NEWS:
The French aerospace major Dassault Aviation and India’s Reliance Industries are planning to set up a facility to produce wings of the Rafale combat aircraft selected by the Indian Air Force (IAF) in the tender for 126 Medium Multi-Role Combat Aircraft (MMRCA). The two firms are planning to set up a facility involving an investment of Rs. 1000 crore and as per industry sources, this facility is most likely to come up in Bangalore. Under the plan, Dassault Aviation would help Reliance to establish the factory that will be similar to its production facilities in France where the aircraft is produced. The Defence Ministry and other agencies concerned have given a go ahead to the two companies for creating the unit.

VIEWS
As early as in the beginning of 2012, soon after the Rafale offered by Dassault Aviation of France was shortlisted as the preferred platform in the tender for the MMRCA for the IAF, the French original equipment manufacturer (OEM) had indicated that it had selected Reliance Industries as its Indian partner for jointly producing the batch of 108 Rafale combat jets in India for the IAF. In fact, Dassault Aviation did proclaim that it had already signed a memorandum of understanding (MOU) with Reliance Industries Limited, India’s largest private sector company, “for pursuing strategic opportunities of collaboration in the area of complex manufacturing and support in India”. For Reliance Industries, it would be their maiden venture in the regime of manufacturing for the aeronautical industry.

Apparently, the French OEM did not have the required level of confidence in the capability of the Indian aerospace major Hindustan Aeronautics Limited (HAL) to handle the production of a fourth generation combat jet. It is understood that this was based partly on an observation by Timothy J Roemer a former US Ambassador in India, in a confidential cable that somehow was leaked to the media. In his report to the American government, the US Ambassador is believed to have concluded his assessment with the words “HAL’s ability to partner effectively with American firms for the licensed production of the MMRCA, was untested and suspect”. The adverse impression created by this leaked report was further aggravated when a team from Dassault visiting the HAL facility in Nasik, was reportedly disappointed by the infrastructure in place there and expressed concern about “the capability of HAL to absorb the required technology”.

Dassault Aviation thus indicated their preference for Reliance Industries over HAL to enter into partnership for building the batch of 108 aircraft in India for the IAF. The French aerospace major wrote to the Indian Ministry of Defence that if it was to shoulder overall responsibility for the project, it should be given the freedom to decide on the quantum of work to be shared between HAL and private companies in India. Dassault Aviation on their part was not willing to be held responsible for quality and delivery schedule in respect of those platforms licensed manufactured in India by HAL.

The Ministry of Defence held the view that as per the RFP, while Dassault Aviation was free to partner with any Indian company in the aerospace sector to meet with its offset obligations that for this particular contract has been pitched at 50 per cent of the contract value, the licensed manufacture of the platform would be the responsibility of HAL that had been stipulated as the lead integrator in the RFP. The Ministry of Defence further stated that HAL in turn had the liberty to outsource work packages to private companies in the Indian aerospace sector. Also, as the terms of the RFP had been accepted by the bidder for participating in the tender, no deviation would be possible at this stage. Stand adopted by Dassault Aviation was thus rejected by the Ministry of Defence.

From the reports appearing in the media in the recent past, it appears that the issue of role of HAL in the MMRCA project over which there were protracted negotiations and consequent delay in the finalisation of the contract, appear to have been finally resolved. Dassault Aviation and Reliance Industries limited have now been given the go ahead by the Indian Ministry of Defence to establish a new facility with considerable investment, to manufacture a major component, the main planes or wings for the Rafale MMRCA. This arrangement appears somewhat similar to that between HAL and Bengaluru-based Dynamatic Technologies wherein work packages have been outsourced to the latter that manufactures major airframe components of the Su-30 MKI for the HAL plant at Nasik. In the case of the MMRCA too, HAL will thus continue to be the lead integrator.

After an excruciating delay of two years since the selection of the Rafale, the tender is finally moving towards its logical conclusion. The report in the media is bound to elevate the sagging spirits in the IAF that has been eagerly waiting for the finalisation of the contract.