India’s Reliance Group and French Rafale maker Dassault Aviation announced a joint venture in the execution of worth ₹30,000 crore offset contract as part of the Rafale fighter jet deal.
Here’s what you need to know about this deal from news reports:
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- It is a programme on the lines with the new provision introduced in Defence Procurement Procedure (DPP) 2016.
- The new partnership will establish a foundation for a credible, aerospace manufacturing capability under one umbrella to be created by the joint venture at Mihan, India.
- A huge integrated facility is proposed to be set up at Reliance Special Economic Zone (SEZ) in Nagpur. Work is expected to begin in the next couple of months and production intended to begin within 12 months.
- The joint venture will focus on aerostructures, engines, and electronics and intends to infrastructure and supply chain in India for the aerospace sector.
- The proposed strategic partnership between Dassault and Reliance will also focus on promoting research and development (R&D) projects under the IDDM (Indigenously Designed, Developed and Manufactured) program.
- The main point of the offset agreement is 74% of it has to be imported from India, which means direct business worth around ₹22,000 crore.
- Ambani’s Reliance Group entered into the defense sector in January 2015 and has established global partnerships with original equipment manufacturers to build airborne, land and sea platforms.
- Apart from creating sub-assemblies for Rafale fighters, India plans to build homemade light combat aircraft and fifth-generation fighters with Russia in partnership with private defense enterprises.
- Given the scale of the contract, the JV will partner with 100 odd Micro, Small and Medium Enterprises (MSMEs) for sourcing and contracting.
This announcement came within days of India and France signing an agreement for 36 Rafale fighter jets at a value of ₹59,000 crore. The agreement includes a 50 percent offset obligation, making the deal the largest offset contract to be executed by any defense company in India.
