Reliance and Dassault declare defence partnership

INDIA’S Reliance Group and France’s Dassault have signed a lucrative defence partnership as part of a fighter jet deal agreed between the two nations last month, the companies said on October 3.

India signed a contract to buy 36 Rafale fighter jets for 7.9 billion euros (£6.9 billion), France’s biggest ever such sale, as the nation seeks to bolster its military in the face of China’s growing clout.

Dassault, which is building the aircraft, agreed under the terms of the deal to invest about 50 percent of the value of the contract in India.

It has teamed with Indian billionaire tycoon Anil Ambani’s Reliance Group in a joint venture called “Dassault Reliance Aerospace” to focus on research and development of unspecified defence projects in India.

The partnership “illustrates our strong commitment to establish ourselves in India,” Dassault chief executive officer Eric Trappier said in a joint statement.

Ambani added that the deal was “a transformational moment for the Indian aerospace sector.”

However, the companies did not say how much of Dassault’s estimated 300-billion rupee (£3.5 billion) required investment would be poured into the joint venture.

India, the world’s top defence importer, is conducting a $100-billion (£77.9 billion) upgrade of its Soviet-era military hardware, facing border disputes with its northern and western neighbours, China and Pakistan.

But Indian prime minister Narendra Modi has moved to reduce India’s reliance on expensive imports and called for the manufacturing of defence equipment locally.

Modi’s government has raised the limit on foreign investment in the defence sector and encouraged tie-ups between foreign and local companies.

The Rafale purchase was first mooted in 2012 but has faced major delays and obstacles.

India entered exclusive negotiations on buying 126 Rafale jets four years ago, but the number of planes was scaled back in frustrating negotiations over the cost and assembly of the planes in India.

Modi announced on a visit to Paris last year that his government had agreed in principle to buy the jets.

But the deal continued to be held back by disagreements such as Delhi’s insistence about a percentage of the contract being invested in India – known as the offset clause – before it was eventually signed in September.