India's anti-trust body on Friday said it has approved the proposed joint venture between the Anil Ambani-led Reliance Group and Dassault Aviation of France in what is touted as one of the largest offsets deals in the country's defence space, potentially valued at some Rs 30,000 crore ($4.5 billion).
"@CCI_India (The Competition Commission of India) approves setting up of a joint venture between Reliance Aerostructure Limited and Dassault Aviation," the country's apex body that promotes and ensures fair competition said in a tweet Friday evening.
According to industry sources, the new venture will be the key player in executing the offsets obligations of Dassault, as a part of India's purchase agreement for 36 Rafale fighter jets valued at nearly $9 billion or Rs 59,000 crore.
"This is a transformational moment for Indian Aerospace sector and for Reliance Infrastructure's subsidiary Reliance Aerospace," Reliance Group Chairman Anil Ambani had said when his group's deal with Dassault was signed last year.
The pact with the French company calls for an offsets obligation of 50 per cent -- that is, half the value of the deal has to be invested in India. This, the sources said, has the potential to become the largest foreign foreign direct investment in India's defence sector.
"This joint venture will have a significant spill-over effect. It could result in the creation of a large support eco-system, involving 300-400 small and medium scale Indian companies," an industry source said.
After much negotiations, India had signed with France in September last year an agreement for the purchase of 36 Rafales, a Medium Multi-role Combat Aircraft. The original tender was for 126 fighters, but was pruned to the current size.
The first fighter plane agreement in about two decades was inked almost 16 months after Prime Minister Modi announced India's decision to buy the jets during his visit to France in April 2015.
Dassault first established itself in India as a major defence aircraft supplier with the sale of Mirage 2000 fighters. Its Rafale was chosen by India in 2012, following a competitive bidding process that was initiated in 2007. The French company also makes Falcon business jets.