National / Cover Stories MAGAZINE | APR 27, 2015
Dassault Aviation of France, a leading global player in aerospace technology, is no stranger to India. For the last 60 years, it has been supplying aircraft and other key platforms to the Indian Air Force (IAF). But in recent years, Dassault has not had good news from India: in 2007, Dassault had won, through global tender, a multi-billion contract for 126 Rafale Medium Multi Role Combat (MMRC) aircraft, but New Delhi had been unable to reach a final decision on it. So when Prime Minister Narendra Modi announced on April 11 in Paris that India would buy 36 Rafale aircraft in ready-to-fly condition, it was cause for celebration. Dassault publicly thanked Modi in a statement. But if Dassault’s top executives were throwing their hats up and uncorking the champagne, there was reason for similar exuberance in Indian corporate houses too. Announced with the Rafale deal was an agreement between L&T and Areva for constructing nuclear reactors at the Jaitapur plant. The fine print is not known yet, but together the two developments indicate greater participation of Indian private players in the defence, strategic and nuclear sectors. Reliance, the Tatas, the Mahindras and many others will soon be staking out shares of the lucrative and expanding Indian defence-strategic market. Over the past few years, many of these companies have been spending crores in tie-ups with foreign companies and in acquiring Indian entities to take advantage of such an emerging scenario. They are also in deals with such companies for supplying equipment abroad. Modi had sent them a signal by speaking of ‘Make in India’. The breaking of the logjam on the Rafale deal essentially gives the public-sector Hindustan Aeronautics Ltd (HAL) a jolt. In that sense, it runs against the ‘Make in India’ slogan. But it brings hope to private players, who are seeing their chances improve for a share of the $130 billion India will be spending over the next decade or so in modernising its armed forces.
Says Baba N. Kalyani, chairman of the Kalyani Group, with wide interests in defence manufacturing, “I think Prime Minister Narendra Modi has made the right decision. The IAF needs fighter jets. So it’s a good thing.” Brig (retd) Khutub Hai, MD of Firmbase Consulting, goes even further: “Now, Dassault is free to pick an Indian partner. Rumour has it, it will be Reliance. And if that is so, so be it. India’s aim to have another airplane manufacturer in the next few years will be fulfilled, and Dassault will get the efficient partner it wants.” Defence minister Manohar Parrikar, too, has indicated that a situation could soon arise for Indian players to participate significantly in the defence sector: “the same car cannot run on two roads”, so future deals will also follow the G2G model. In the coming days, India may ask Dassault for more aircraft and decide how many of them will be built in India.
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