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Reliance role in Rafale restricted to offset obligation, not aircraft manufacture:Air Marshal Pandey


New Delhi, Sep 25: The statement by former French president, Francois Hollande that the Indian government had proposed Anil Ambani's Reliance Defence as the offset partner for Dassault Aviation in the Rafale aircraft deal has kicked up a political storm.

Reliance role in Rafale restricted to offset obligation, not aircraft manufacture: Air Marshal Pande

The question being asked by the opposition is why Reliance Defence was chosen over HAL. Air Marshal B K Pandey (Retd) takes time off to discuss with OneIndia the controversy over this issue. He explains that the role of Reliance Defence in Rafale is restricted to the offset obligation and not the manufacture of the aircraft.

The first contract:

Air Marshal Pandey says that the manner in which this debate is going, it looks as though everyone is confused about the issue.

Also Read | Can 'Rafale' be compared with 'Bofors'?

A process began in 2001 and in 2007, a tender for 126 aircraft was floated. In the year 2012, a commercial bid was opened and later got stuck on the particular issue of HAL.

Dassault came up with an objection that they would not like to partner with HAL as they felt that the quality control and timeline was not up to the mark, says B K Pandey.

Then, A K Antony had said that the terms of contract against which the bid was made, HAL would be the lead integrator and no one could back out of it. As part of the contract, the first 18 aircraft would be supplied by France and the rest would be manufactured by Dassault and HAL in joint production.

Dassault wanted to set up a separate factory and manufacture aircraft, but needed a partner in India to do the ground work and not to manufacture the aircraft. They identified Reliance Defence as they had already partnered with them for the manufacture of components for the civil aircraft, Pandey adds.

In all this the contract and the tender got stuck and did not move until 2014. When the new government took over, there was very little that could have been done as the matter was already in a log jam. In the meantime, the IAF was desperate as they wanted a modern aircraft and the matter had been lingering on since 2001.

The IAF then proposed that 36 aircraft be purchased directly from France and this was conveyed by Prime Minister Narendra Modi to Hollande. With this being done, it was decided to cancel the contract. To agree with Dassault and partner with Reliance would not have been correct as it was against the terms of reference and hence the contract stood cancelled.

Also Read | What is the Rafale deal? An explainer and the controversy around it

The offset obligation:

The second part of the contract relates to offset obligation. As part of this, 50 per cent of the value of the contract should be invested in India in the aerospace industry and not in the manufacturing of Rafale, Air Marshal Pandey says.

Dassault was already in contract with Reliance and hence they would invest there. I see nothing wrong in this. Dassault's liability is to spend Rs 29,000 crore in India. There is nothing incorrect in the entire procedure.

Also Read | Rahul releases video quoting French media house on Rafale deal, suggests it is "sad truth" about PM

The Defence Minister must make these things clear instead of indulging in a slugfest. She is not clarifying things properly and one must know that a political slugfest on this issue is not going to solve the problem.

As of now, India would buy 36 aircraft directly from France and another case for procuring 114 more aircraft has been initiated. Seven vendors have responded to this. Six of them had taken part in the first contract, while another is a Russian.

Also Read | Francois Hollande's statement, Rahul's tweet are 'orchestrated', says Arun Jaitley

I fear that the Medium Multirole Combat Aircraft 2.0 would go the same as the first one. The tender has not been finalised as yet and now only information has been given. This would finalise by next year. If HAL is in the picture, then it would go the same way. Air Marshal Pandey says, " I recall during the Defence Expo, the Defence Secretary had said that he would not let this go the first way.

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