Rafale deal row: Needless controversies are being created, says Ministry of Defence
The ministry pointed out that the French media ‘has raised issues of conflict of interest involving persons’ close to former French President François Hollande.
The Ministry of Defence on Saturday said unnecessary controversies were being created following former French President François Hollande’s statement on the Rafale deal.
Hollande’s statement, the ministry said, needs to be read 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, it added.
On Friday, a French media outlet quoted Hollande as saying that his government “did not have a say” in choosing Anil Ambani’s company Reliance Defence for the Rafale deal. The former French president claimed the Indian government had proposed Reliance Defence’s name for the pact, which was agreed upon when he was president.
He also denied any connection between the deal and Reliance’s decision to allegedly finance a film by his partner Julie Gayet. A media report had claimed last month that Ambani’s Reliance Entertainment had signed an agreement with Gayet to produce a film two days before Hollande attended Republic Day celebrations in New Delhi in 2016. During the visit, Hollande signed a memorandum of understanding with Prime Minister Narendra Modi to deliver 36 Rafale aircraft to India.
The French government and defence firm Dassault Aviation, which manufactures the jets, have contradicted his claim.
“The government has stated earlier and again reiterates that it had no role in the selection of Reliance Defence as the offset partner,” the ministry said. It added that the offset policy was formally announced in 2005 with an objective to leverage capital acquisitions to develop Indian defence industry and foster the development of internationally competitive enterprises.
“To leverage its huge arm-imports in order to develop a strong indigenous industry, a flow-back arrangement is made in the defence contracts, which is widely known as offsets, and constitutes a certain percentage of the contract value,” the statement said. “The offset can be discharged by many means such as direct purchase of eligible products/services, FDI in joint ventures and investment towards equipment and transfer of technology. As per Defence Offset Guidelines, the foreign Original Equipment Manufacturer is free to select any Indian company as its offset partner.”
The ministry said the joint venture between Reliance Defence and Dassault Aviation was a purely commercial arrangement between two private companies. It said Dassault entered into a pact with Reliance within two weeks of being declared the lowest bidder in February 2012.
“In view of above, it is once again reiterated that the Government of India has no role in the selection of Indian Offset partner which is a commercial decision of the OEM [Original Equipment Manufacturer],” it added.
The deal between India and France was signed in September 2016, with New Delhi agreeing to purchase 36 Rafale aircraft worth Rs 59,000 crore. A month later, Reliance and Dassault announced a joint venture in India called Dassault Reliance Aerospace Ltd. Reliance holds a 51% stake of the venture while Dassault owns 49%.