India’s multi-billion dollar warplane deal faces scrutiny

Bloomberg

India’s prime minister is facing allegations his administration acted improperly on a multi-billion dollar warplane contract with France, keeping alive a controversial issue that could dent the ruling party’s reputation as it heads to elections next year.
Francois Hollande was president when Indian PM Narendra Modi visited France and signed an $8.7 billion deal for Dassault Aviation Rafale aircraft in 2016. He told French news site Mediapart.fr that his government was told to partner with a specific Indian firm, Reliance Group, for additional “offset” investments.
The remarks from the former French leader contradict what Modi’s government, the current French government and Dassault have said previously about the selection of Indian business magnate Anil
Ambani’s Reliance Group.
“The Indian government proposed this partner and Dassault negotiated with Ambani,” Hollande said, according to the report posted on September 21 that referred to the Ambani family, who are dominant in the Indian business world.
“We were given no choice, we took the partner which was appointed.”
The administration of Emmanuel Macron and Dassault both issued statements after Hollande’s comments saying the choice of Reliance Group was made by Dassault. The French government says it played no role in Dassault’s selection of Reliance.
Dassault said the first contract was a government-to-government contract, and that the company then picked Reliance for their partner in a separate offset contract.
However, the former French president’s comments appear to bolster long-standing allegations from the opposition Congress party that India’s prime minister executed a deal that unduly benefited the Ambani family — which includes Anil Ambani’s brother Mukesh Ambani, Asia’s richest man.
Ahead of India’s 2019 general election, in which Modi’s Bharatiya Janata Party will campaign on its pro-poor policies and economic development record, the allegations of impropriety against the government could provide fuel to opposition critiques that the prime minister is too cozy with tycoons.
“If these developments are true, the BJP could suffer a major political blow, especially with elections just around the corner,” said Michael Kugelman, a senior associate for South Asia at the Woodrow Wilson Center in Washington, D.C. “Hollande’s revelation undercuts the image that the BJP likes to project of itself as a squeaky-clean party. More broadly, the possibility of New Delhi doing a favour for a pro-government corporate titan in the high-stakes, big-money world of arms sales — the optics are dreadful, and the reputational costs for the government could be considerable.”

Industrial Partners
A spokesman for India’s prime minister’s office did not answer a call or text message. Finance Minister Arun Jaitley, who also previously held responsibility for defense, said in a Facebook post Gandhi’s repeated allegations on the Rafale deal were a “campaign of falsehood.”
The official Twitter account for India’s defense ministry said the report of Hollande’s comments were “being verified,” but that the Indian and French governments did not have a role in Dassault’s decision.
“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,” a French foreign ministry spokesperson said.
The French company said: “Dassault Aviation has decided to make a partnership with India’s Reliance Group. This is Dassault Aviation’s choice.”
Reliance declined to comment on the allegations. Reliance Defence & Aerospace president Rajesh Dhingra told India’s Economic Times the allegations were “unfounded” and that Congress comments on Rafale were “a deliberate attempt to mislead.”
Congress party president Rahul Gandhi has accused Modi’s government of scrapping an earlier 126-jet deal negotiated by the previous Congress government in favour of a personally-negotiated deal for 36 aircraft that cost more on a per-plane basis.