No longer inhibited by executive protocol, President Macron’s predecessor Francois Hollande caused uproar in India when he revealed the leverage exercised by the Indian government during the Rafale Deal. The deal is shrouded around claims of nepotism set forth against Prime Minister Narendra Modi’s association with businessman Anil Ambani. The allegations include:
- Handing over the operational management of contributions in offset costs of the purchase of Rafale jets from Dassault Aviation to Reliance Aerostructure Limited lead by Anil Ambani in lieu of the initially stipulated, state owned Hindustan Aeronautics Limited (HAL).
- Engaging in antitrust practices by revealing to Anil Ambani the financial details of the deal thereby ‘violating the oath of secrecy.’
- Negotiating a deal which would hurt the Indian economy by tripling the price of each jet relative to the deal signed by the United Progressive Alliance (UPA) with France in 2012.
- Defying the ‘Made in India’ program by buying 36 ready to fly jets juxtaposed with the previous negotiations, which stipulated the purchase of 18 jets in ‘fly-away’ condition and 108 jets to be made in India, as result of offset stipulations overseeing Dassault’s investment in India in cooperation with HAL.
The allegations intensified after Hollande leveled accusations against the India government of leaving Dassault with no choice but to partner with the Ambani lead Reliance Aerostructure. Coincidentally enough, Reliance Aerostructure was incorporated no less than ten days before Modi’s announcing of the flagship project that would set in motion his premiership on a positive note.
However, the financial discrepancies levied against the project and the concealment of offset benefits have opened up the project to scrutiny from both within the BJP as well as from across the Indian political spectrum, most noticeably from Rahul Gandhi, President of the Indian National Congress who is spearheading the plethora of voices echoing against Modi’s demeanor in enforcing the deal. The government has issued a resounding defense of the deal it negotiated confronting head on accusations made against by domestic and foreign elements. Arun Jaitley, The Indian Finance Minister pointed out the inconsistencies in Hollande’s claim who issued more credibility to the Finance Minister’s rebuttal by refuting his own emboldened statement that sparked the controversy in the first place. Hollande went back on his words after the current French government rendered clarity over its official stance by declaring that partnership between the two private firms is based on their and no one else’s discretion. Furthermore, the Indian government has made clear that the agreement signed in 2015 under the auspices of Mr. Modi is more favorable to the Indian cause than the previous agreement for it entails not just the physical transfer of technology and its logistical implementation but most importantly highlights India’s burgeoning global role in commercial military aviation.
Offset investment, 50% of the cost of the 36 Rafale Jets flowing into India, the largest of its kind, will be directed under the patronage of the Dassault Reliance Aerospace Limited (DRAL). The purchase is set to be set at €7.87 billion. Information on how the cost will be broken up is recondite because of the Indian government citing security reasons, another point of attack for the opposition in the Indian parliament. The amalgamation of the two private firms is based on 51-49% ratio favoring Reliance Aerostructure. The Dhirubhai Ambani Space Park is being propped up with the offset contributions, 30% of which will be invested in aeronautical research in India with the remaining 20% earmarked for local manufacturing of Rafale jets. The project is set to induct an approximate 20,000 jobs and benefit the local populace of Nagpur.
French diplomatic relations with India have been brought to the fore in light of Hollande’s initial statement. Hailed as the epitome of bilateral cooperation when the deal was signed between Mr Modi and Hollande, the latter’s statements threatened to derail the project in the wake of rising speculation and domestic pressure against Mr. Modi on account of venturing into unfair trade practices and corruption. Emmanuel Macron, the current French president, has defused rising speculation around the deal by stating that the Dassault and Reliance Aerostructure ventured into a partnership willingly.
Francois Hollande, the quintessential modern day socialist, hailed the socialist cause when campaigning for the presidency as well as in the initial period of his ascendancy to office. Two years in office was enough for him to soften and somewhat reverse his assurances of taxing businesses earning revenues in excess of $1 million. Touting his successfully aligned foreign policy with international regimes, the ne plus ultra of which was the Rafale deal with India, Hollande’s domestic policy was in shambles which forced the Socialist party to reconsider its ranks. The likes of Dassault, which he promised to tax and redistribute to the poor reported revenues in excess of €4 billion during his last year in office. Francois Hollande’s presidency as his statements surrounding the Rafale Deal, as Arun Jaitley suggested are riddled with contradictions.
Jean-Baptiste Lemoyne, the Secretary of State to the Minister for Europe and Foreign Affairs and Foreign Affairs echoed Paris’ sentiments stating, “because one is no longer in office, causing damage to a strategic partnership between India and France by making remarks that clearly cause controversy in India is really not appropriate.”
Though the Indian opposition will continue, in all its merits, to belabor the case against Mr. Modi, the French government will not want to exacerbate its role in the case. India is fast developing economy with pecuniary benefits for France and the European Union at large. Hurting diplomatic relations, channeled through a bilateral deal of such unprecedented monetary proportions is not the primary course of action that France would take, especially at a time when the EU is looking to broaden its economic horizons. Mr. Modi, treading on thin ice, in the Indian parliament at the moment will want to ensure that the predicament he finds himself in does not reflect on India’s global trade narrative.