In early 2012, the Indian Ministry of Defence has announced the selection of the Rafale from Dassault Aviation as part of the tender MMRCA (Medium Multi-Role Combat Aircraft). Actually, this is a round of privileged but delicate negotiations between the French aircraft manufacturer and the Indian authorities. The MMRCA tender is estimated at 10 billion euros for the supply of 126 fighter aircrafts. One of the constraints imposed on this contract is an obligation to offset up to 50%.
The Indian aerospace industry will therefore benefit from a windfall of nearly 5 billion euros in the coming years. Beyond this agreement, India is now the world's largest importer of weapons and plans to invest nearly $ 100 billion in defence equipments, in the next ten years.
The aviation industry in this country mainly revolves around the state owned group HAL (Hindustan Aeronautics Limited). HAL is not completely able to match the capabilities needed to build an aircraft such as the Rafale. Dassault Aviation will also provide technology transfer to other indigenous companies.
Fifteen days after the announcement of the choice of the Rafale, Dassault Aviation and the Indian conglomerate Reliance Industries (RIL) announced a partnership in the fields of defense and security, but the two groups did not say more about the scope of this agreement.
RIL is the first private Indian group; it is present in the gas, petrochemicals but also textile fibres, distribution and telecommunications but not in aerospace. The Reliance Group has annual revenues of approximately U.S. $ 70 billion and has the largest market capitalization in the Mumbai Stock Exchange.
Reliance is led by Mukesh Ambani, listed as the 9th richest man in the World and is the son of the founder of RIL – Dhirubhai Ambani. Mukesh Ambani has a dream to create an Indian Boeing, and now he has embarked on his journey towards this goal, with the reliance fortune.
In 2011, he hired Dr. Vivek Lall to be the head of Reliances’ aerospace division: Dr. Vivek Lall is a recognized expert in the world of aerospace. Dr. Lall studied in the United States and has worked for NASA, Raytheon and Boeing. He was the managing director of Boeing in India before joining the Reliance Group.
In February 2012, RIL announced a partnership with Dassault Aviation.
In early summer 2012, RIL applied to the Indian Ministry of Commerce and the economy, for an industrial license to produce aircraft parts and to develop aerospace technologies. This was followed by the creation of Reliance Aerospace Technologies and Homeland Security, for which Vivek Lall was appointed CEO. HQ of the Aeronautics Division of the Reliance Group is based in Nashik, near Mumbai. RIL plans to acquire other facilities across the country in order to create a real Aerospace hub. RIL would also unite smaller players and train them to produce better quality components for the aviation industry.
Mr. Ambani plans to invest up to 1 billion U.S. $ and hire nearly 1,500 employees in the coming years in its aerospace division.
While the Reliance Group's cash is important, it is necessary to show some courage to embark on such an adventure. Reliance Group has experienced several transformations in its history. The future will tell us if the bet on the aerospace industry will be successful.
(Translated from French by Frédéric GAYRAUD & Neha SHRIVASTAVA).
Published on Le Cercle Les Echos