The Franco-Indian Rafale Affair



The sale of 36 Rafale fighter jets from France to India has long become a hot-political issue in both countries, involving the highest level of government, shady intermediaries, favouritism, alleged investigative cover-ups, and a French comedy-action film. The case illustrates the many shades corruption can take in a single arms deal.

Case details
Seller country: France
Seller company: Dassault Aviation
Buyer country: India
Goods category: Aircraft
Equipment sold: 36 Rafale Fighter Jets
Deal value: INR 59,000 crore – EUR 7.8 bn
Sum involved in corruption: EUR 1 mio – tens-of-millions
Start year: 2007
Outcome status: Legal Investigation Ongoing

Dramatis Personae
  • Anil Ambani – Owner of Reliance Group (Industrial Partner to Dassault). Close friend of Narendra Modi’s

  • Emanuel Macron – French President (2017-present), Minister of Economy and Industry (2014-2016)

  • Jean-Yves Le Drian – French Minister of Defence (2012-2017), Minister of European and Foreign Affairs (2017-present)

  • François Hollande – French President (2012-2017)

  • Narendra Modi – Prime Minister of India (2014-present)

  • Manohar Parrikar – Indian Minister of Defence (2014-2017)

  • Sushen Gupta – Indian Middleman

Summary of Corruption Allegations

This case involves several strands of allegations of corruption and favouritism.

In India, it is unclear why after three years of negotiations to hammer out a deal to buy 126 Rafale aircraft from Dassault, of which 108 were to be assembled at Indian company Hindustan Aeronautics Limited (HAL), Indian Prime Minister Modi turned the deal upside down. He announced that India would only purchase 36 Rafale jets, all of which would be assembled in France. The deal includes a 50% offset clause to be executed by Dassault and its partners. This means the firm needs to invest money back into Indian manufacturing. As a consequence of Modi’s announcement, HAL was replaced as Dassault’s industrial partner with the Reliance Group, whose majority shareholder and chairman, Anil Ambani, has close ties to Modi. These actions have attracted many allegations of favouritism. Reportedly, at the time Reliance had no experience in aeronautics and was in poor financial shape. Two weeks before Modi apparently decided to purchase the 36 jets, upending the original agreement, Dassault and Reliance had signed their first Memorandum of Understanding. Shortly after the deal was signed in 2016, the two companies agreed to create a joint venture called Dassault Reliance Aerospace Limited (DRAL). Dassault reportedly had no industrial interest in forming a partnership with Reliance, and only signed the deal to gain political influence. The two partners agreed a maximum investment in the subsidiary of 169 million euros. Of that sum, Dassault pledged to provide up to 159 million euros, representing 94% of the total, despite only holding a 49% stake in the company. Reliance would provide the remaining 10 million euros, while holding a 51% share .

Furthermore, in early 2016, immediately before the inter-governmental contract for the sale of the jets was inked, Dassault’s principal Indian industrial partner in the deal, the Reliance Group, with multiple activities in defence, construction, telecommunications and entertainment, pledged EUR 1.6 mio in funding for a feature film co-produced by then-French president Francois Hollande’s personal partner, the actress Julie Gayet. Reliance announced its investment the same day that Hollande arrived in New Delhi for a visit to sign the preliminary contract for the jet sale. Hollande claims no knowledge of the investment and no influence over the choice of Reliance as a defence-partner. Meanwhile, Hollande’s economy minister, now President Emmanuel Macron, was allegedly involved in reducing the tax debt of Reliance’s French subsidiary, Reliance FLAG Atlantic France from EUR 151 mio. to EUR 7.6 mio, the background of which is unclear.

What is more, anti-corruption clauses were apparently removed from the Rafale deal, which France-based missile manufacturer MDA, a party to the Rafale deal, had lobbied for. The Indian side reportedly tried to insist upon their inclusion a year prior in 2015, but finally agreed to their removal September 2016.

Finally, Dassault and its industrial partner Thales are accused of paying millions to an intermediary before and after the deal. Sushen Gupta operated as an agent for Dassault, had worked on the Rafale contract, and allegedly obtained confidential documents from India’s Ministry of Defence, which could help the French side in negotiations. He apparently received several million euros in secret commissions, from both Dassault and Thales, and has since been charged with money laundering in a similar scheme in a separate defence deal known as Choppergate, or the VVIP Helicopter Deal. On 30 March , 2017, Sushen Gupta sent a EUR 1,017,850 invoice on behalf of the Gupta-family-owned company Defsys Solutions for the manufacture of 50 large replica models of the Rafale jets. Dassault has not been able to produce a single document to French investigators showing that these models exist. Moreover, Sushen Gupta’s Mauritian company Interstellar Technologies allegedly received at least 7.5 million euros from Dassault Aviation between 2007 and 2012, facilitated by overbilled IT contracts and a system of false invoices.

