Indian Reliance Group and Dassault Aviation have announced a joint venture (JV) to execute $3.3 billion worth offset contract as part of the Rafale fighter jet deal.
The announcement of the JV, Dassault Reliance Aerospace, comes within days of India and France on September 23 signing an agreement for 36 Rafale fighter jets at a value of euro 7.87 billion.
The agreement includes a 50 per cent offset obligation. The main point of the offset agreement is 74 per cent of it has to be imported from India, which means direct business worth around Rs 22,000 crore ($3.3 billion).
The offset, spread over seven years, will be finalised soon. There is also a technology-sharing component, which is being discussed with the Defence Research and Development Organisation (DRDO). Other companies involved in the Rafale deal include French firms MBDA and Thales, besides Safran, which too will be part of the overall offset obligation.
The Dassault Reliance Aerospace joint venture will be a key player in the execution of offset obligations, a joint statement by the companies said Monday.
The development has come as a boost to the Reliance Group, which entered the defence sector only in January 2015.
The proposed strategic partnership between Dassault and Reliance will also focus on promoting research and development projects under the IDDM programme (Indigenously Designed, Developed and Manufactured).
"The formation of this joint venture with Reliance Aerospace led by Anil Ambani's Reliance Group illustrates our strong commitment to establish ourselves in India and develop strategic industrial partnerships under the Make in India policy promoted by the Indian government," Eric Trappier, Dassault Aviation Chairman and CEO said.