Rafale controversy: Reliance violated conditions of licence issued to it by DIPP

In a complaint to the Central Bureau of Investigation (CBI) by advocate Prashant Bhushan and former BJP Union ministers Arun Shourie and Yashwant Sinha regarding the Rafale deal, they have alleged that Anil Ambani-owned Reliance Aerostructure Ltd (RAL) may have violated the conditions of the licence issued to it by the Department of Industrial Policy and Promotion (DIPP).

In the complaint, the trio has accused that RAL changed the location of its industrial unit (from Gujarat to Maharashtra) and the type of product/article to be manufactured” (from military aircraft to civilian business jets), thereby, violating the conditions of the licence issued to it.

If you see the image above, it shows that as of July 2018, Reliance Aerostructure Limited was given licence for “Amreli in the state of Gujarat” for “manufacture and upgrade of airplanes and helicopters specially designed for military application.”

This information can be check on DIPP’s website under the section titled “List Of Industrial Licences Issued For Manufacture Of Items Under Defence Industries From January 2001 To 3 July 2018.”

However, over the past few months, Reliance has been saying that the work will be carried out at a production facility located in Nagpur, Maharashtra. It has also mentioned that it will make parts for the company’s Falcon business jets, which are normally used for civilian purposes. This is absolutely different from the kind of licence it has been granted.

“This is in clear violation of the condition of the licence that R.A.L obtained from the D.I.P.P. R.A.L. cannot take a licence for “Manufacture and Upgrade of Airplanes and Helicopters Specially Designed for Military Application”, and then enter into a JV to manufacture parts for a civilian aircraft under that same licence,” the CBI complaint says.

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“To be clear, civilian aircrafts [sic] are in fact included in the list of eligible products/ services towards the discharge of offsets. But what products/services actually get allowed by the government to be used to discharge the offset obligations is controlled through the issue of the industrial license that specifies what can be manufactured,” it adds.

“R.A.L. has evidently failed to comply with the licensing requirements stipulated by the DIPP by [a] changing location of manufacturing without due amendment in license & [b] by starting process of manufacturing a ‘new article’ i.e. civilian Falcon aircrafts as opposed to “Manufacture and Upgrade of Airplanes and Helicopters Specially Designed for Military Application”,” the statement notes. It has violated Clause 4.2 of the Offset Guidelines. The Finance Minister’s statement, shows that government is aware of this fact. However, Mr. Modi’s influence has ensured that no action has been taken against R.A.L. thus far,” the complaint further reads.

The controversy took another turn when former French President Francois Hollande, recently said that it was the Indian Government that insisted on choosing Reliance Defence as Dassault’s offset partner and that the French government had no say in it.

Yesterday, a Congress-led delegation met Comptroller and Auditor General of India (CAG) to discuss the alleged “irregularities” in the ongoing Rafale deal controversy.

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