The Anil Ambani-led Reliance Group’s ambitions in the defence equipment space received a fillip with the announcement of a joint venture, Dassault Reliance Aerospace Pvt. Ltd, with French aircraft maker Dassault Aviation SA that is in line to benefit from a Rs24,500 crore seven-year offset deal.
In September, India inked a deal to buy 36 Rafale aircraft from Dassault for Rs59,000 crore. The agreement has a 50% offset clause. Of this Rs24,500 crore, 74% will have to come from India in goods and services, which could mean a boost for the government’s efforts to promote the local manufacture of defence equipment.
The Reliance Group entered the defence equipment space through the acquisition of Pipavav Defence and Offshore Engineering Co. Ltd, since renamed Reliance Defence and Engineering Ltd. The Rafale deal, however, is the first the group has won.
The first Rafale fighter jet is expected to come in three years but Reliance has already acquired 289 acres of land in Nagpur’s Multi-modal International Cargo Hub and Airport (MIHAN) in the state of Maharashtra where the offset will be executed.
“The manufacturing should start in 12 months’ time,” said a person familiar with Reliance’s plans, who asked not to be named.
The structure of the company as also the ratio of direct versus indirect offsets was not disclosed.
“Broadly”, the person cited above added, the entire offset will be routed through the joint venture in two ways.
First, it will spread work to 100-300 micro, small and medium enterprises, creating a supply chain for the aircraft.
The second part will be direct manufacturing at Nagpur of aerostructures (or components of the aircraft frame), electronics and engine components, and work related to designing of aircraft and improving its efficiency, manoeuvrability and range over time.
In a statement, Eric Trappier, chairman and CEO of Dassault Aviation, said the joint venture showed the company’s “strong commitment to establishing ourselves in India and to develop strategic industrial partnerships under the ‘Make in India’ policy promoted by the Indian government”.
In the same statement, Anil Ambani, chairman of Reliance Group, called it “a transformational moment for the Indian Aerospace sector and for Reliance Infrastructure’s subsidiary Reliance Aerospace”.
Former Indian Air Force chief Fali Major said the offset would create more jobs. “This Dassault and Reliance JV is a great beginning for big-time offsets into the country.”