By Prarthana Mitra
Reliance Group chairman Anil Ambani, whose involvement in the manufacture of heavy duty-fighter jets raised eyebrows regarding the metamorphic Rafale deal, opened up about Reliance Defence’s role in the unfolding controversy.
In a recent media statement, Ambani announced that the Congress and party chief Rahul Gandhi (who dredged up the issue in parliament during the no-confidence vote), were “misinformed, misdirected and misled” by malicious agents and rival corporations with vested interests. He pulled no punches in asserting his innocence and the absence of any foul play in the joint venture with Dassault, both tasked with building 36 fighter jets in France.
When was Reliance Defence set up?
Ambani expressly denied Gandhi’s allegations that Reliance Defence was set up ten days before the new deal was sanctioned, which according to confirmed reports and expert opinions, is a much more expensive deal than the one initially agreed upon.
On April 10, 2015, the government signed off on a deal with the French government to purchase 36 Rafale fighter jets, just days after Reliance Defence entered the fold and was tasked with the building the remaining jets along with Dassault. To much alarm, Hindustan Aeronautics Ltd (HAL), a public sector organisation with 60 years of experience in aircraft manufacturing, was manifestly kicked out and the “Make in India” programme canned.
Calling Gandhi’s speculation “factually incorrect”, Ambani attempts to rectify it, saying that the group’s decision to venture into defence infrastructure was on the table since December 2014. “In February, we informed the stock exchange of the companies we had incorporated,” he said.
Not responsible for the manufacture
According to Reliance Infrastructure, Ambani wrote a letter to Gandhi last week, expressing deep anguish over the latter’s “baseless, ill-informed and unfortunate” accusations. In the latest press release, the heavily indebted businessman clarified that Reliance Defence was not to take part in the manufacturing process. Their jurisdiction extended to defence offset exports according to a work-share agreement. He reassured the opposition and all critics that the 36 jets would be 100% French-manufactured, thus rendering Reliance’s inexperience in aircraft manufacture a moot point.
The numbers still don’t add up
Ambani refused to address the gross discrepancy in defence spending over this project but he did call the possibility of profiting by crores a “figment of imagination, promoted by vested interests“.
Since Gandhi’s scathing attack on Defence Minister Nirmala Sitharaman in parliament last month, several media organisations are calling the non-disclosure a baseless lie. Earlier press releases by Dassault and Reliance Defence show that the total price for 36 aircrafts comes to Rs 60,000 crore (Rs 1,660 crore per plane), which is more than double the price of the aircrafts under the earlier 126 aircrafts deal and almost Rs 1,000 crore higher per aircraft than the final quote furnished by the government in the Parliament on November 18, 2016.
Reliance Defence lies at the centre of the allegation regarding overpriced aircraft, as it is clear to some that the newly-minted Reliance Defence Ltd. will be profiting from the billions of dollars of offsets that would arise from the Rafale purchase.
According to The Wire, Reliance is to hold 51% of the equity and Dassault, 49%. This brand new company is the one that has been assigned 70% of the offset benefits – that is, orders worth Rs 21,000 crore out of a total offset liability of Rs 30,000 crore.
Prarthana Mitra is a staff writer at Qrius
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