  • Aug 2007

    The Indian ministry of defence issued a request for proposal for procurement of 126 Medium Multi-Role Combat Aircraft

  • Jan 2012

    Dassault Aviation’s Rafale jet was quoted as the lowest bid. Of 126 aircraft, 108 were to be assembled in a defence partnership by state-owned Indian company Hindustan Aeronautics Limited (HAL), Dassault was to re-invest EUR 4 million back into Indian companies in an offset agreement

  • 13 Mar 2014

    Workshare agreement signed between Hindustan Aeronautics Limited (HAL) and Dassaut Aviation for 108 & 18 direct fly-away jets

  • 26 Mar 2015

    Dassault and Reliance signed their first Memorandum of Understanding

  • 10 Apr 2015

    Sudden public turnaround: Indian Prime Minister Narendra Modi, in office since 2014, at a press conference with French president Hollande, announced the overturn of the original tender off-the-shelf purchase of 36 Rafale fighter jets, all of which were to be manufactured in France. HAL was replaced with the Reliance Group as Dassault’s local industrial partner.

  • 13 Apr 2015

    The Le Monde newspaper revealed that Macron had waived a EUR 143.7 million tax adjustment from a French subsidiary of the Reliance Group. Reliance owes at least EUR 151-million in unpaid taxes at this point

  • Oct 2015

    French authorities accepted 7.3 million euros from Reliance as a settlement against the original demand of 151 million euros (India Times).

  • 24 Jan 2016

    A Reliance Group company announced a EUR 1.6 million investment in a feature film co-produced by then-French-president François Hollande’s personal partner, the actress Julie Gayet

  • 26 Jan 2016

    India and France signed a Memorandum of Understanding for 36 Rafale Jets

  • 23 Sep 2016

    The deal was signed by French minister for defence, Jean-Yves Le Drian and his Indian counterpart Manohar Parrikar

  • 28 Nov 2018

    Dassault and the Reliance Group signed a “shareholders’ agreement” which set out their relationship in a future joint-venture company called Dassault Reliance Aerospace Limited (DRAL)

  • Nov 2016

    The Indian government announced the price of each aircraft unit in Parliament as around INR 670 cr

  • Dec 2016

    The Dassault Aviation Annual Report revealed that the Indian government paid INR 60,000 cr for 36 aircraft, more than double the government stated price.

  • Sep 2018

    The former French president Francois Hollande revealed that the French government had no say in choosing an Indian defence partner

  • 20 Jul 2020

    First batch of Rafale jets delivered

Investigation Outcomes
  • Mar 2012

    The Indian Defence ministry launched an internal investigation into the result of the tender after a member of parliament claimedthe Rafale was more expensive than the Eurofighter Typhoon

  • 13 Mar 2018

    First Public Interest Litigation filed against Rafale deal in the Indian Supreme Court

  • 11 Oct 2018

    The Central Bureau of Investigation (CBI) in New Delhi received an official complaint over corruption relating to the Rafale deal deposed by Supreme Court lawyer Prashant Bhushan, Yashwant Sinha, and Arun Shouri, both former BJP ministers. No investigation was opened, even though false invoices by Sushen Gupta’s Interstellar company were submitted to the CBI by Mauritian authorities on October 11th. The documents covered the 2007-2012 deal, whereas the complaint related to suspicious activity that took place from 2015.

  • 26 Oct 2018

    Sherpa, a French anti-corruption NGO, filed a complaint with the French Public Prosecution Service

  • 2018

    French Anti Corruption Agency inspectors found that Dassault had agreed to pay EUR 1mio to Sushen Gupta’s Defsys company just after the signing of the deal, but the agency did not refer the matter to prosecutors

  • Dec 2018

    The Indian Supreme Court exonerated the Modi government in the Rafale deal, how it was negotiated, the increase in cost of the fighter jet units, and the choice of Reliance Defence as an offset partner

  • 14 Nov 2019

    Indian Supreme Court dismissed all petitions and review petitions against the Rafale deal in India

  • 2019

    Eliane Houlette, the head of the financial crimes branch of the French Public Prosecution Service rejected the investigation into the complaint citing national interest

  • Apr 2021

    The French investigative platform Mediapart published a series of investigative papers called the “Rafale Papers” revealing corruption, bribes, and favouritism in the Rafale deal

  • 28 Apr 2021

    Sherpa filed a request for a judicial inquiry into India's purchasing of the jets

  • Apr 2021

    In India the opposition pushes for a new investigation citing newly published evidence

  • 2 Jul 2021

    An official criminal investigation was opened in France by Houlette’s successor at the Public Prosecution Service, Jean-Francois Bohnert

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