Hollande's claim on Rafale deal fuelled massive political row

As former French president Francois Hollande's claim on the Rafale deal fuelled a massive political row, the government Saturday asserted it did not have any role in the selection of Reliance Defence as a partner for Dassault while France said it was in "no manner" involved in the choice of any Indian industrial associate for the contract.

Dassault Aviation said the decision to partner with Reliance Defence Ltd (RDL) to fulfill offset obligations of the deal was its own.

Hollande, who was French president when the Rs 58,000 crore deal was announced, was quoted as saying by French publication 'Mediapart' that France was given "no choice" on the selection of the Indian partner for Dassault and the Indian government proposed the name of Reliance to partner with the French aerospace giant.

AFP reported that Hollande told it on the sidelines of a meeting in Canada on Friday that France "did not choose Reliance in any way". When asked whether India had put pressure on Reliance and Dassault to work together, Hollande said he was unaware and "only Dassault can comment on this".

Hollande's comments gave fresh ammo to the opposition, with Rahul Gandhi making one of his sharpest attacks on Prime Minister Narendra Modi on the issue, alleging the remarks showed there was "clear-cut corruption" in the deal and he must clarify whether the former French president was "lying".

"Now, what the ex-president of France is saying is that the prime minister of India is a 'thief'. That is what this (Hollande's) statement is saying," Gandhi told a press conference while asking Modi to come clean.

Defence Minister Nirmala Sitharaman, who is on a visit to Egypt, accused Gandhi of "repeating untruth" and criticised him for using "brazen and abusive language" against Modi. "They betray their sense of desperation in being out-of-power. In our govt there is no corruption," she said.

Hitting out at Gandhi, Law Minister Ravi Shankar Prasad condemned his remarks as "shameful and irresponsible", saying no president of any party has ever used such language against a prime minister.

Prasad also rejected Hollande's claim as reported earlier, saying it was not known under what compulsion he made the remarks.

The sensational comments quoted to Hollande gave a new twist to the controversy as the Indian government has been maintaining it was not officially aware whom the Dassault Aviation has selected as its Indian partner to fulfill offset obligations of the deal. The opposition has been alleging that government was favoring RDL.

The report quoted Hollande as saying, "It was the Indian government that proposed this service group, and Dassault who negotiated with Ambani. We had no choice, we took the interlocutor who was given to us."

Both Dassault and RDL have already announced setting up of a joint venture to manufacture aerospace components and fulfill offset obligations for the Rafale deal.

Under India's offset policy, foreign defense entities are mandated to spend at least 30 percent of the total contract value in India through procurement of components or setting up of research and development facilities.

"The government has stated earlier and again reiterates that it had no role in the selection of Reliance Defence as the Offset partner," the defense ministry said in a statement.

It also said the reported statement of Hollande needs to be seen in "its full context where the French media has raised issues of conflict of interest involving persons close to the former President."

It is seen as a reference to a recent media report linking the Rafale deal with a film by Hollande's partner Julie Gayet. The report had said Ambani's Reliance Entertainment had signed an agreement with Gayet to produce a film before the Rafale deal was sealed.

"Incidentally, media reports of February 2012 suggest that Dassault Aviation, within two weeks of being declared the lowest bidder for procurement of 126 aircraft by the previous government, had entered into a pact for partnership with Reliance Industries in the defense sector," the defense ministry said.

The previous UPA government was negotiating with Dassault for procurement of 126 Rafale jets under which 18 jets were to supplied in a fly-away condition and 108 were to be manufactured in India by the French company along with HAL. However, the UPA could not seal the deal.

In its statement, the French government said it is in "no manner involved in the choice of Indian industrial partners who have been, are being, or will be selected by French companies".

Dassault said it has decided to make a partnership with the Reliance Defence in accordance with the policy of 'Make in India'.

"This offsets contract is delivered in compliance with the Defence Procurement Procedure (DPP) 2016 regulations. In this framework, and in accordance with the policy of Make in India, Dassault Aviation has decided to make a partnership with India's Reliance Group. This is Dassault Aviation's choice," it said.

Modi had announced the procurement of a batch of 36 Rafale jets after talks with Hollande on April 10, 2015, in Paris. The final deal was sealed on September 23, 2016.

The Congress has alleged irregularities in the deal, saying the government was procuring each aircraft at over Rs 1,670 crore as against Rs 526 crore finalized by the UPA government when it was negotiating the deal.

The opposition has alleged Reliance Defence was formed just 12 days before the announcement of the Rafale deal in 2015. Reliance group has rejected the charges.