On Monday, Dassault Aviation announced that it will partner with Reliance Group, one of India’s leading private sector conglomerates, to begin executing its commercial offset commitment as part of a near $9 billion U.S. Rafale sale to India.
The Government of India inked an $8.8 billion U.S. sale for 36 Dassault Rafale multi-role fighters in the final week of September. In addition to the fighter and munitions package, the French government and industry had agreed to re-invest roughly 50% of the contract’s value in India.
According to the Economic Times, Dassault Aviation and Reliance Group will build a 100-acre facility in Nagpur, which will generate 1,500 jobs over the next seven years.
Notes & Comments:
Defense News’ Vivek Raghuvanshi described the Dassault-Reliance venture as “the largest-ever defence-industrial partnership so far announced in India.” Indeed, until now Tata Group was in the lead in terms of procuring big-ticket offset contracts, namely from Boeing (and increasingly Airbus). However, it is Anil Ambani’s Reliance that will the lead in fighter-related work.
It is not yet clear if this partnership will serve as the umbrella agreement for all Rafale-related offsets. The contract includes other French industry vendors as well, such as Thales, Safran, and MBDA. If the Reliance partnership is limited to just Dassault, then additional contracts may be on the table for other vendors in India. Granted, these will not be as lucrative as the Dassault-Reliant partnership.
A bit had been said about Reliance Group’s functional inexperience in defence industry work (especially in comparison to Tata Group). In recent years, Reliance Group has secured the trust of the Indian armed forces as well as foreign defence vendors – such as Thales – to engage in defence production tasks. Ultimately, this is a company which is strong in terms of efficiency and capital, which has enabled it to build capacity in relatively short order.
I for one hope the offsets result in some real tech share. Players like L&T have openly complained the quality of offset work is no way adding value. I keep coming across articles that say the Tatas have some issues with the quality of offsets too… We have paid an arm and a leg possibly for the Rafale and hope it results atleast in decent engine being developed in India domestically. it will do a great service to the IAF fleet.