NEW DELHI: The Indo-French joint venture (JV) between Dassault Aviation and Anil Ambani-owned Reliance Aerostructure Ltd is likely to be dissolved as the French company has reportedly decided to pull out of the JV — Dassault Reliance Aerostructure Ltd (DRAL).
Sources said Dassault has taken the decision due to Ambani’s “inability to make the investment required to keep the joint venture going”. Ambani is the major partner in the 51-49 JV. The two companies had entered into the joint venture to handle the offset obligations arising out of India’s USD 7.6 billion deal to buy 36 Rafale fighter jets. The JV was formed in 2017.
With Prime Minister Narendra Modi scheduled to visit France to be the guest of honour on Bastille Day on July 14, where he is likely to announce another multi-billion dollar deal to buy 26 Rafale Marine fighters, Dassault has started looking for a new Indian partner to execute its present and future offset obligations.
DRAL, having its production facility at a 62-acre plot in the MIHAAN Special Economic Zone in Nagpur, is currently engaged in the assembly of Rafale components, including engine doors, rudder, elevons, windshields, canopy, etc.
Sources said the fate of Reliance Aerostructure’s tie-up with another French company, Thales, is not yet clear. Ambani’s company has another 51-49 JV with Thales — Thales Reliance Defence Systems (TRDS) — in which Reliance is a major partner. TRDS is said to be the most advanced Thales facility outside France. This, too, operates out of MIHAAN and produces Rafale components.
The Centre had introduced a defence offset policy in 2005 which requires all foreign vendors to invest a part of the contract value in India so as to help domestic defence companies grow and facilitate the transfer of technology, besides generating employment.
Firms defaulting on offset obligations
A large number of top foreign defence companies have defaulted on their offset obligations. Repeated requests by the defence ministry to these vendors to fulfil their obligations have fallen on deaf ears.
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