-Pilot Infighting In Rajasthan Congress

May 31, 2023
IPA Special

Slowdown In Containerized Exports Poses Setback To Pro-Export Agenda

May 31, 2023
IPA Special

Sons Of First Joint Climbers Of Mount Everest Are Carrying The Legacy Of Their Fathers

May 31, 2023
IPA Special

Shiites And Not Jews Emerge As Touchstone Of Saudi Moderation

May 31, 2023
IPA Special

Kerala Govt To Move SC Against Centre’s Cut In Net Borrowings Ceiling

May 31, 2023
IPA Special

G7 Conclave Fails To Meet Commitment For Nuclear Weapons Abolition

May 31, 2023
IPA Special

Defection Of Lone Congress MLA In Bengal To TMC Angers Alliance Partner CPI(M)

May 31, 2023
Politics

Gehlot, Pilot patch-up success increasingly in doubt

May 31, 2023
Happening Now

World body condemns action against Indian wrestlers

May 31, 2023
Politics

Yechury appeals to Cong to supports AAP on ordinance

May 31, 2023
Politics

Mamata says Shah trip prompted by her own visit plan

May 31, 2023
Happening Now

Owaisi dares Centre to strike on China instead of Telangana

May 31, 2023
IPA Special

NITI Aayog Has Failed To Play Any Effective Role In Planning For Indian Economy

May 30, 2023
IPA Special

Opposition Parties Could Not Meet Properly PM Challenge On New Parliament Building

May 30, 2023
IPA Special

Congress Dithering Over Supporting AAP On Ordinance Is Height Of Stupidity

May 30, 2023
IPA Special

Bengal Congress Making Too Much Noise Over Sole MLA’s Defection To Trinamool

May 30, 2023
IPA Special

An Isolated Imran Khan On No-Fly List Is Not A Bad News For The Captain

May 30, 2023
IPA Special

Massive Outreach Programme By BJP In Uttar Pradesh For 2024 Polls

May 30, 2023

An appeal

The legacy of IPA, founded by Nikhil Chakravartty, the doyen of journalism in India, to keep the flag of independent media flying high, is facing the threat of extinction due to the effect of the Covid pandemic. Only an emergency funding can avert such an eventuality. We appeal to all those who believe in the freedom of expression to contribute to this noble cause.
Click here to learn more

Share

Reply

  • 0
More on IPA

US Govt Putting Pressure On India To Join NATO+ As A Part Of Asia-Pacific Strategy

May 31, 2023 3:56 pm | IPA Staff

By Arun Srivastava Narendra Modi’s yearning to be acknowledged as the world leader (Vishwa Guru) has landed India in a unpleasant quagmire endangering its identity...

IPA Special

Political Outcome From Communal Cauldron May Not Favour BJP

May 31, 2023 3:55 pm | IPA Staff

By Dr. Gyan Pathak BJP has broken its legs in Karnataka   assembly polls when it fell into the pitfalls of majority politics. The party, including...

IPA Special

No Real Truce Is Ready At Ending Gehlot-Pilot Infighting In Rajasthan Congress

May 31, 2023 3:09 pm | IPA Staff

By Sushil Kutty The latest Sachin Pilot-Ashok Gehlot patch-up will last till June 8 when disqualified Congress Member of Parliament Rahul Gandhi returns from his...

IPA Special

Slowdown In Containerized Exports Poses Setback To Pro-Export Agenda

May 31, 2023 1:44 pm | IPA Staff

By K Raveendran There is a marked slowdown in the containerized exports from India, attributed mainly to a decline in consumer demand for Indian goods...

IPA Special

US Govt Putting Pressure On India To Join NATO+ As A Part Of Asia-Pacific Strategy

in IPA Special
May 31, 2023   ·  

Political Outcome From Communal Cauldron May Not Favour BJP

in IPA Special
May 31, 2023   ·  

No Real Truce Is Ready At Ending Gehlot-Pilot Infighting In Rajasthan Congress

in IPA Special
May 31, 2023   ·  

Leave a Reply Cancel reply

You must be logged in to post a comment.

Follow us on
Up Next: What is Mayawati’s Game plan beyond Chhattisgarh?
©2020 -2021 India Press Agency, All Rights Reserved.
Newspack by India Press Agency | Statement of Ownership | Contact Us
logo
  • Home
  • now
  • politics
  • business
  • markets