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Largest ever contract: Reliance, Dassault form JV to execute Rafale offsets

Dassault to make engine parts, electronics at the Reliance facility in Nagpur.

By: ENS Economic Bureau | New Delhi | October 4, 2016 12:36:18 am
reliance, reliance group, reliance dassault aviation, dassault aviation, reliance fighter jet deal, foreign defense companies, dassault supply chain, india news, business news, companies Under the offsets, Dassault will make aerostructures, engine parts and electronics at the Reliance facility in Nagpur. The work at Nagpur is expected to start in the next three months.

Dassault Aviation and Anil Ambani promoted Reliance Group on Monday announced the creation of their joint venture “Dassault Reliance Aerospace” in India to execute the offset obligations worth Rs 30,000 crore. The offset obligations form part of the Euro 7.87 billion (Rs 59,000 crore) agreement that India signed with France for purchase of 36 Rafale fighter on September 23, 2016.

“The Dassault Reliance Aerospace Joint Venture will be a key player in the execution of offset obligations, as a part of the 36 Rafale fighter Jets purchase agreement….. The agreement includes a 50 per cent offset obligation which is the largest ever offset contract in the history of India,” the two companies said in a joint statement.

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An industry insider said that after the incorporation of the joint venture company, the name of the company will be formally sent by Dassault to the defence ministry for approval for discharging offsets for the Rafale deal. A defence ministry official said that the approval of the same is “more like a formality”.

Under the offsets, Dassault will make aerostructures, engine parts and electronics at the Reliance facility in Nagpur. The work at Nagpur is expected to start in the next three months.

According to a senior Reliance executive, the company has been working for past many months to develop a supply chain, and has spoken to a large number of potential vendors. The company hopes to create an aerospace ecosystem so that any future requirement of building a Rafale fighter can be made in India.

“This announcement will bring a change in the order of magnitude in the Indian aerospace industry. The private aerospace sector currently has an annual turnover of around Euro 100mn. Four billion Euros over the next seven years mean around 600 million Euros every year,” a senior Reliance executive told The Indian Express.

The proposed strategic partnership between the two companies will also focus on promoting research and development projects under the IDDM program (Indigenously Designed, Developed and Manufactured), a initiative of the defence ministry.

“The formation of this Joint venture with Reliance Aerospace led by Anil Ambani’s Reliance Group illustrates our strong commitment to establish ourselves in India and to develop strategic industrial partnerships under the “Make in India” policy promoted by the Indian Government”, said Eric Trappier, Dassault Aviation Chairman & CEO.

Ambani also expressed delight over partnering with Dassault Aviation and a visionary leader like Eric Trappier. “This is a transformational moment for the Indian Aerospace sector and for Reliance Infrastructure’s subsidiary Reliance Aerospace,” said Ambani.

Reliance Group had entered the Indian defence manufacturing sector in January 2015 and acquired Pipavav Defence, a Naval shipyard based in Gujarat. The company has also been developing air, land and sea defence manufacturing capabilities in collaboration with leading global defence firms.

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