In a move to bring in the largest ever foreign direct investment (FDI) in the defence manufacturing sector in India, French defence major Dassault Aviation will invest over 100 million euros in a joint venture with Reliance Aerostructure ltd to manufacture aircraft components in related to the proposed purchase of 36 Rafale fighter jets from France, according to the joint statement made by both the companies on Friday.
Putting the Orange City Nagpur on the world aviation map in this venture, Eric Trappier, Chairman of Dassault Aviation and Anil Ambani, Chairman of Reliance Group laid the foundation stone for the Dassault Reliance Aerospace Park (DRAl) manufacturing facility at the Dhirubhai Ambani Aerospace Park in Mihan SEZ near the Nagpur airport.
The foundation stone was laid in the presence of Florence Parly, Minister of Armed Forces of French Republic, Chief Minister Devendra Fadnavis, Union Minister Nitin Gadkari, Ambassador of France to India Alexandre Ziegler, and over 200 dignitaries from Maharashtra and city administration.
“The Reliance-Dassault partnership will bring high levels of technology transfer and make India a major supplier in the global aviation supply chain,” Ambani said. Dassault and Reliance will fully support Make in India and Skill India missions and enhance India’s pursuit of self-sufficiency in the aerospace sector, he added.
Ambani also thanked Gadkari and Fadnavis for their “strong and consistent support” for the project. "First we thought of Bengaluru, then Hyderabad. Then Eric (Dassault Chairman Eric Trappier) suggested we go to Gujarat," Ambani said during the foundation laying ceremony. "But I said I want to go to Nagpur. Gadkariji first suggested the idea of (having the project at) Nagpur. He said he will banish me from India if I took the project elsewhere," Ambani said in a lighter vein.
"The CM (Fadnavis) said everything I need will be done for the project at Mihan,” he said adding that “I don't think there's a better example in ease of doing business. Thank you, Gadkariji for twisting my arm and making me come to Nagpur." During the presentation, French Defence Minister Florence Parly said that her country shares concerns over the threat of terrorism confronting both the countries and India is the natural partner of France in Asia. Parly who held discussions in Delhi earlier on Friday with her Indian counterpart Nirmala Sitharaman.
“During my talks (with Sitharaman), we shared views on threat of terrorism confronting India, France and Europe and ways to combat it,” Parly said in a media briefing after laying the foundation. "We also shared views on situation in the Indian Ocean region," she said.
“Dassault Reliance Aerospace will manufacture several components of the offset obligation connected to the purchase of 36 Rafale fighter jets from France, signed between the two Governments in September 2016,” Ambani said. It will manufacture components for the legacy Falcon 2000 series of civil jets manufactured by Dassault Aviation and will become part of its global supply chain.
This is for the first time that a business jet will be manufactured in India, a Dassault Reliance Aerospace official said. “These first steps are expected to be achieved in the coming years, leading to the possible setting up of the final assembly of Rafale and Falcon aircraft in India,” the official said. It will be home to Dassault Reliance Aerospace ltd—the 51:49 joint venture of Reliance Aerostructure and Dassault Aviation.
Reliance Group will set up assembly lines and manufacturing facilities of fixed wing aircraft aerostructure for commercial transport aircraft and helicopters for both defence and commercial use. The park will also house ancillary and component manufacturing units to support after-sales requirements. The official also added, “The Dassault Reliance Aerospace facility will train skilled workers in aviation assembly and integration, and lead to major employment generation in Nagpur and surrounding areas, the official added. It will also attract and house an organic ecosystem of over 200 MSMEs to secure the component and avionics manufacturing needs of Rafale and Falcon jets.”
Dassault Aviation Chairman, however Eric Trappier said the firm is firmly committed to implementing Prime Minister Narendra Modi’s Make in India programme. “This development gives the 65 year-long strong association of Dassault Aviation in India a new momentum and the will of future manufacturing developments,” he said.
The Dhirubhai Ambani Aerospace Park, spread over 289 acres, will be the largest greenfield aerospace park in India with a capital investment of over Rs 6,500 crore. It is being developed in two phases. Phase one production is expected to start next year. In 2016, India signed a 7.9 billion euros ($8.8 billion contract for purchasing 36 Rafale fighter jets in fly-away condition which incorporated a 50 per cent offset clause, mandating that 50 per cent of the deal value would be invested in the Indian defence ecosystem.
While the first lot of the Rafale jets from France are expected to be delivered by September 2019, the remaining will be delivered after another 30 months (around March 2022). As part of the mandatory offsets under this deal, France will invest 30 per cent of the total deal cost in India's military aeronautics related research programmes and another 20 per cent towards the local production of Rafale components.