EXCLUSIVE: FLYING LIES - II

The violation of rules of the Indian government to help Anil Ambani’s Reliance group in pocketing the Rafale deal is not limited to the Defence Procurement Procedure — as reported exclusively by Newsclick — alone.

It emerges that rules of the Department of Industrial Policy and Promotion (DIPP) have also been violated blatantly by Reliance Aerostructure Limited (RAL), which was awarded the offsets contract by French aircraft manufacturer Dassault Aviation.

This contract led to a joint venture (JV) between Dassault and RAL, called the Dassault Reliance Aerospace Limited (DRAL) — and the setting up of a plant at Nagpur for manufacturing parts for aircraft, Rafale, and civil aircraft, Falcon.

Also Read: EXCLUSIVE: Flying Lies?

Now, RAL was incorporated as a company on April 24, 2015, as per the Ministry of Corporate Affairs website. But it was only on June 16, 2015 that RAL applied to the Maharashtra government for allocation of land — according to a report published on the website of Reliance Capital Limited, another company of the Reliance Anil Dhirubhai Ambani Group (ADAG).

 On August 29, 2015, Maharashtra CM Fadnavis handed over the land allotment letter of 105 acres, out of the initial allocation of 289 acres to RAL in the presence of Union cabinet minister Nitin Gadkari and Reliance ADAG Chairman Anil Ambani. ADAG decided to reduce the land area because they couldn't afford to pay the pre-fixed price for the 289 acres even after many reminders from the relevant government departments.

JV Created Without Licence  to RAL

However, in April 2015 — when, according to Dassault’s own statement, the JV with RAL was created (controversy regarding the date of the JV’s formation is clarified here) — RAL did not have the approvals and license from the DIPP.  

On November 21, 2015, the Financial Express reported that “DIPP has given conditional approval to 11 proposals of eight subsidiaries of Reliance Infra, which include Reliance Defence Technologies, Reliance Helicopters, Reliance Propulsion Systems, Reliance Aero-structure and Reliance Naval Systems.”

Indeed, the DIPP says — in its “List Of Industrial Licences Issued For Manufacture Of Items Under Defence Industries From January 2011 To 3 July 2018” — that RAL received the licence only on February 22, 2016. This was a good 10 months after April 2015, when the JV was created.

Licence Only For Military Aircraft

What’s more, the licence that RAL got is only for “manufacturing and upgrade of airplanes and helicopters specially designed for military applications.”

And yet, a press release by Dassault Aviation on October 27, 2017 — after the inauguration of the Mihan set-up of the JV — said:

“DRAL will manufacture components for the Legacy Falcon 2000 Series of Civil Jets manufactured by Dassault Aviation and thus will become part of its Global Supply Chain. These first steps are expected to achieve in the coming years the possible setting up of final assembly of Rafale and Falcon Aircraft.”

This is in clear violation of the licence that RAL has obtained from the DIPP.

A company cannot take a licence for manufacturing parts of only military aircraft, and then enter into a JV to manufacture parts for civilian aircraft under that same licence. So how did RAL do so?

Even as recently as September 21, 2018 — after former French President Francois Hollande’s revelations that the Modi government did not give any other option to Dassault for an offsets partner other than Reliance — Dassault issued a press release saying:

“Dassault Aviation and Reliance have built a plant in Nagpur for manufacturing parts for Falcon and Rafale aircraft.”

Under the Industries (Development And Regulation) Act 1951, section 11A of Chapter 3 — Regulation of Scheduled Industries — says:

“The owner of an industrial undertaking not being the central government which is registered under section 10 or in respect of which a license or permission has been issued under section 11 shall not produce or manufacture any new articles unless —

1. In case of an industrial undertaking registered under section 10, he has obtained a license for producing or manufacturing such new article; and

2. In case of an industrial undertaking in respect of which a license or permission has been issued under section 11, he has had the existing license or permission amended in the prescribed manner.”

Change of Address

Further, all 11 defence companies, including RAL, under Anil Ambani’s Reliance group share the same address — Survey Number 589, Taluka Jafrabad, Village Lunsapur, Amreli District, Gujarat.

Again, this is a violation of DIPP rules which categorically state that any change in the place or location other than the one mentioned in the initial registration of a company will not stand valid, and a new registration will be required to be done.

But there is no evidence for RAL taking a new licence or even applying for a change of address. So how is it that RAL applied for a licence with an address in Gujarat but the factory is located in Maharashtra?

However, the questions of primary importance are:

Did the Ministry of Defence (MoD) — in its evaluation of the Rafale offsets contract — not come across RAL’s violations of the DIPP rules? If it did, was not the MoD supposed to examine these violations by RAL, along with the company’s capability? And if it did examine these, how did the Ministry let these violations pass?

Or did the Ministry of Defence remain unaware of these violations all along — just as it claims that the government was unaware of who Dassault’s Indian offsets partner was until much later?

Ravi Nair broke the story of the Rafale scandal and is writing a book on the subject. This is part two of his exclusive article for Newsclick.