The Congress had alleged that rules related to defence ministry approvals and audits were ignored in the offset contracts between Dassault and Reliance even as the government ignored public sector unit, Hindustan Aeronautics (HAL), which had won the earlier contract. An offset contract requires a foreign manufacturer that wins a defence contract in India to spend a certain portion of the deal value locally to promote local manufacturing.
The agreement to buy 36 Rafale jets was signed between Prime Minister Narendra Modi and the French government in 2016, after an earlier agreement to buy 126 aircraft was scrapped by the Modi government soon after coming to power in 2014. Rahul Gandhi has repeatedly accused Modi and Defence Minister Nirmala Sitharaman of not divulging the purchase price of Rafale aircraft and favouring Ambani’s Reliance Defence.
Rahul Gandhi said the deal signed by the Modi government has increased the cost of each aircraft by Rs 10 billion, and offset contracts were given to Ambani's firm, which has no experience in the military aviation sector.
In his letter, Ambani said Rafale fighter jets are not being manufactured by Reliance or by the Dassault Reliance joint venture. All 36 planes are to be 100 per cent manufactured in France, and exported from France to India. Besides, Ambani clarified that not a single component worth a single rupee is to be manufactured by Reliance for these 36 Rafale jets. “The allegations relating to ‘lack of experience’ are, thus, irrelevant,” Ambani said.
“There is no contract from the MoD (Ministry of Defence) to any Reliance Group company related to 36 Rafale aircraft,” Ambani said.
Allegations of Reliance benefitting by thousands of crores is a figment of imagination, he added. “Our role is limited to offset exports/export obligations. More than 100 medium, small and micro enterprises (MSMEs) will participate in this, along with public sector undertakings such as BEL and Defence Research and Development Organisation (DRDO). This role strengthens Indian manufacturing capabilities, and is in pursuance of the offsets policy introduced by the Congress-led United Progressive Alliance government itself from 2005 onwards,” he said.
Rahul Gandhi’s allegation that Reliance Defence was set up 10 days before the 10 April 2015 announcement in Paris by both governments links factually incorrect information, and is thus irrelevant and completely false, said Ambani.
“The Reliance Group announced its decision to enter the defence manufacturing sector in December 2014 and January 2015, months before the intention for purchase of Rafale aircraft. In February 2015, we informed the Indian stock exchanges of the companies we have incorporated,” said he.
The Modi-led government came to power on May 2014 and re-negotiated the $11-billion jet contract with France in 2015.
After scrapping the order for 126 jets, which the Rafale won in a decade-long global tender, Modi’s administration bought the 36 jets off-the-shelf to speed up the process as Russian made MiG fighters are phased out.