Dassault To Emerge As The Biggest Investor In India's Defence Sector Following Rafale Deal

Dassault will be the biggest investor in India’s defense sector under the Foreign Direct Investment (FDI) following the Rafale fighter jet deal.

The first tranche of FDI, about INR 200 crore ($31 million) is likely to come by July, Economic Times reported Friday.

The investment is part of Dassault’s obligations on Make in India commitments under the Rafale fighter jet deal. These commitments require the French company to manufacture a significant part of the aircraft in India. 

The investment, intended for manufacturing of aircraft components for global markets, will come into the Dassault-Reliance Aerospace Limited (DRAL) joint venture set up to meet offset obligations for the Rs 58,000-crore deal. The first tranche of FDI, around Rs 200 crore, is likely to come in by July. 

“Dassault will emerge as a single largest FDI investor in the defence sector. It will far exceed all FDI till date in the defence sector in India. The cumulative FDI in the defence sector in India till date is of the order of $6 million,” Rajesh K Dhingra, president, Reliance Defence & Aerospace, told ET. 

The JV will be used for creating infrastructure at the Mihan (Nagpur) facility, with a ground-breaking ceremony planned for the end of July. Teams from the French company have visited the site at least four times in the past three months to finalise project plans. “Groundbreaking is planned in July and we expect the first article to roll out in the first quarter of 2018. Currently, first batch of our team is undergoing training at Dassault facilities in France,” Dhingra added. 

Government clearances would not be required for the inflow as it will be under the automatic route for FDI given that Reliance Defence holds 51% of the JV.