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Russia rejected Reliance Defence in favour of PSUs, before Rafale deal

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In 2016, India signed an inter-governmental agreement with France called Rafale Deal that gathered much controversy for the ruling party. Instead of dying down with the course of time, the fighter jet deal controversy has taken a shape of any scam. Before India signed a Memorandum of Understanding with France to buy 36 off-the-shelf Dassault Rafale twin-engine fighter jets, Reliance Defence tried to procure contracts from Russia but failed. Russia is India’s old defence partner.

Anil Ambani tried to seal three major deals with Russia only to fail each time. Russia wanted to partner with public sector units including Hindustan Aeronautics Ltd (HAL) and set up a production of $1 billion Kamov KA-226 light helicopter. Anil Ambani also visited Moscow with Prime Minister Modi in December to discuss the deal with the Russian government.

Also Read: Where did Rs 1,30,000 crore figure come in Rafale deal?

Ambani’s new venture Reliance Defence was a private sector company. Russia refused to sign a contract with a private sector company and wanted to deal with only the private sector units giving government approval. Indian government does not officially recommend or nominate any private company, hence the Reliance Defence failed to secure a deal with Russia.

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Reliance Defence also established talks with Russian United Shipbuilding Corporation (USC) for a partnership with India in building warships. A Ukrainian firm that makes engines for the warships tied up with India and Reliance Defence was appointed as the preferred yard by USC. Later the government appointed another state-owned Goa Shipyard Ltd for the deal instead of Reliance Defence.

The contract, however, is yet to be inked and will come up for discussion during President Putin’s upcoming visit to India in October this year. “In the case of four 1135.6 frigates, after inspection of different shipyards in the public and private sector, USC had identified RNEL as the preferred partner. However, instead of a competitive process, it was a decision of the MoD to award the contract to GSL on nomination basis,” said a Reliance spokesperson to Economic Times.