Anil Ambani-promoted Reliance ADA Group said it has signed an agreement with Dassault Aviation of France, the manufacturer of Rafale fighter jets, for a joint venture in India which will benefit from the largest ever local sourcing and manufacturing obligation of up to Rs.30,000 crore.
The JV , Dassault Reliance Aerospace, comes after India and France on September 23 inked the 7.87-billion-euro (around Rs.59,000-crore) deal for the direct acquisition of 36 Rafale fighters, with the first jet to be delivered between October 2019 and early-2022.
The defence ministry's offsets policy makes it mandatory for any foreign firm bagging an arms deal over Rs.300 crore to plough back at least 30% of the contract value to India as offsets. The Rafale deal has a 50% offsets clause, making it the largest-ever offsets contract till now. Under the contract to be executed over seven years, 74% of the offsets have to be imported from India to make aircraft components.
The JV will execute the offsets of Dassault as well as other firms involved in the Rafale deal such as Thales and Safran, while those of missile manufacturer MBDA will be handled separately . ADAG has been positioning itself to tap the multi-billion dollar local defence production business after the government shifted focus to local manufacturing and allowed the private sector greater play in the tightly-policed defence sector .
Sources said the infrastructure for the JV is expected to be in place in three months and production is likely to commence in a year. Although the details are to be worked out, possible areas of cooperation include work related to the body of the aircraft, electronics, engine parts and engineering support.
With the country's fledgling defence industrial base incapable of absorbing huge offsets, the defence ministry had earlier liberalized the offsets policy to include investments in the civil aerospace, homeland security and training sectors as well. `Services' like maintenance and repair, software and technology transfer also now figure in the list.
In January 2015, ADAG entered the defence manufacturing sector, acquired a naval shipyard and is developing its air, land and sea defence manufacturing capabilities in collaboration with leading global defence firms.
The JV , Dassault Reliance Aerospace, comes after India and France on September 23 inked the 7.87-billion-euro (around Rs.59,000-crore) deal for the direct acquisition of 36 Rafale fighters, with the first jet to be delivered between October 2019 and early-2022.
The defence ministry's offsets policy makes it mandatory for any foreign firm bagging an arms deal over Rs.300 crore to plough back at least 30% of the contract value to India as offsets. The Rafale deal has a 50% offsets clause, making it the largest-ever offsets contract till now. Under the contract to be executed over seven years, 74% of the offsets have to be imported from India to make aircraft components.
The JV will execute the offsets of Dassault as well as other firms involved in the Rafale deal such as Thales and Safran, while those of missile manufacturer MBDA will be handled separately . ADAG has been positioning itself to tap the multi-billion dollar local defence production business after the government shifted focus to local manufacturing and allowed the private sector greater play in the tightly-policed defence sector .
Sources said the infrastructure for the JV is expected to be in place in three months and production is likely to commence in a year. Although the details are to be worked out, possible areas of cooperation include work related to the body of the aircraft, electronics, engine parts and engineering support.
With the country's fledgling defence industrial base incapable of absorbing huge offsets, the defence ministry had earlier liberalized the offsets policy to include investments in the civil aerospace, homeland security and training sectors as well. `Services' like maintenance and repair, software and technology transfer also now figure in the list.
In January 2015, ADAG entered the defence manufacturing sector, acquired a naval shipyard and is developing its air, land and sea defence manufacturing capabilities in collaboration with leading global defence firms.
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