Reliance Defence to form JV with Dassault for Rafale offset

Dassault Aviation, the French company that manufactures Rafale fighter jets, has chosen Anil Ambani-led Reliance Defence as its strategic partner in India, and the two will soon form a joint venture for execution of offset obligations under the recent Indian deal for purchase of 36 Rafale fighter jets.

Reliance Defence will be executing a decent portion of the nearly Rs30,000 crore of business that will flow in as offset in the Rs60,000-crore ($7.87 billion) deal. Reports said the Anil Ambani group company may get as much as 60 per cent (Rs18,000 crore) of the offset business.

According to sources, the remaining portion of the offset business will be shared among defence companies such as Bharat Electronics, Samtel and others.

Dassault and Reliance Aerospace plan to set up an integrated facility spread over 100 acres at Reliance Special Economic Zone (SEZ) in Nagpur, with the JV looking at creating a complete aerospace infrastructure.

Work is expected to begin in the next couple of months and production intended to begin within 12 months, according to a company release.

''The proposed strategic partnership between Dassault and Reliance will also focus on promoting research and development projects under the IDDM program (Indigenously Designed, Developed and Manufactured), a new initiative of India's defence minister Manohar Parrikar,'' the statement read.

''The formation of this joint venture with Reliance Aerospace illustrates our strong commitment to establish ourselves in India and develop strategic industrial partnerships under the 'Make in India' policy promoted by the government,'' said Eric Trappier, chairman and CEO, Dassault Aviation.

The Rafale offset clause, which involves development of major Indian programmes with high levels of technology transfer, will be a major business boost to Reliance Defence, coming just after of its acquisition of Pipavav Defence.

The joint venture which will bring its first, official and major defence order, will indirectly benefit the entire aerospace sector,according to Reliance executives.

Reliance Defence chief Anil Ambani said it is a transformational moment for the Indian aerospace sector and for Reliance Infrastructure's subsidiary Reliance Aerospace.

However, with defence offset obligations split among  Dassault, Thales, MDBA and Saffra, it is likely that the business gets distributed among a broad spectrum of companies, say sources.

This could be either in the form of outsourcing by the JV or fresh JVs, sources add.