Land in Nagpur, Not Rafale Deal Terms Made Dassault Pick Anil Ambani Firm as Partner: CEO

New Delhi: French aircraft maker Dassault Aviation on Friday said the choice of going with Anil Ambani's Reliance Defence for a partnership to manufacture parts for its Rafale aircraft was completely its own and not one forced by the Indian government.

In an exclusive chat with CNBC-TV18 in Paris, company CEO Eric Trappier said Dassault picked Reliance as its partner because the Anil Ambani-led company had land near an airfield on the outskirts of Nagpur, where they could set up a production facility.

The Anil Ambani firm was picked to fulfil the offset obligation of the contract despite having no experience in building or maintaining aircrafts, but Trappier insisted that the real estate was the prime consideration in awarding the offset contract.

Denying that partnering with a beginner could cause delays or other problems, he said Dasssault, with over 90 years of experience in the sector, brings the technical know-how to the joint venture with the Anil Ambani firm, making it the “most qualified vendor.”

When pressed that land was not integral to realise the offset obligations of the Rafale deal as the 36 aircraft were being brought in a fly-away condition and would have to only be serviced here, he answered that the company was looking to expand its operations in India and wanted to manufacture here, for which land was essential.

He asserted that land was given priority over experience and other technical considerations because Dassault wanted to manufacture its Falcon 2000 aircraft simultaneously with the Rafale fighter jet.

“For this, we needed to set up an assembly lines and flight testing facilities, and the area near Nagpur that Reliance was offering was suitable. There is no land available near Bengaluru (where HAL is based), or in Delhi and Mumbai,” he told CNBC-TV18.

Talking about the offset obligations, Trappier said the Anil Ambani firm was only one of the 30 offset partners in India currently.

The company is in talks with 70 other companies to make up rest of the offset obligations, he said, but did not clarify on what the tag of “key offset partner” for the Anil Ambani firm means.

Trappier said that Dassault had entered into discussions with Indian firms to set up base here after 2007, when the UPA government floated a Request for Proposal for acquiring the fighter jets for the Indian Air Force.

The UPA government was looking to acquire 18 jets in fly-away condition and wanted 108 to be manufactured by the HAL. Although he accepted that the RFP was clear on HAL (Hindustan Aeronautical Limited) being the lead production agency for the offset obligation, he said Dassault started looking for partners afterwards.

He said that he had a great working equation with HAL, but negotiations on the original deal had come to a standstill in the months leading up to the announcement of the deal by Prime Minister Narendra Modi in Paris in 2015.

The defence major’s CEO said he, too, was in dark about the change in terms of the deal and only learnt about it during the press conference. “It was a government-to-government negotiation and we had no role to play in it,” he clarified.

PM Narendra Modi has been questioned for changing the contract unilaterally, without first seeking the approval of the Cabinet Committee on Security. The changed deal had India buying 36 aircrafts in fly-away condition and none to be manufactured locally.

The opposition Congress has alleged that it was done on the behest of Anil Ambani and that the PM was directly involved in the corruption. Both the government and Ambani have denied the charges. The Centre has insisted that it went for the bigger purchase upfront because of the dire needs of the IAF.

Trappier revealed that Dassault, too, was keen on the initial deal for 126 aircrafts with India, but said there was no change in prices for the aircrafts, as alleged by the Congress.

Congress chief Rahul Gandhi has said that while UPA negotiated deal was for Rs 526 crore for each plane, the deal NDA signed has India shelling out over Rs 1600 per aircraft.

But Trappier said the price is the same for the planes that will be delivered in fly-away condition, and so will be the weapon systems on them. The major difference in price, he said, comes from the aircraft that were to be built in India being shelved.