A Rafale fighter jet, manufactured by Dassault Aviation SA, prepares to land following an aerial display on the second day of the 14th Dubai Air Show at Dubai World Central (DWC) in Dubai, United Arab Emirates. (Photographer: Jasper Juinen/Bloomberg)

Congress Misinformed On Rafale Deal, Anil Ambani Writes To Rahul Gandhi

The Reliance Group said its Chairman Anil Ambani has written to Congress president Rahul Gandhi on the Rafale fighter jet deal saying his party has been "misinformed, misdirected and misled by malicious vested interests and corporate rivals" on the issue.

Ambani, who had first written to Gandhi on the issue in December, again wrote to him last week saying not a single component worth a rupee is to be manufactured by his group for the 36 Rafale jets India is buying from France.

Gandhi has been attacking the government for inking the deal at a much higher price than the one the previous UPA regime had negotiated. While he has accused the government of changing the deal to benefit "one businessman", his party has demanded a Joint Parliamentary Committee probe into the deal.

"Allegations of Reliance benefitting by thousands of crores is a figment of imagination, promoted by vested interests," the company said in a statement, quoting from Ambani's letter. "Simply put, no contract exists with the Government of India."

French company Dassault, which is supplying the fighter jets, has entered into a joint venture with Reliance Group to meet its offset requirement of the contract. A foreign supplier of equipment agrees to manufacture a given percent of his product (in terms of value) in the buying country, under defence offset. Sometimes this may take place with technology transfer.

While direct offsets are linked to the original defence contact where companies often agree to transfer relevant technological know-how or use local suppliers to build the equipment they are selling to the government, indirect offsets have nothing to do with the deal and can include the company making up investments in local industries.

In case of the Rafale deal, which will give newcomer Reliance Group a foothold in the defence industry, the companies have not specified what components will they manufacturer in India.

Ambani in the letter expressed "deep anguish over continued personal attacks by Rahul Gandhi on him", the statement said. He termed all allegations as baseless, ill-informed and unfortunate. "All 36 planes are to be 100 percent manufactured in France, and exported from France to India."

He also said there was no contract from the Ministry of Defence to any Reliance Group company related to the aircraft.

Ambani said his group's role was limited to offset and export obligations. He said more than 100 medium, small and micro enterprises, including public sector undertakings like Bharat Electronics Limited and Defence Research and Development Organisation, would take part in the process. He said the procedure was in pursuance of the Offsets Policy introduced by the Congress-led UPA government itself in 2005.

He said Reliance Group announced its decision to enter the defence manufacturing sector in December 2014-January 2015, months before the intention for the purchase of Rafale aircraft.