Russia rejected Rel Defence in favour of PSUs

NEW DELHI: Before it signed up for the Rafale fighter jets offset deal that has now become controversial, Anil Ambani’s Reliance Defence attempted to bag contracts from Russia, India’s old defence partner, but lost out on three major deals. Unlike France, Russia after consultations with India chose to partner with public sector units including Hindustan Aeronautics Ltd, which will set up a production line for the $1 billion Kamov KA-226 light helicopter.In similar fashion to the Paris trip in April 2015 where the Rafale pact was first discussed, Ambani was present during the prime minister’s visit to Moscow in December of the same year, batting for major contracts with Russia for his newly formed defence companies.The Kamov contract was the first to be formalised during the visit. While Reliance Defence was in advanced talks to partner the Russians in the preceding months, Russia decided to go the PSU way. HAL is a known partner for Russia as it already makes the Sukhoi aircraft. The Russian side, sources said, was adamant that the private sector entity should be “government approved” for it to be considered. Reliance Defence did not meet this criterion, given that the government does not officially recommend or nominate any private sector company. 65630932 In fact, three months prior to the signing during the December visit, Russia had informed the defence ministry about an understanding with Reliance Defence for a possible partnership. But it did not progress after HAL was nominated for the deal. During the same visit, the procurement of four frigates for the Indian Navy at an estimated cost of $2.5 billion was also agreed upon by the two governments.Talks With USC to Build WarshipsReliance Defence was in talks with the Russian United Shipbuilding Corporation (USC) to be the Indian partner for building these warships. The company had even tied up with a Ukrainian firm that made the engines for the warship. While Reliance Defence was chosen as the preferred yard by USC, the government did not process the contract under competitive bidding, instead nominated the state-owned Goa Shipyard Ltd (GSL) for the deal. 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 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,” a Reliance spokesperson said in response to an ET query.Perhaps its most ambitious plan in Russia was to partner with Almaz Antey, the manufacturer of the S 400 missile defence system, to execute the offsets for the mega deal. During the PM’s Moscow visit, Reliance Defence even entered into an agreement with the Russian entity for the deal worth Rs 39,500 crore. However, as reported by ET earlier, the Indian government decided not to impose the otherwise mandatory 30% offset clause for the S 400 deal, removing any possibility of Reliance Defence being a part of the contract execution. The waiver was given after an express request by the Russian side that argued that because the S 400 is a highly sensitive and advanced system, the offsets clause needs to be removed for timely delivery.While Reliance Defence did not meet with any success in Russia despite repeated efforts, it tasted its first major victory in the defence sector in October 2016, when it announced a new joint venture with French aerospace giant Dassault Aviation to target business from the offsets for the Rafale contract.

from Economic Times https://ift.tt/2PqyGcm