Former French President Francois Hollande poured kerosene on the flames of the Rafale fighter plane deal on Friday, saying that India gave manufacturer Dassault no choice but to work with Anil Ambani’s Reliance Defence, despite official Indian government claims to the contrary. The sheer magnitude of the remarks, made to reputed French news organisation MediaPart, was reflected in the silence from the Bharatiya Janata Party and the government. As of Saturday morning, France and Dassault had put out statements. But Prime Minister Narendra Modi’s government has yet to respond.
Here is what you need to know:
The Rafale deal
- In 2015, after years of negotiations between India and France over a deal to buy 126 Rafale fighter jets, Prime Minister Narendra Modi ripped up the older agreement and announced a new deal. Instead of 126 planes, India would be getting 36 Rafale aircraft in an arrangement that Modi insisted was better and cheaper for India. There has been much debate over the price of the new deal, which you can read about here.
- One aspect of the new arrangement was that instead of the bulk of the jets being built in India with state-owned Hindustan Aeronautics Limited, Modi’s deal would see all 36 jets built in France and imported into India. Dassault, the company that builds Rafale jets, would instead have to invest half the cost of the deal in Indian companies, a condition called an “offset clause”.
- Per the terms of the deal, Dassault was supposed to be free to work with any company it wanted to. It has made plans to work with 72 Indian firms, but, according to its own press releases, the “key player” in its offset obligations will be Anil Ambani’s Reliance Defence. Reports have suggested that the Dassault-Reliance joint venture will get as much as Rs 21,000 crore of the Rs 30,000 crore offset obligations.
- The Opposition, led by Congress President Rahul Gandhi, has spent the last year alleging that the deal is actually a scam, in which India is overpaying for jets and where the Indian government is allowing a private company – Reliance Defence – to benefit at the cost of state-owned HAL. The timing of some of the details, including the incorporation of Reliance’s defence companies days before Modi announced the Rafale deal, have raised further suspicions. The Indian government, however, has insisted all along that it had nothing to do with Dassault’s decision to work with Reliance Defence.
Hollande’s comments contradicted that contention:
“We did not have a say in this. The Indian government proposed this group, and Dassault [the company that manufactured the jets] negotiated with Ambani. We did not have a choice, we took the interlocutor who was given to us.”
In fact, only last week, Defence Minister Nirmala Sitharaman insisted that she did not even know who Dassault’s offset partners were, since procedure only calls for them to be cleared in 2019:
“I have not got to know who is Dassault’s offset partner... It is a commercial decision. There are procedures laid down to check the process of fulfilment of offset obligations. Neither I can accept, nor I can suggest, nor I can reject anybody from going with anybody.”
The Indian government’s claims that it doesn’t know the identity of offset partner is were always suspect: Dassault and Reliance have said in press releases that they were working together, and the foundation stone for their joint venture’s manufacturing facility in Nagpur was laid in October 2017 with Union Minister Nitin Gadkari, Maharashtra Chief Minister Devendra Fadnavis and French Defence Minister Florency Parly in attendance.
But Hollande’s comments go a step further. They suggest Modi’s government proposed Reliance’s name, and gave the French government no choice.
Why is Hollande speaking now?
This is likely to do with French domestic politics and allegations against Hollande and his partner, Julie Gayet. In August, the Indian Express reported that, even as Rafale talks were underway, Anil Ambani’s group was helping produce a movie for Julie Gayet.
The implication was that this movie deal acted as some sort of nudge to push France and Dassault into working with Anil Ambani. In his comments, Hollande is clearly trying to deny this. Instead, he says Anil Ambani’s company was picked because the Indian government proposed it and gave France no choice. “I could not even imagine that there was any connection to a film by Julie Gayet,” he said.
How have the various players responded?
As of 8 am on Saturday, Modi, his government and the Bharatiya Janata Party have yet to officially respond to Hollande’s comments. The only mention of the interview is in a tweet by the Ministry of Defence’s spokesperson, which says the report is being verified.
The French Ministry of Europe and Foreign Affairs put out a statement saying that “the French government is in no manner involved in the choice of Indian industrial partners who have been, are being, or will be selected by French companies. In accordance with India’s acquisition procedure, French companies have the full freedom to choose the Indian partner companies that they consider to be the most relevant.”
Dassault also issued a statement, saying “in accordance with the policy of Make in India, Dassault Aviation has decided to make a partnership with India’s Reliance Group. This is Dassault Aviation’s choice.”
The Congress put out a statement saying the prime minister has “betrayed India”.
None of the official responses so far address Hollande’s comments that India proposed the Reliance Group during Rafale negotiations. They all insist that Dassault had a choice in picking its partner, which is technically what the agreement says. But if the Indian government had put forward a name during negotiations, how freely is this choice made?
This is what the government needs to answer:
- Did Modi or his government propose Anil Ambani’s Reliance Defence as a partner for Dassault in the Rafale deal?
- If it claims it did not, will Modi or his government say that Hollande – the former French president with whom the Rafale deal was negotiated – is lying?
- If it insists that Hollande is lying, will the government of India do anything beyond simply issuing a statement?
The government will want to avoid saying Hollande lied, in part because that is a major accusation against a former foreign head of state, and it will also keep the story alive, forcing French media to follow up. But if it does not state plainly that Hollande is not telling the truth, that brings into question its insistence that India had nothing to do with Dassault’s decision to go with Reliance.
Moreover, now that Sitharaman has said she does not know who the offset partners are and that “neither I can accept, nor I can suggest, nor I can reject anybody” at this stage, the government cannot claim that Reliance was just one of many companies on some sort of approved list of firms that it put forward to France as potential partners.
Simply put, the Indian government will have to offer a direct rebuttal of Hollande’s remarks. Anything less will be an admission that it has not been telling the truth.
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