Will Anil Ambani’s Fortune Change With The Arrival Of Rafale Jets?

India recently received five Dassault Aviation Rafale fighter jets from France. The touchdown of Rafale jets has resurrected the controversies surrounding the French origin aircraft, one of which had roped in business tycoon Anil Ambani. 

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Several opposition leaders and critics had raised the question about the joint venture of Dassault Aviation with Ambani’s Reliance group.

Anil Ambani’s several group companies have declared bankruptcy and numerous assets have been taken over by banks. The latest one in the list is Yes Bank’s takeover of Anil Ambani’s Reliance Group headquarters at Santacruz and two other offices in south Mumbai over the recovery of Rs. 2892 crore loan to Reliance Infrastructure.

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In 2016, India and France signed a purchase agreement for the supply of 36 Rafale fighter jets at a value of €7.87 billion, or about Rs 60,000 crore. Under the agreement, the 36 Rafale procurement offset proposal supports the ‘Make In India’ initiative. It means that the French side will facilitate the implementation of ‘Make In India’ by the industrial supplier through offsets for 50% value of the supply protocol.

Merely two weeks later, Dassault and Reliance announced their joint-venture Dassault Reliance Aerospace Limited (DRAL). It was reported in 2019 that Dassault Aviation is likely to start manufacturing components of the Rafale fighter jets at the Nagpur facility of DRAL, with the wares destined for global customers.

Opposition parties and netizens raised the question that despite no experience in aircraft production, why Ambani’s sinking company was awarded the contract instead of Hindustan Aeronautics Limited. It was alleged that the deal was made because of Ambani’s closeness to the top government officials. The opposition leaders also alleged that the deal as “promoted corruption”.

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Meanwhile, former French president Francois Hollande, who negotiated the Rafale deal with Prime Minister Narendra Modi, declared that it was the Indian government who proposed Reliance — “we had no choice”, he said. However, Dassault had responded saying it was not influenced to pick Anil Ambani’s company.

Later, it was reported by the French media that the French government gave a tax exemption of about 1100 crores to a company of Anil Ambani between February and October 2015. According to the report, a few months before this tax relief, India’s Prime Minister Narendra Modi announced his plans to buy 36 Rafale fighter aircraft with French company Dassault Aviation.

Congress party’s election campaign for 2019 Lok Sabha elections focused on the Rafale deal alleging that an overpriced deal has been signed as an offset contract for Anil Ambani’s inexperienced defence company. The government rubbished such claims.

Rafale Jets

Following a Congress petition, the Supreme Court gave a clean chit to the government and confirmed its earlier order that no irregularities or corruption were found in the deal.

Anil Ambani’s Downfall

In the last two decades, after the partition of the Reliance empire due to the founder’s death, Dhirubhai Ambani, the two heirs Mukesh and Anil have followed an opposite trajectory. While Mukesh Ambani became the 6th richest person in the world, Anil Ambani has reportedly admitted in a London court that his net worth is zero and he “doesn’t hold any meaningful assets”.

From being the 6th richest man in 2008, Anil Ambani explored several lines of business but things started to go downhill after losing a Supreme court case in 2010 against his brother, Mukesh Ambani.

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Soon after, the share price of Reliance Power plummeted, it compelled Anil Ambani to take loans from banks and foreign institutions. Economic affairs analysts believe that till some time ago corporate houses belonging to powerful and political parties were able to delay repayment despite heavy debts, but after NPA (Non-Performing Asset) become a political matter, it became difficult to do so.

Experts also argue that the change in laws has impacted such practices. Now debtors can declare companies as insolvent through National Company Law Tribunal and drag them to court to repay the creditor. In the last decade, Anil Ambani’s debt has increased which eventually led him to declare bankruptcy or sell the stake of his companies.

Netizens have wondered with the arrival of ‘much anticipated’ Rafale jets, will the fortunes of Anil Ambani change for good?