Arun Jaitley
Union Finance Minister, Arun Jaitley.Reuters

Finance Minister Arun Jaitley, who had been out of action for the last three months and returned to office recently, has come out strongly at Congress for pressing charges of crony capitalism and favouring a private company in relation with the Rafale aircraft deal. 

In an interview given to news agency ANI, Jaitley said that the deal was a government-to-government deal and had no involvement of any third party. The finance minister stated that there was an offset clause attached with a foreign vendor and it was mandatory for the government to partner with an Indian firm. He said that the government has no involvement in deciding who should the foreign companies partner with for offset purpose. 

On being asked that the Congress has levelled charges against the BJP government for favouring industrialist Anil Ambani's company because of his close relations with the members of the BJP, the finance minister clarified that governments only deal with governments and the offset has nothing to do with the contract. 

"Let's be clear, this is a government to government arrangement. Offset has nothing to do with this contract. There are 100s of offsets in India. The government will purchase 36 fully-loaded aircraft coming all the way from France, manufactured in France, no private party involved. The government of India's role ends there. Under a policy devised by the UPA, every defence supplier (original equipment manufacturer or OEM) has to undertake some offsets," Jaitley told ANI.

"Purchases have to be made from India equivalent to about 30 per cent of the total contract value. Who will he make purchases from? He selects his own partners. Those purchases have nothing to do with Rafale or these aircraft. He could be buying guns, pistols, binoculars or some spare parts. For this purpose, not only Rafale but every defence manufacturer has to enter into offset contracts," he added. 

A Dassault Rafale combat aircraft, which has been selected by the Indian Air Force for purchase
A Dassault Rafale combat aircraft

The minister also made it clear that these companies can enter into offset contracts in India's private sector or public sector and asserted that Dassault is also free to sign contracts with the company of their own choice and the Indian government has no say in that.

"Dassault can also enter into contracts with whomever they want and the GoI has nothing to do with it. They won't enter into a contract with only one. They may enter into offsets with several companies in both the private and public sector. In fact, Dassault has also entered into one contract for offset with the public sector in India. This is not the first defence purchase. There have been dozens, if not 100s of defence purchases. Every OEM does his offset purchases," Jaitley told ANI. 

On being asked about why was Hindustan Aeronautics Limited kept out from the Rafale deal, Jaitley said that it was Dassault's prerogative who they wished to purchase their aircrafts from.

"HAL has a sufficient order line to keep themselves reasonably busy. Therefore, there are other PSUs that are getting it. Question is if IAF needs the aircraft immediately, do they wait for an Indian company to acquire the expertise to then start manufacturing without knowing the ability of how good an aircraft they can manufacture and wait till the cows come home before you get the aircraft in hand? Or is it that you need urgently. UPA wasted 10 years, NDA was not willing for this kind of policy paralysis in decision making. So the fully loaded aircraft will come, we will pay for them, that's our only deal. Who they purchase their aircraft from is Dassault's prerogative," the minister said.

When the minister was asked by the news agency about the allegations levelled by Congress against the current regime over favouring private parties in the deal, the finance minister said that the government wants to promote the Make in India campaign and help Indian industries grow.

"For some reason, the Congress party's approach when it was in power for a long time was extremely retrograde. We will buy 100 per cent from foreign governments and companies but we will not allow India's private sector to manufacture, and, therefore, defence, for a long time, remained a prerogative of the public sector. Public sector did some good role, therefore, high exclusive technologies were only available with some of the most important foreign companies which were manufactured in Russia, France, Germany or the United States. You have to enter into collaborations with them," Jaitley said. 

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Jaitley said that when he took charge as the Defence Minister, he increased FDI to 49 %INDRANIL MUKHERJEE/AFP/Getty Images

He further added that the BJP opened up 26 per cent FDI during former Prime Minister Atal Bihari Vajpayee's regime and when he (Jaitley) took office, he increased it to 49 per cent.

"During Mr (Atal Bihari) Vajpayee's government, we opened up 26 per cent. When I became Defence Minister in 2014, I made it 49 per cent (FDI). Even at 49 per cent many of them said why should I pass my exclusive technology and intellectual property to a company which is 51per cent Indian. So, we had to say, in cutting-edge technologies we are willing to go up. Now if you see that process we have started where a large number of Indian companies, whether it is the Tatas or Mahindra or L&T, have started getting into international collaborations with foreign players whether manufacturing aircraft, ships or other weaponry is concerned," Jaitley said. 

He further said that during his two tenures as Defence Minister, he opened up FDI during the first tenure and finalised a strategic partner policy during his second tenure.

"I, in fact, had two small tenures as Defence Minister. I opened it up in the first tenure, finalised a strategic partner policy in the second. For each platform, shipping or aircraft or weaponry, the GoI would identify one strategic partner which would be an Indian company. That company will then get a manufacturing base of that platform in India and the government will have to make purchases from them, and they can enter into collaborations with technology suppliers who have huge international experience. That's the process we are trying to encourage, which all these years have been put on a back burner," he said.

He further said that there is a larger public interest, and policies are not changed regularly. "The object of offsets is also that India had no defence manufacturing potential. Firstly, PSUs came up, some potential came up. Now the private sector has started coming in. Today we changed the policy to allow even private sector to start manufacturing in collaboration with foreign principles. Public sector can also enter into those collaborations. HAL can still enter into a re-collaboration. HAL is in fact entering into collaborations with foreign principles to start manufacturing in various areas. Now the sky is the limit. The question is that the object behind the offset policy of the UPA was that you must augment domestic capacities and the foreign supplier must buy 30 per cent equivalent from Indian manufacturers so that some capacity building takes place. Why should we abandon that?" he added. 

(With ANI Inputs)