India's Reliance group has won one of the biggest contracts in the history of the country's defence industry, agreeing to help build a fleet of new fighter jets in a deal that is set to earn the company more than €1.9bn.
The deal is a major success for Anil Ambani, chairman of the Reliance group, in his attempts to reposition his indebted company at the forefront of the Indian defence sector as the country embarks on a series of procurement deals for its armed forces.
Mr Ambani began his expansion into the defence industry last year with the surprise acquisition of a controlling stake in the Pipavav shipyard in Gujarat, worth $300m.
He said in a statement: "This deal is a transformational moment for the Indian aerospace sector and for Reliance Infrastructure’s subsidiary Reliance Aerospace."
Dassault agreed last month to supply the 36 jets to India in a government-to-government deal worth about €8bn — the largest defence procurement programme in India's history. As part of that agreement, just under half of the construction and supply contract will be handled by the joint venture between Dassault and Reliance, to be known as Dassault Reliance Aerospace.
Reliance will own at least 51 per cent of that joint venture, something New Delhi insisted on as part of its push to boost the country's domestic manufacturing industry, under the tagline of "Make in India".
One person briefed on the deal said it was likely to create 1,500 jobs in India. The new company will start building a factory in Nagpur, in central India, in the next three months, with production expected to start within a year.
Narendra Modi, the Indian prime minister, who personally intervened to ensure the Rafale deal went through, had been criticised for signing an agreement which would mean more than half of the production would be done by Dassault and its supply chain.
Those involved in the deal said the separate agreement announced on Monday showed the companies' commitment to Indian manufacturing.
Eric Trappier, Dassault's chairman and chief executive, said: "The formation of this joint venture illustrates our strong commitment to establish ourselves in India and to develop strategic industrial partnerships under the ‘Make in India’ policy promoted by the Indian government."
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