Rafale aircraft deal

Biggest Indian monopoly capitalists benefit from "Make in India" program

Media sources have recently revealed that Anil Ambani-led Reliance Defence has been chosen as French monopoly defence manufacturer Dassault Aviation’s Indian strategic partner. The joint venture which was formed over a year ago with the acquisition of Pipavav Defence, will “be a key player in the execution of offset obligations” arising from the recent purchase of 36 Rafale fighter jets. The Dassault JV will represent its first, official and major defence order.

The 36 Rafale fighter jets that were acquired by India recently were purchased for almost 8 billion euros and came with a 50% offset clause. The offset clause ensures that 50% of the deal’s amount needs to be invested into the Indian defence ecosystem.

According to a statement released by Reliance Defence, it will be one of the primary Indian partners that will “develop major Indian programs with high levels of technology transfer” as a result of the Rafale offset clause. Reliance spokespersons have described this as a "transformational moment" for the Indian aerospace sector and for Reliance Infrastructure’s subsidiary Reliance Aerospace, claiming that this will indirectly benefit the entire aerospace sector.

“The proposed strategic partnership between Dassault and Reliance will also focus on promoting research and development projects under the IDDM program (Indigenously Designed, Developed and Manufactured), a new initiative of India’s Defence Minister Manohar Parrikar,” the statement read.

Media sources had reported in early 2015, that three companies -- Bharat Electronics, Noida-based Samtel and Reliance Defence Systems -- were in talks with Dassault and the Indian government for possible co-production opportunities arising from the Rafale deal. However, it has now been revealed that while Bharat Electronics and Samtel and other defence companies will also get a much smaller share of the offset money, it is Reliance Defence that will execute the major portion of the Rs. 20,000 – Rs. 30,000 crore that will flow in as a result of the Rafale deal.

According to analysts, the work distributed to other companies could come in the form of simple outsourcing or even other joint-ventures, which would be announced shortly.

The Rafale deal was touted as a major step in PM Narendra Modi's stated goal of changing the status of India from being the number one defence importer to a situation where over the next five years, nearly 70% of the country’s military needs would come from domestic production.

The Rafale deal is just one more example which shows that, to realise its ambitions of becoming a big imperialist power, the Indian ruling class is advancing on the path of rapid militarisation. Setting up a military industrial complex like that which exists in countries like the US, is an important component of this program. All the major capitalist monopolies of India have entered the sector of arms production in a demonstrative way. While these big Indian monopoly capitalists will reap fabulous profits through these arms deals, as Anil Ambani-led Reliance Defence will in the case of the Rafale aircraft deal, the Indian working class and people are being made to bear the burden of these defence purchases, running into hundreds of thousands of crores of rupees.

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Oct 16-31 2016    Political-Economy    2016   

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