We have no role in selection of Reliance Defence for Rafale deal: Centre

The defence ministry said "unnecessary controversies" are being sought to be created following media reports regarding a statement purportedly made by Hollande concerning the selection of Reliance Defence as the offset partner by Dassault, the manufacturers of Rafale aircraft.

"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.

The statement by the ministry came a day after French publication 'Mediapart' quoted Hollande as saying that the Indian government proposed Reliance Defence as the partner for French aerospace giant in the Rs 58,000 crore Rafale deal and France did not have a choice.

The Dassault Aviation has chosen Reliance Defence Ltd (RDL) as the Indian partner to fulfil offset obligations of the deal and both companies have already announced setting up of a joint venture to manufacture aerospace components.

The opposition parties have been accusing the NDA government of favouring the RDL over state-run aerospace behemoth Hindustan Aeronautics Ltd. The government has been maintaining that it has no role in selection of RDL by Dassault Aviation.

"The reported statement perhaps needs to be seen 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," the ministry said, seen as a reference to a recent media report linking the Rafale deal with a film by Hollande's partner Julie Gayet.

The report had said Ambani's Reliance Entertainment had signed an agreement with Gayet to produce a film before the Rafale deal was sealed. Hollande, who was France's president when procurement of 36 Rafale jets was announced in April 2015, rejected the report.

"Incidentally, media reports of February, 2012 suggest that Dassault Aviation, within two weeks of being declared the lowest bidder for procurement of 126 aircraft by the previous government, had entered into a pact for partnership with Reliance Industries in defence sector," the defence ministry said.

The previous UPA government was negotiating with Dassault Aviation for procurement of 126 Rafale jets under which 18 jets were to supplied in a fly-away condition and 108 were to be manufactured in India by the French company along with HAL. However, the UPA could not seal the deal.

In its statement, the defence ministry said the joint venture between RDL and Dassault Aviation is a "purely commercial arrangement" between two private companies. The joint venture came into force in February, 2017.

It said the offset can be discharged by many means such as direct purchase of eligible products and services, FDI in joint ventures and investment towards equipment and transfer of technology. "As per Defence Offset Guidelines, the foreign Original Equipment Manufacturer (OEM) is free to select any Indian company as its offset partner."

Under India's offset policy, foreign defence entities are mandated to spend at least 30 per cent of the total contract value in India through procurement of components or setting up of research and development facilities.

The ministry also referred to a press release issued by Dassault Aviation stating that the company has signed partnership agreement with several companies and is negotiating with hundred odd other companies.

"As per the guidelines, the vendor is to provide the details of the offset partners either at the time of seeking offset credit or one year prior to discharge of offset obligation, which in this case will be due from 2020," said the ministry.

The Congress has been accusing massive irregularities in the deal, alleging that the government was procuring each aircraft at a cost of over Rs 1,670 crore as against Rs 526 crore finalised by the UPA government when it was negotiating procurement of 126 Rafale jets.