New Delhi. Dassault Aviation has selected Reliance Industries Limited (RIL) as its private sector partner to manufacture the Rafale Combat jets in India.
Details are not known but Dassault confirmed the agreement with the Mumbai-based Mukesh Ambani-led Indian conglomerate. It was signed a week or so after the Government announced the Rafale as the winner in the Medium Multi Role Combat Aircraft (MMRCA) fray Jan 31.
In a statement, the French company said: Dassault Aviation, a major player in the global aerospace industry has entered into an MoU with Reliance Industries Ltd., India's largest private sector company, for pursuing in strategic opportunities of collaboration in the area of complex manufacturing and support in India.
Dassault manufactures Rafale combat jets and Falcon business jets, and the proposed venture should foray into both these sectors.
Company sources also pointed out that much of the tooling and weapons of IAF's Mirage 2000, which are being upgraded to Mirage 2000-5 standards, are common with those of the Rafale, and therefore it would be easier to absorb the new generation technologies, both in manufacturing and operations.
Authoritative sources told India Strategic that the two partners had also informed the Ministry of Defence (MoD).
Any such venture has to be cleared by the Government and several procedural and security clearances would be needed in due course as Reliance gets into the technology induction and manufacturing process.
As HAL is the lead integrator for the MMRCA project, the two companies will have to involve it also.
While in-principle approval for such collaborations already exists as per the Defence Procurement Procedure (DPP), the Government has just cleared an important proposal permitting the Defence Public Sector Undertakings (DPSUs) like HAL to forge partnerships with private sector companies to speed up technology induction as well as production of strategic systems for the armed forces.
RIL, already the top group in India, should become the biggest Indian player in combat jets and allied military systems.
Notably, RIL had inducted Boeing India's former head for defence systems, Dr Vivek Lall, to lead a security and defence subsidiary. The intention apparently was to utilize the opportunities offered by India's growing defence requirements, and the business that offsets would generate for the Indian industry.
Dr Lall, an Indian with US citizenship, has the distinction to have worked in the US National Aeronautics and Space Administration (NASA), the war systems US giant Raytheon and then the civil and military aviation world leader Boeing. He is credited as being one of the 2000 outstanding scientists in the entire world, and he was inducted as a Distinguished Fellow recently at the RIL-funded think tank, the Observer Research Foundation (ORF), apparently for initiating hi tech aviation studies.
The cash rich Reliance should infuse billions of dollars in its new partnership. There are timelines in the delivery of MMRCA, and this venture should be able to exceed the turnover of HAL within five years or so.
RIL has already gone into sophisticated Homeland Security systems to make cities secure, and signed agreements with Raytheon and German Siemens in this regard.
As per the terms of the Request for Proposals (RfP), issued by the Indian Air Force (IAF) in 2007, HAL will be the prime integrator for the selected aircraft. But the winning vendor would have the choice to go in for private or public sector companies, for the 50 per cent offsets commitments mandatory for the deal.
It may be recalled that there was a time when the defence industries were open only to the private sector. But gradually, there has been relaxation as the Indian private industry has been seeking a level playing field with public sector companies in defence manufacturing.
There has also been the inability of some of the Defence Public Sector Undertakings (DPSUs) to stick to time lines due to persistent labour trouble, and in some cases poor workmanship resulting from seemingly innocuous but otherwise serious problems like tobacco addiction among employees. The armed forces have been looking at the private sector for quality and timely delivery assurances.
How the Dassault-Reliance venture proceeds will depend on the finalisation of the MoD's negotiations over the acquisition of Rafale. The RfP is for 126 aircraft with an option for 63 more. But over the years, this number should go up to 300 as IAF is looking for 42 to 45 combat aircraft squadrons by 2022 or so.
Notably, IAF, Army and Navy also need transport aircraft. For instance, IAF is looking for replacements for about 60 of its very old Avro aircraft. The Dassault-RIL venture should also open the doors for production of transport aircraft in India.
© India Strategic
