India’s biggest defence FDI of Rs 6,500 cr in DAAP kitty

The DAAP will be home to the Dassault Reliance Aerospace Ltd (DRAL), a 51:49 joint venture between Reliance Aerostructure and Dassault Aviation, the French aviation major specialising in defence aircraft. The DRAL would be the lead project for executing the offset programme of the Rafale fighter jets and the partnership will bring in not only high-level Transfer of Technology, but also help develop the ecosystem of the domestic aerospace sector and feed into the global supply chain. 

The execution of this offset clause will also bring in the largest foreign direct investment in the defence sector till date and make it the largest offset contract in the country’s history. Last year, India signed a 7.9 billion euros or $8.8 billion contract for purchasing 36 Rafale fighter jets in flyaway condition which incorporated a 50 per cent offset clause, mandating that 50 per cent of the deal value would be invested in the Indian defence ecosystem. 

While the first lot of the Rafale jets from France are expected to be delivered by September 2019, the remaining will be delivered after another 30 months (around March 2022). As part of the mandatory offsets under this deal, France will invest 30 per cent of the total deal cost in India’s military aeronautics related research programmes and another 20 per cent towards the local production of Rafale components. 

The DAAP project will be developed in two phases - the first over an area of 104 acres to be operational in 2018, and later the second over 185 acres of land at the Multi-modal International Hub Airport at Nagpur (MIHAN). In the DAAP, the Reliance Group will set up assembly lines and manufacturing facilities of fixed wing aircraft, aerostructure for commercial transport aircraft, besides helicopters for defence and commercial uses. 

The Reliance Group plans to add immense value to MIHAN by creating over 700 direct jobs at DAAP and the total number of high-skilled jobs will exceed 5,000, plus more than 15,000 secondary jobs, besides setting up a world class Centre of Excellence for Design Technology and Manufacturing. 

To be designed as a Smart City, the DAAP will be a one stop hub for all aerospace requirements, which will catapult Nagpur on the global defence production map. As part of the eco-system to support various upcoming projects, over 200 Indian MSMEs are expected to come up at DAAP, besides global OEMs in Defence and Aerospace platforms and components. 

The MIHAN site was selected after extensive surveys across various Indian states, for its world-class facilities and infrastructure like the Medicity, available of top-class managers, its proximity to the IIM and the international airport here, excellent telecom connectivity, a disciplined work culture, Airfield and Air Space for Flight Tests, and a good social infrastructure.