First Steps Towards Indigenous Military Complex: Reliance Manufacturing Unit To Come Up At Nagpur

The Reliance Group has entered into a joint venture with Dassault Aviation for the execution of the offset contract signed as a part of India’s deal with the French manufacturer for the purchase of 36 Rafale fighter jets for the Indian Air Force.

As per the contract, Dassault Aviation is set to invest 50 per cent of its revenue, up to Rs 300 billion ($4.51 billion), in the Indian defence industry to boost technological innovation and capacity building.

Being the largest offset contract to be executed by any defence company in India till date, the investment can prove to be a game changer for the Indian defence industry, which suffers from a lack of investment, slow technological advancement and inadequate manufacturing capacity.

According to the offset contract, 30 per cent of Dassault’s revenue will be invested in India’s aerospace industry, and the remaining 20 per cent has been set aside for manufacturing spare parts for Rafale fighter jets.

The joint venture will focus on areas such as aerostructures, electronics and engines. Reliance will set up a manufacturing facility in Nagpur to keep up with Dassault's supply chain, which will be part of Dassault's global supply chain. For the same, Reliance has acquired 289 acres of land in Nagpur’s Multi-modal International Cargo Hub and Air Port.

The offset amount will be routed through the joint venture in two ways. First, the venture will focus on micro, small and medium enterprises to create a supply chain for Rafale jets. Second, the venture will focus on direct manufacturing of components related to the fighter jet’s engine and air-frame.

A recent report published by Bloomberg disclosed that offset obligations on 25 defence contracts signed since 2008 show a shortfall in implementation in 13 of them. In view of the failure of old offset contracts, the success of this joint venture is welcome news for India.