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Rafale deal: There was no pressure from Indian side on choosing Reliance, says Dassault CEO

Discussion in 'Indian Defence Industry' started by vikasdangi, Oct 27, 2018.

  1. vikasdangi

    vikasdangi IDF NewBie

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    Source - Indian Defence News

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    Rafale's relationship with Reliance Defence goes back to 2012: Dassault CEO

    by Manu Pubby

    Dassault Aviation CEO, Éric Trappier spoke exclusively to Manu Pubby of The Economic Times, where he said that Dassault was selected in 2012, but had not been able to finalise the HAL deal even in 2015. It was difficult to agree on who will take responsibility for the aircraft, Dassault or HAL, Trappier said

    Edited Excerpts:

    The opposition has been alleging that Rs 30,000 cr offsets have been gifted to Reliance Defence for the Rafale deal. Is this true?

    It is totally untrue. We have a partnership with Reliance that started in 2011. We have been a partner to India for the past 65 years. We want to set up facilities because India wishes to develop its own industry and be a global player. We were looking for private partners to transfer our know-how and manufacturing to India.

    We partnered Reliance because it was able to give us facilities and some knowhow about the country while I am the one who knows how to produce the Falcon. We signed an MoU in February 2012 (with the Mukesh Ambani-led Reliance Group), around the same time the Rafale emerged as a winner (in India), and we have continued to work together. My purpose is and was to meet full offset obligations, to set up facilities and to make my own supply chain for the Falcon.

    What about the question on Rs 30,000 cr offsets to Reliance Defence?

    In line with our share, we have invested 49% in the joint venture with a capital of Rs 70 crore. We will gradually increase the capital in the JV. Our plan is to increase this figure to Rs 850 cr. So, my investment of about Rs 425 crore (49%) will be over five years.

    It has nothing to do with the big figures I have been hearing. As per the rules of offsets, the contract was government-to-government and at the same time Dassault signed a contract for offset as per the Defence Procurement Procedure (DPP) 2013. There was a value to the offsets.

    The JV will produce parts of Falcon and maybe, one day a complete Falcon 2000 at Mihan. We will get some credits for offsets. Today, if I take the number of deals with different companies, I already have 40% of the obligations covered with 30 companies.One of these is the (Reliance) JV which is 10% of the 40%.

    But, the JV has said in press releases it is a key partner in the Rs 30,000 cr offsets?

    What is important is what we are going to do. It is to produce the Falcon, its parts and parts of Rafale. For me, it is key as I need to transfer to this JV the capacity to produce to western standards. We need to have the right quality to be a global company. It is key because the JV is going to become a global aeronautical company that is founded from scratch.

    So, which are the rest of the companies that will be doing the offsets for Rafale?

    We have a list, the job continues as we are in discussion with over a 100 companies. Thirty of these have already been signed up. They are in Bangalore, in Mumbai, in Pune, all over the country.

    There has been a lot of confusion and talk on former President Francois Hollande’s statement that the partnership with Reliance was compulsory for the deal?

    It is very simple, Mr Hollande has himself clarified that the two companies partnered on their own.

    We found Reliance in 2011-12. This was not at the time of Hollande and not at the time of your incumbent PM. We have been in talks with Reliance for a long ime. I want to make it clear that Dassault Aviation is a partner as the Ambanis are a very respectable family. The two brothers and their mother are well-known in India. We are a family-owned company and we feel comfortable with another family-owned company.

    Was there any pressure or push from the Indian side on choosing Reliance for the offsets?

    Not at all. The rules of the Defence Procurement Policy says that the choice of offset partner belongs to the contractor.

    The French have nothing to say about the choice of partners in India. When I choose a partner it becomes my responsibility to fulfil the obligations, to quality standards and timing. I made the choice.

    Has India paid a lot more for the 36 Rafale jets than what it would have paid for the previously negotiated contract?

    There is a mix-up here. I don’t want to disclose the information on the pricing but what I can say is that we had a proposal earlier for 126 aircraft. This was based in two parts. First was for 18 aircraft in flyaway condition and the second was for the production of 108 aircraft which included tools, jigs, man-hours and documentation.

    The unit price for the 18 flyaway Rafales was what was given to the government. The support (spare parts) was changed to adapt to 36. Then, we started negotiations with MoD. The pricing was kept very low and there was also a rebate of 9% on the total price.

    If it was double the price, I would have been sent back to France without any contract. Compared to the same (UPA) price, India brought down the cost by 9%. Where is the confusion? Apple to apple, the comparison is between the 18 and 36 flyaway jets.

    Were you surprised that the number of aircraft to be bought were brought down to 36 from 126?

    That was part of the (Indian) decision. We were very firm on getting the deal for 126 planes and we had discussions with HAL as it was the lead production agency. For some reasons, the deal did not go through.

    What was the problem?

    We were selected in 2012 and even in 2015 we had not been able to finalise the deal. I will not say why in details but it was difficult to cope with different requirements.

    One was who will take the final responsibility for the aircraft, Dassault or HAL?

    I had said that for the first few aircraft it should be Dassault and then it should be HAL. We had an excellent relationship with HAL and we had many discussion but for some reason it did not go through.

    Then, if I understand there was an urgent requirement of the IAF and India requested France to supply the aircraft and finalised the deal for 36 Rafales.

    In the Rafale deal, corruption complaints have been filed with the CBI and representations have also been made to the Supreme Court. Are you open to an investigation into the contract?

    Since 2000, there has been a strong international law on anti-corruption in France and we stick to it. We stick to the laws of France and the laws of India and the law of the contract. We are totally against corruption. If there is any investigation in France or India, we are not only open to the investigation, it is our duty (to respond). We will prove that there is no corruption. We are open, we are engineers and we want to be in India.

    We want to develop capabilities in India not only for manufacturing but for design and development. There are many opportunities and we are really enthusiastic to be in India.

    That is why I am just a little bit sad about the controversy. For me, I am very enthusiastic to be in India, to set up the partnership with Indian companies and our teams are committed to it.

    Do you think that signing the deal for 36 jets gives you an advantage for two upcoming contracts for 110 fighter to be made in India and a Naval requirement of 57 jets?

    The IAF had done a complete evaluation of different competitors that included the F/A-18, the Gripen, the Eurofighter as well as the Russian jet and among them, the Rafale was judged the best.

    So, it does give us an advantage. The other advantage is that in the deal for 36 jets, the training of pilots, mechanics and support will already be in place.

    I will fight to try to get both contracts because Rafale is capable of aircraft carrier operations. It could be a competition between us and the US but we have a very good product. The French forces decided from the start to have an aircraft capable of both land-based and aircraft carrier operations. The Rafale will give India real superiority in the air.

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