Nagpur SEZ to host Rafale offset manufacturing

Four French companies with a major stake in the Rafale deal will execute the work

An integrated facility will be commissioned by the Reliance Anil Dhirubhai Ambani Group and its French partner Dassault in Nagpur in the next few months for the execution of offset contracts of the just-concluded deal for 36 French fighters. A significant part of the whopping Rs. 30,000 crore offsets would be executed through the joint venture, Dassault Reliance Aerospace.

According to industry sources, the new facility will come up in the Reliance Special Economic Zone (SEZ) in Nagpur, and it would be fully operational within the next 12 months.

Four French companies which have a major stake in the Rafale deal — Dassault Aviation, Thales, Safran and MBDA — will execute offsets worth about Rs. 30,000 crore as per their share. The Dassault-Reliance JV will only execute a part of the offsets because some of the investments have to be done in DRDO for technology development.

Last month India and France concluded a €7.87-billion deal for 36 Rafale multi-role fighter jets in a fly-away condition but it has a 50 percent offset clause under which that contract value has be invested and sourced from India.

Contract share

The first three companies individually have about 25-30 percent share in the aircraft which will also be the case in executing the offsets. Another 10 percent is held by several other French companies based on their contribution. MBDA is the weapons manufacturer which is also part of the contract.

According to sources the entire offset amount will not go into the private sector. As per the agreement about 30 percent of the Rs. 30,000 crore i.e. about Rs. 9,000 crore has to be invested in Reseach & Development (R&D) along with the Defence Research and Development Organisation (DRDO) for technology development.

In response to a query from The Hindu , Thales said that offsets would be delivered through various avenues including the Dassault-Reliance JV.

The JV was needed as Dassault India, a service-oriented company, cannot take up manufacturing which will be done by the JV. “There will be several Independent Offset Partners (IOPs) through the JV,” industry sources said.