Defending itself against the allegation by former French president Francois Hollande — that the Indian government “proposed” Anil Ambani’s Reliance Defence as the offset partner for Dassault Aviation in the Rafale aircraft deal — the government said it played “no role” and that “unnecessary controversies” were being created. In a statement issued on Saturday, the Defence Ministry also invoked “issues of conflict of interest involving persons close to the former President (Hollande)”.
The government, the statement said, “had no role in the selection of Reliance Defence as the Offset partner” and that “as per Defence Offset Guidelines, the foreign Original Equipment Manufacturer is free to select any Indian company as its offset partner”.
It also said that as per offset guidelines, “the vendor (Dassault Aviation) is to provide the details of the offset partners either at the time of seeking offset credit or one year prior to discharge of offset obligation, which in this case will be due from 2020”.
The ministry’s statement came a day after it tweeted that Hollande’s remarks would be “verified” and “reiterated that neither GoI nor French Govt had any say in the commercial decision”.
Late Friday night, the French Ministry of European and Foreign Affairs issued a statement saying that it was in “no manner involved” in the choice of Reliance Defence as Dassault’s offset partner. “In accordance with India’s acquisition procedure, French companies have the full freedom to choose the Indian partner companies they consider to be the most relevant, then present for the Indian government’s approval the offsets projects that they wish to execute in India with these local partners…”
Dassault Aviation too issued a statement late Friday night, asserting that “in accordance with the policy of Make in India, Dassault Aviation has decided to make a partnership with India’s Reliance Group” and that “it is Dassault Aviation’s choice, as CEO Eric Trappier had explained in an interview”.
Making an unusual reference to domestic French politics, the Defence Ministry’s statement said, “The reported statement perhaps needs to be seen in its full context – where the French media has raised issues of conflict of interest involving persons close to the former President. His subsequent statements are also relevant in this regard.” This is a reference to a report in The Indian Express linking the Rafale deal with a film by Hollande’s partner Julie Gayet.
As reported by The Indian Express on August 31, Reliance Entertainment announced on January 24, 2016, that it had entered into an agreement with Gayet’s firm, Rouge International, to jointly produce a French film. Two days later, Prime Minister Narendra Modi and Hollande signed an MoU in New Delhi for the purchase of 36 French jets in flyaway condition.
Hollande told Mediapart that he was not aware of the announcement of the film with Gayet during his visit to India as he was busy with matters of the state. According to Mediapart, the film was made on a budget of Euro 10 million, which included a promised Indian funding by Reliance Entertainment of Euro 3 million, eventually reduced to Euro 1.6 million.
On Friday, Hollande was quoted by French news website Mediapart.fr as saying, “We didn’t have a say in that. It was the Indian government that proposed this service group (Reliance), and Dassault who negotiated with Ambani. We didn’t have a choice, we took the interlocutor who was given to us.”
Speaking to AFP on the sidelines of a meeting in Canada on Friday, the former French leader insisted that France “did not choose Reliance in any way”.
When asked whether India had put pressure on Reliance and Dassault to work together, Hollande said he was unaware and “only Dassault can comment on this”.
The former French President’s remarks had contradicted the Indian government’s claim that the deal between Dassault and Reliance was a commercial pact between two private parties and the government had nothing to do with it.
Under the offset clause, France is to invest Rs 30,000 crore or 50 per cent of the total order cost of the Rafale deal in local contracts in India. Ambani’s Reliance Defence became part of the offset programme of the Rs 59,000-crore Rafale deal through Dassault Reliance Aerospace Ltd (DRAL), in which it holds a 51% stake. Dassault Aviation, the French manufacturer of Rafale, holds 49% stake in DRAL.
The ministry statement acknowledged reports “that a JV between Reliance Defence and Dassault Aviation came into being in February 2017” but stated that “this is a purely commercial arrangement between two private companies”. It also referred to “media reports of February 2012” which suggested “that Dassault Aviation, within two weeks of being declared the lowest bidder for procurement of 126 aircraft by the previous Government, had entered into a pact for partnership with Reliance Industries in Defence sector”.
In February 2012, Dassault Aviation had signed an MoU with Reliance Industries of Mukesh Ambani, Anil Ambani’s elder brother. As per the statement issued by Dassault Aviation then, it had “entered into an MoU with Reliance Industries Ltd, India’s largest private sector company, for pursuing strategic opportunities of collaboration in the area of complex manufacturing and support in India.”
Dassault’s MoU with Mukesh Ambani’s Reliance Industries lapsed in 2014 and in 2017, it formed a JV with Anil Ambani’s Reliance Defence. In October 2017, Dassault Aviation chairman Eric Trappier and Anil Ambani laid the foundation stone for a DRAL manufacturing facility in Nagpur in the presence of then French Defence Minister Florence Parly, Roads and Highways Minister Nitin Gadkari, Maharashtra Chief Minister Devendra Fadnavis and Ambassador of France to India Alexandre Ziegler.