The largest defence sector foreign direct investment (FDI) is coming soon via French aircraft manufacturer Dassault.
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.
Reliance Defence is bullish on the aviation and naval sectors and is targeting potential contracts worth over `2 lakh crore that are expected to come up for bidding in the next 24 months. This includes new submarines and amphibious ships for the navy, over 260 single and twin-engine fighters and a variety of helicopters needed by the three armed forces.
The plan is to set up a 100-acre facility that will integrate a supply chain for the Rafale fighter jet in India. DRAL has announced that the first phase of the project will generate more than 700 highly-skilled direct jobs and 2,800 indirect jobs.
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